The Bank of Jamaica (BOJ) is advancing plans to develop and implement the use of a central bank digital currency (CBDC).
In a press release on Friday, the BOJ issued an invitation to “interested CBDC providers to develop and test potential CBDC solutions in its recently established Fintech Regulatory Sandbox.
“The Sandbox provides a controlled environment where technological financial innovations such as CBDC can be tested for viability while ensuring adequate consumer protection and data privacy before any introduction to the Jamaican economy,” the release further explained.
According to the BOJ, a CBDC is a digital form of central bank-issued currency and, therefore, is legal tender. The bank also noted the distinction between a CBDC and cryptocurrency.
“It is not to be confused with cryptocurrency, which is privately issued, generally not backed by a central authority and does not perform all the essential functions of money. As legal tender, CBDC is fiat currency, which means it can be exchanged dollar for dollar with physical cash.”
“If a viable solution is adopted and introduced, the anticipated benefits of CBDC for Jamaican citizens, businesses and the Government include increased financial inclusion.”— Bank of Jamaica
As such, individuals, households and businesses can use the digital currency to make payments for goods and services, as well as hold their value in savings.
A CBDC also has the backing of the issuing central bank and issued to licensed deposit-taking institutions on a wholesale basis, like physical currency.
“If a viable solution is adopted and introduced, the anticipated benefits of CBDC for Jamaican citizens, businesses and the Government include increased financial inclusion, as it will provide another means of efficient and secured payments. For deposit-taking institutions, CBDC presents an opportunity to improve cash management processes and costs,” the central bank shared.
The BOJ, however, pointed out that it plans to continue issuing banknotes and coins to facilitate all forms of economic activity.
Still, the bank said it remains committed to the development of the retail payments infrastructure and Jamaica’s transition to a digital economy in which consumers can make and receive payments, any time, any place, using any convenient device.