The Bank of Jamaica (BOJ) has announced that Republic of Ireland-based technology provider, eCurrency Mint Incorporated, has been selected to support the BOJ in testing a Central Bank Digital Currency (CBDC) solution locally.
CBDC is a digital form of central bank-issued currency and is, therefore, legal tender.
In a statement on Tuesday (March 23), the BOJ said eCurrency Mint, which was chosen after an “extensive” procurement process, will assist the Central Bank to initiate a seven-month pilot from May to December 2021, utilising the local institution’s Fintech Regulatory Sandbox.
The Sandbox is designed to provide a platform to encourage innovations in financial services, and promote competition and financial inclusion, as well as inform the framing of new or amendment of existing regulations.
The BOJ further indicated that eCurrency Mint will be the provider when the national CBDC rollout commences in early 2022.
CBDC 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 BOJ says CBDC represents an opportunity for DTIs to improve cash management processes and costs.
The Bank assured, however, that it will continue to issue notes and coins to facilitate all economic activity.
The BOJ indicated that the CBDC to be issued will solely be for domestic use, adding that a hybrid model will be used.
In this regard, the BOJ said it will not only issue to commercial banks but also other DTIs, including building societies, merchant banks and authorised payment service providers (PSPs), all licensed or authorised by the Central Bank. These entities will, in turn, distribute CBDCs to the retail market.
In order to utilise digital currency, consumers will need to have a CBDC account, which will be different from a regular bank account and much easier and simpler to obtain.
Persons who already have bank accounts will be able to automatically obtain a CBDC account.
Authorised PSPs, as well as DTIs, will be able to bring on board unbanked customers, who will be able to transfer and convert funds seamlessly between regular and CBDC accounts.
eCurrency Mint develops and provides technology that enables central banks to issue digital fiat currency, called e-currency.
The company’s technologies provide e-currencies that are central bank governed and have inherent trust and transparency of digital transactions.
This enables users to get the benefit of using safe and secured e-currencies.