A public education and promotional campaign to encourage the use of central bank digital currency (CBDC) by the public and merchants is ratcheting up in Jamaica.
The Caribbean island’s central bank went live with Jam-Dex last month, with the government providing an incentive payment of J$2,500 (about £13.50/US$16.30) to the first 100,000 Jamaicans to sign up (create a digital wallet for the CBDC). The state’s cash carrot, which is likely to catch the attention of other jurisdictions considering whether they should introduce a CBDC and how to encourage people to use it, appears to have been a smash hit with the threshold quickly hit and 100,000 Jamaicans receiving their digital cash.
The only digital wallet provider providing CBDC transactions in Jamaica at present is National Commercial Bank (NCB), with Jam-Dex flowing through its ‘Lynk’ digital wallet.
Lynk-led marketing activity to encourage sign-up has included ‘virtual townhalls’ to encourage retailers to accept CBDC, as well as (digital) cash giveaways capitalising on national celebrations marking 60 years since Jamaica gained independence from the United Kingdom.
A six-week roadshow dubbed ‘Mek Di Lynk’ has taken place involving dancers and brand ambassadors.
The above tweet from Jamaica’s Nationwide Radio shows Jamaica’s PM Andrew Holness (second from left) involved in ‘Mek Di Lynk’ activity with Lynk’s chief executive Vernon James (third from left), chief growth officer Denise Williams (left), and brand and communications manager Kemoi Burke (right)
Lynk user and merchant numbers
In launching Jam-Dex, Jamaica has become the biggest nation in the Caribbean to go live with a CBDC. In October 2020 the Bahamas launched the ‘Sand Dollar’ to become the first nation worldwide to launch a CDBC and the Eastern Caribbean Central Bank launched ‘DCash’ as the first CBDC within a currency union (the Eastern Caribbean Currency Union – ECCU) last year.
Jamaica’s finance minister Nigel Clarke announced in March that the first 100,000 Jamaicans establishing wallets after 1 April would receive the digital deposit from the government. He announced on 30 June that this threshold had been hit.
The number of Lynk users has since grown further. More than 120,000 users are now able to use Jam-Dex to pay for goods and services, while there are more than 2,300 merchants on the Lynk platform, according the Jamaica Observer (on 26 July).
Clarke said in March that four more wallet providers were expected to be onboarded by the Bank of Jamaica (BoJ) by June (to bring the overall number to five). Progress is expected here shortly.
According to government agency the Jamaica Information Service, Clarke said in the House of Representatives (Jamaica’s lower house) on 28 June that “the next phase is for merchants to be signed up – that’s the key phase; merchants across communities who sell all manner of goods, and [when] it begins to take off, have more banks take it up.”
The above tweet is promoting a recent Lynk ‘virtual townhall’ meeting (via Zoom) aimed at explaining Jamaica’s CBDC to merchants
Seeking to capitalise on its status as a sponsor of Jamaica’s ‘60’ celebrations, Lynk – which promotes itself as ‘built by Jamaicans for Jamaicans!’ – also gave J$250 (about £1.35/ US$1.63) to the first 60 people who signed up and were ‘fully onboarded’ to Lynk, among similar 60-themed offers, daily up to 6 August.
‘Working on increasing’ weekly transaction limit
Jamaica’s government set out a timetable for the introduction of a digital Jamaican dollar in March 2021, with Clarke talking enthusiastically about the possibilities of CBDC in parliament (worth watching on YouTube – the CBDC section starts at about 01:19:50). BoJ announced the appointment of eCurrency Mint as its CBDC technology provider the same month.
Notable milestones after that included the ‘minting’ of the first batch of Jamaican CBDC last August: J$230 million dollars (about £1.1m)-worth of CBDC being issued to deposit-taking institutions and payment service providers (PSPs). 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.
BoJ declared its pilot programme successful, with NCB having on-boarded 57 customers (four merchants and 53 consumers) during tests and the completion of some CBDC transactions during a special event. The winners of a competition for a name, tagline (‘No cash, no problem!’) and logo for the CBDC were announced in February. Jam-Dex is short for ‘Jamaica Digital Exchange’.
The passage of the Bank of Jamaica (Amendment) Act 2022 by the Senate, the Jamaican parliament’s upper house, in June effectively fired the starting-gun for public issuance of Jamaica’s CBDC.
The current weekly transaction limit is J$175,000 (about £945/US$1,145). The Lynk website states it is ‘working on increasing that soon while keeping with the Bank of Jamaica regulations’.
The use of the J$2,500 incentive to encourage sign-up is a tactic that will catch the eye of other governments and central banks.
During a panel session titled ‘How can CBDCs help deliver public good?’ at the Global Government Fintech Lab on 1 June, Rainer Olt of Estonia’s central bank – which has fed into Eurosystem research into a potential digital euro – said he was interested in the experience to date of the Eastern Caribbean Central Bank (ECCB)’s blockchain-based DCash. This became the first CBDC live within a currency union more than a year ago (the ECCB is the monetary authority for eight islands).
“What I find interesting is that they [ECCB] are solving an issue because their payment system is not so developed – now they have a faster, better payment system,” Olt said. “But they have encountered an issue building on an external platform – they were offline for two months,” he continued – a reference to DCash suffering a service interruption triggered by a ‘technical issue and subsequent necessity for additional upgrades’ during the first quarter of the year.
Olt added that his understanding was that DCash user numbers were (at the time), relatively small (120 merchants accepting DCash and about 4,000 people using it). “So, I think there are some lessons to be learned from these experiences,” he said.
Greater variety and magnitude of CBDC promotion continues to be provided by China, where authorities have been stepping up efforts to promote the digital yuan.
At Global Government Fintech’s event Olt mentioned the Chinese experience. “I like the [CBDC] solution they have built, and they actually have 260 million [digital] wallets opened,” he said. “But, looking at the details, there are only 47 cents within each wallet if you divide it [up]. So, in numbers of wallets it seems like a success, but in practical use probably there are also lessons to be learned, because if it’s something that solves a concrete market issue in the retail field, then the usage should be higher.”
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‘Jamaica prepares for Jam-Dex as CBDC recognised as legal tender’ – our news story (28 June 2022) on the passage of the Bank of Jamaica (Amendment) Act 2022 by the Senate
‘Jamaica’s central bank digital currency sprints forward: Natalie Haynes interview’ – interview (4 February 2022) with the BoJ’s CBDC implementation committee chair
‘Jamaica to launch digital currency after pilot success’ – news story (5 January 2022) on the BoJ announcing that its eight-month CBDC pilot project had been successful, with activities having included National Commercial Bank on-boarding a small number of consumers and merchants
‘Jamaica sets out digital currency ambitions’ – news story (23 March 2021) on the government setting out the timetable for a CBDC’s introduction and providing specifics