BOJ Hopeful More Persons Will Join Banks To Get CBDC Accounts

The Bank of Jamaica (BOJ) is hopeful that the simplified companion customer verification process to facilitate the establishment of central bank digital currency (CBDC) accounts will spur an increase in the number of persons joining local financial institutions.

Governor, Richard Byles, advised that persons must acquire a special wallet in order to utilise the CBDC, dubbed ‘Jam-Dex’.

Speaking on Wednesday (June 15), during a ‘Riverside Chat’ semi-virtual forum on digital currency at the 2022 Jamaica 60 Diaspora Conference, he explained that the wallet is an app that can be downloaded and used on their mobile devices.

“To get a wallet and to use digital currency, you have to join a bank. But whereas you needed to [provide a utility bill] and identification [among other things], the know-your-customer (KYC) process with CBDC is quite low. It requires one government ID, a picture of yourself, and your taxpayer registration number (TRN)… [and] that is good enough,” the Governor outlined.

Mr. Byles said Jam-Dex, which is slated to be rolled out nationally this year following a successful pilot in 2021, will offer persons a seamless and more efficient business transaction option to utilising cash.

He noted that while more than 60 per cent of Jamaica’s adult population are customers of banks and other financial institutions with which they have accounts, many don’t use them because of inconveniences they say they have experienced.

These, the Governor pointed out, include high costs and long lines at locations, noting that “very few” person seem to be holders of debit or credit cards.

“With CBDC, we’re hoping that [Jam-Dex] will be owned by almost every Jamaican and that they will be able to transact in the same way as [they do with] a debit card or a credit card… but with no cost. What we are hoping that Jam-Dex will become is an efficient way for ordinary Jamaicans to transact digitally,” he argued.

Mr. Byles said the CBDC is designed to be inclusive and aims to accommodate more Jamaicans in the banking and financial system digitally.

He explained that it can be used to facilitate pension and Programme of Advancement through Health and Education (PATH) payments.

The Governor said the funds would be deposited in real time directly to beneficiaries’ accounts “and not through the post office or by cheque or any other form that is more inefficient”.

“The great advantage of it, of course, is that it is secure… it’s on your phone. So even if you lose your phone, there’s no access to it without your code. We are hoping to move more Jamaicans to using a digital currency, which is far more convenient and cost-effective and efficient,” Mr. Byles added.

CBDC is a digital form of central bank-issued currency and is, therefore, legal tender.

It is a fiat currency, which means it can be exchanged, dollar for dollar, with actual cash, and is issued to licensed deposit-taking institutions (DTIs) on a wholesale basis.

Individuals, households, and businesses can use it to pay for goods and services, as obtains with cash.

According to the BOJ, the benefits to be derived by citizens, businesses and the Government from the adoption and introduction of a viable digital currency solution include increased financial inclusion and another means of efficient and secured payments.

Additionally, the Bank says CBDC represents an opportunity for DTIs to improve cash-management processes and costs.

Persons who already have bank accounts will be able to automatically obtain a CBDC account.

The Jamaica 60 Diaspora Conference is being hosted at the Ministry of Foreign Affairs and Foreign Trade in downtown Kingston from June 14 to 16, under the theme ‘Reigniting a Nation for Greatness’.