Stakeholder Endorsement Crucial For Implementation Of CBDC – BOJ Governor

Bank of Jamaica (BOJ) Governor, Richard Byles, says stakeholder endorsement and support will be crucial to the successful implementation of the proposed central bank digital currency (CBDC).

Key among these interests that Mr. Byles has identified are the Government, merchants, and consumers.

“The world is looking at us… with [our development of a] central bank digital currency [to determine whether] it will be a success [and what] are the lessons to be learnt from Jamaica. This is a really important programme… so it’s important that we get it right,” the Governor added.

He was speaking during the Rotary Club of St. Andrew North’s recent virtual installation ceremony for incoming President, Kecia Taylor.

Mr. Byles said the Government’s support for the CBDC was needed “as much as possible”, particularly by incorporating it in relevant areas of service delivery.

“So, whether it’s to make [Programme of Advancement through Health and Education] PATH payments [or] to make pension payments, whatever it is that they are doing in terms of making [major] payments…  this is a big way in which the Government can encourage persons to take up CBDC,” he pointed out.

The Governor also emphasised the need for a “high level” of acceptability by merchants who, he noted, comprise a significant percentage of the clientele base of financial institutions, particularly commercial banks.

Mr. Byles noted that one of the challenges encountered in some instances was “to convince them to accept and be prepared to [utilise] CBDC”.

“[We] need the commercial banks [and other financial institutions] to promote it and recommend it to their customers,” he said, adding that he did not anticipate any major challenge in convincing them to embrace it.

“The customers have to like the product, think it’s good for them, and be prepared to take it up and join a bank. That’s a marketing [thrust] that we will [be pushing] at the Bank,” Mr. Byles further said.

He indicated that work is being finalised to commence the CBDC’s pilot implementation in August.

Mr. Byles said technical support for the CBDC’s rollout is being reviewed to facilitate onboarding of the first financial institution – National Commercial Bank (NCB) – to test the system.

He indicated that between September and December, the BOJ will look to onboard more banks, adding that “we will gradually expand the pilot… into a full [rollout] in 2022”.

The CBDC is a form of Central Bank-backed currency and is, therefore, legal tender. It can be exchanged, dollar for dollar, with actual cash, and is issued to licensed deposit-taking institutions (DTIs).

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

According to the Bank, 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.