Work Advanced To Commence Pilot Implementation Of CBDC In August

Bank of Jamaica (BOJ) Governor, Richard Byles, says work is being finalised to commence pilot implementation of the proposed central bank digital currency (CBDC) locally, in August.

Mr. Byles indicated that technical support for the CBDC’s rollout, among other inputs, are being reviewed to facilitate onboarding of the first financial institution – National Commercial Bank (NCB) – to test the system.

The Governor said 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”.

He was keynote speaker at the Rotary Club of St. Andrew North’s virtual installation ceremony for incoming President, Kecia Taylor.

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.

The BOJ’s Fintech Regulatory Sandbox is being utilised in the process of the CBDC’s implementation.

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 the amendment of existing regulations.

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.

The central bank indicates that CBDC will be issued solely for domestic use, adding that a hybrid model will be used.

In this regard, the BOJ says it will not only be issued 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 and DTIs will be able to onboard unbanked customers, who will be able to transfer and convert funds seamlessly between regular and CBDC accounts.