CBDC for domestic use only
The Bank of Jamaica (BOJ) remains firm that its digital currency will be for domestic use only.
In an update provided to the Jamaica Observer, it said it is also not considering interoperability with any other CBDC or usable on any other digital wallet apart from deposit-taking institutions and payment associates in its own ecosystem.
The CBDC, which is yet to be named publicly, will be convertible one-to-one with Jamaican banknotes and coins. The BOJ added, “the purchase of foreign currency using CBDC will be conducted in the same way as done with paper currency.”
Just last week, Prime Minister Andrew Holness said he anticipates up to 70 per cent of the population will use digital currencies in Jamaica in five years.
The central bank disclosed that it has hired a marketing company to support national roll-out.
The BOJ told the Caribbean Business Report, “Digital currency platforms are broad in scope and include cryptocurrencies and central bank digital currency (CBDC) platforms. A central bank digital currency (CBDC) is a digital form of central bank issued currency and is therefore legal tender. Only CBDC wallet providers will be able to connect to the CBDC platform for the Bank of Jamaica to issue and redeem CBDC.”
The BOJ outlined that CBDC will be available for use on payment platforms offered by wallet providers (deposit-taking institutions and payment service providers ). These systems must be connected to the CBDC platform.
It noted that interoperability is an integral part of the CBDC project and supports connectivity between existing payment systems.
At this point, interoperability, however, is focused on domestic systems only. The bank, affirming that Jamaica’s CBDC is only for domestic use, stated that the current focus is to build critical mass for the domestic CBDC ecosystem.
It noted that challenges in cross border interoperability and usage include undesirable volatility in foreign exchange rates; loss of oversight power by domestic authorities; and mechanisms to support interoperability, such as, different technologies.
Turning to the pilot completed on December 31, 2021, the bank stated that there is no information on transaction volume and value at this time.
It outlined that the next milestone for CBDC is national roll-out. The BOJ said that a National Survey was conducted December 2021 which will provide more information on users’ expectations.
