One of the critical challenges raised in the distribution of the Jamaican Government’s CARE package was that of reaching the unbanked — the term used for those without accounts at commercial institutions.

The Bank of Jamaica (BOJ) has reached out to partners in financial technology for a solution and has given them an August 7 deadline to indicate interest in testing the BOJ’s Fintech Regulatory Sandbox.

Dr Justin Ram, CEO of the newest Caribbean fintech startup GSEC, has welcomed this approach by the BOJ. “What the Bank of Jamaica has indicated here is that they are looking at the future. They can see where the trends are heading. At this stage, this is a bold move in the right direction. Other central banks in the region have gone in that direction.”

Another indicator that the Jamaican central bank is looking ahead is its clearly stated position on the role it sees cryptocurrencies playing. The issue is one that central banks around the world have grappled with as digital currencies emerge. The BOJ’s view is that a bank-issued digital currency would be a fiat currency, and not to be confused with cryptocurrencies. The bank was clear to stress that cryptos do not perform all the essential functions of money, and they are not generally backed by a central authority.

For his part, Dr Ram stressed that it was essential to appreciate the real long-term value of the digital currency and its particular significance to the Caribbean. “One of the things we will be able to do with financial technology is to bank with the unbanked. A considerable portion of our Caribbean population don’t have any bank accounts… and so are operating outside of the formal system,” he explained. “You will be able to say, anyone, you can control all your currency in the palm of your hand.”

These technology transformations point to a revised role for both the commercial and central banks of the region. “Banks [will] no longer have to manage your bank accounts because you are able to do that via your phone,” added Dr Ram.

As he sees it, commercial banks will need to decide how they will handle the new data and analytics available to improve their operations.

He suggests that, for central banks, it will be a further adjustment in their management of monetary policy and notes that there is a real possibility that, if a central bank decides to change its monetary policy, the end result will be a policy more potent than before, since it would not have to go through all the intermediaries required under the existing system.

WATCH Dr Justin Ram on The Future of Money, www.jamaicaobserver.com; www.caribbeanbusinessreport.com