Home Digital Currencies Jamaica to launch digital currency after pilot success

Jamaica to launch digital currency after pilot success

Jamaica: National Commercial Bank (NCB) has been involved in the CBDC pilot | Credit: nigelat; Pixabay

Jamaica is looking to start the national rollout of a central bank digital currency (CBDC) during the first quarter of this year, having completed trials.

Bank of Jamaica (BoJ) announced last week (31 December) that its eight-month CBDC pilot project was successful, with activities having included National Commercial Bank (NCB – a private bank) on-boarding a small number of consumers and merchants, as well as the completion of closely scrutinised retail CBDC transactions during a special event.

The BoJ’s announcement rounded off a year during which the island emerged as an international frontrunner in its explorations of the possibilities of state-backed digital money. The Caribbean island’s government set out a timetable for the introduction of a digital Jamaican dollar in March 2021, with the BoJ announcing shortly afterwards that it had selected eCurrency Mint as technology provider.

Other activities during the pilot included the ‘minting’ of the first batch of Jamaican CBDC: J$230 million dollars (about £1.1m)-worth of CBDC was minted on 9 August to be issued to deposit-taking institutions and payment service providers.

The central bank issued J$1 million-worth of CBDC to its own staff the following day (10 August) and then, on 29 October, issued J$5 million-worth of CBDC to NCB – the first issuance of Jamaica’s pilot CBDC to a deposit-taking institution.

NCB on-boards merchants and consumers

NCB, described as the pilot’s ‘first’ digital wallet provider, on-boarded 57 customers during the pilot period: four (small) merchants and 53 consumers. The customers undertook person-to person, cash-in and cash-out transactions through 37 accounts and completed transactions with merchants such as craft jewellers and clothes boutiques at an NCB-sponsored ‘Market on the Lawn’ event in December.

NCB, which is headquartered in capital Kingston, will continue on-boarding its existing customers and new customers to enable them to transact in CBDC, while two additional wallet providers, which are now conducting virtual simulation testing, will be able to order CBDC from the BoJ and distribute it to their customers, according to last week’s announcement. In addition, testing of transactions between customers of different participating wallet providers is due to take place.

The statement published last March on Jamaica’s preparations for a CBDC contained a section entitled ‘Choice of technology – not blockchain’, which explained that the island’s CBDC would be integrated with the central bank’s Real Time Gross Settlement System (RTGS), JamClear. 

‘It is this consideration and prerequisite that led to BoJ choosing a non-blockchain CBDC option,’ the announcement said. ‘Not using the blockchain technology that is often associated with CBDCs is not because of any major concerns with blockchain, but rather that BoJ is mindful of the importance of utilising a technological solution that would as seamlessly as possible interface with the country’s payment infrastructures. Consequently, the solution that BoJ has opted for adapts to traditional technology which is easily integrated with the bank’s RTGS.’

A public competition has taken place for a name, tagline, logo and image design for the CBDC. Winners are yet to be announced.

Another Caribbean island nation, the Bahamas, launched the first fully deployed version of a fiat currency in October 2020. Continuing to push ahead with its pro-digital strategy, the Central Bank of the Bahamas last week began consultations with banks, credit unions and other payment services providers on a strategy to eliminate all use of domestic cheques by the end of 2024.

Mexico aims for CBDC by 2024

Mexico’s government, meanwhile, has announced that the country will have a CBDC within the next three years.

The G20 member nation’s central bank Bank of Mexico (Banxico) is planning ‘to have its own digital currency in circulation by 2024’, according to a brief statement on the government’s presidency’s Twitter account.

The tweet (Spanish language on 30 December) added that ‘these new technologies and next-generation payment infrastructure are extremely important as options of great value to advance financial inclusion in the country’.

Mexico has to date largely had a relatively low profile in commentary around the possibilities of CBDC. But further – presumably more detailed – announcements about the prospect of a digital peso will be closely scrutinised given the economy’s size. With a population of about 129 million, Mexico is the world’s tenth largest country by population.

Media reports have suggested that the government took its cue to make the short CBDC announcement from comments made by Bank of Mexico deputy governor Jonathan Heath, who is quoted as saying during an online conference held earlier during the month that “perhaps by the end of 2024 at the latest we should have [the CBDC] operating perfectly well.”

Heath, however, took to Twitter hours after the government’s announcement, tweeting (in Spanish) that he ‘imagined that this information [the government’s tweet] comes from the annual report on the exercise of powers conferred by law for the transparency and regulation of financial services, which Banxico delivered to Congress on 16 December (page 66)’.

*** The National Bank of Kazakhstan on 15 December published ‘Digital Tenge project: white paper on project results’, a 99-page update on its CBDC explorations. The central bank states that a decision to introduce a CBDC in the central Asian state will be made ‘at the end of 2022’. 

FURTHER READING

=>>> Global Government Fintech’s dedicated ‘Digital Currencies’ section <==

‘Jamaica sets out digital currency ambitions’ – our news story (23 March 2021) on the government setting out the timetable for a CBDC’s introduction, as well as providing specifics on technical aspects

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Ian is editor of Global Government Fintech and also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo.