The Bank of Jamaica minted the island nation’s first batch of Central Bank Digital Currencies (CBDC) on Monday.
Minister of Finance Dr Nigel Clarke is excited about the proposed CBDC, that is planned for roll-out around the start of April 2022, after a six-month pilot that is expected to get under way next month.
Clarke is touting the still-to-be-named digital currency, along with the national identification system, NIDS, as being “the foundation of the digital transformation of our society”, a remark he made via Twitter earlier this week.
A total of J$230 million, or roughly US$1.5 million, will be issued to deposit-taking institutions and authorized payment service providers as part of the CBDC pilot program that ends in December.
The bank had originally planned to begin its pilot program in May but was delayed for unspecified reasons. Jamaica has been working on developing a CBDC since early 2020.
The government said anticipated benefits of the CBDC include increased financial inclusion since it will provide another, easier-to-access means to make payments, and for deposit-taking institutions, the opportunity to improve cash management processes and costs.
The finance minister pointed out that the experience of the state in getting financial assistance to needy Jamaicans through online sign-up and disbursement by direct deposit to bank accounts, revealed that a large segment of the population is unbanked, highlighting the need for a payment method such as the CBDC to be employed as a way of broadening financial inclusion.
Natalie Haynes, deputy governor for banking and currency operations and financial markets infrastructure divisions at the Bank of Jamaica, says participation in the digital currency pilot is open to all wallet providers, which includes all deposit-taking institutions, or DTIs, and non-DTI authorized payment service providers that have tested payment products in the BOJ fintech sandbox designed to encourage fintech innovations. There are four non-DTI wallet providers.
But so far only one company, National Commercial Bank Jamaica, is fully on board for the pilot, having finalized a contractual agreement with E-Currency Mint, the technology service provider that is building out the CBDC system for the BOJ.
“Another DTI will come on in November,” Haynes told the Financial Gleaneron Thursday. “We expect others to come on board by year-end. They can come in at any time,” she said.
