Sagicor Bank Jamaica Limited (SBJ) has been added as the third wallet provider for Jam-Dex, Jamaica’s central bank digital currency (CBDC).

This was revealed in the Bank of Jamaica’s (BOJ) 2023 annual report, which noted that three other commercial banks are at varying stages of the wallet provider onboarding process. The other two digital wallet providers are National Commercial Bank Jamaica Limited (NCBJ) and JN Bank Limited.

Jam-Dex was officially minted in August 2021 and became legal tender in June 2022. At the end of 2023 the BOJ minted a total $276 million in Jam-Dex, but Approximately $257.21 million of the CBDC is in circulation with $208,000 Jam-Dex brought into circulation last year. At present, $148 million in Jam-Dex is in the hands of the public while the remaining $109.21 million Jam-Dex is held by the wallet providers.

Despite there now being three wallet providers, NCBJ, through its subsidiary TFOB (2021) Limited, is the only wallet provider offering Jam-Dex to the public through the Lynk mobile application. In turn, there were 263,341 registered wallet users and over 3,900 merchants on the Lynk app at the end of 2023.

Under the Government’s incentivisation programme, which saw the public gaining access to Jam-Dex in June 2022, the first 100,000 users to open Jam-Dex wallets received $2,500 in digital currency. As part of this programme, $250 million Jam-Dex was issued to NCBJ, while JN Bank had $1 million Jam-Dex at the end of 2022.

With there being some hesitance by merchants with existing point-of-sale (POS) machines to sign up with a digital wallet provider to accept Jam-Dex, the BOJ is working to allow Jam-Dex to be used at POS terminals. The idea would be to have a dynamic QR code on the modified POS devices to accept Jam-Dex. This is based on the Jam-Dex strengthening plan which will see collaboration with a technology provider by the end of March 2024 to bolster merchant acceptance.

The BOJ is also seeking to make deposit-taking institutions have Jam-Dex as a percentage of their monthly currency order, which was set to have taken effect in January 2024. This is against the backdrop of the BOJ working on improving Jam-Dex to facilitate government payments in the form of social and welfare beneficiary payments.

In December 2022, over $600,000 in Jam-Dex was paid to people in St Andrew North Western and St Andrew South Eastern under the Government’s Employment Generation (Christmas work) Programme. Focus group sessions were held in June 2023 with social and welfare beneficiaries in collaboration with the Ministry of Labour and Social Security.

With respect to the BOJ’s regulatory sandbox, two applications from two entities were received, which pushed the number of applications to 40 from 37 entities since the sandbox was established in March 2020. Twenty-three applications to test products within the sandbox have been approved, including digital wallets, an e-commerce solution, prepaid and debit card solutions, POS mobile applications and closed-loop digital gift card solutions.

Financial holding companies receive licences

According to the BOJ annual report, the central bank also issued three new financial holding company licences to JMMB Financial Holdings Limited, Sagicor Group (Jamaica) Limited and VM Financial Group Limited. At the start of 2023, only NCB Financial Group Limited (NCBFG) and JN Financial Group Limited were licensed financial holding companies.

The BOJ expects to process the remaining three applications from Scotia Group Jamaica Limited, GK Financial Group Limited and Barita Financial Group Limited by June 2024. This will be done by the supervisory committee which comprises Governor Richard Byles, Dr Wayne Robinson, Dr Jide Lewis, Shirley-Ann Eaton, and Professor David Tennant.

Under the Banking Services Act (2014), where two or more financial companies of a financial group includes a deposit-taking institution (DTI) — a commercial bank, merchant bank or building society — the legislation requires for the reorganisation of all regulated financial entities into a regulated financial holding company and another holding company to own the non-regulated subsidiaries or interests. This allows for consolidated supervision by the BOJ of the financial entities.

A recent example of this reorganisation is the VM Building Society which held all the subsidiaries and associate interests in its group. On February 1, 2023, the VM Financial Group became the parent company of all financial subsidiaries and financial associates while VM Innovations Limited became the parent company of the non-financial subsidiaries. VM Group Limited, the company owned by its members, became the ultimate parent of the VM Financial Group and VM Innovations.

Following the gazette of The Banking Services (Financial Holding Companies) (Licensing Application Form) Supervisory Rules, Resolution in October 2019, the BOJ granted the first FHC license to NCBFG in May 2021 when the licensing regime was operationalised.

The GK Financial Group already holds the financial entities within GraceKennedy Limited while the Barita Financial Group’s reorganisation is pending. The first hearing was heard on February 20 with Cornerstone United Holdings Jamaica Limited present. The proposed reorganisation would require the shareholders of Cornerstone Trust & Merchant Bank Limited and Barita Investments Limited to vote on the proposed scheme of arrangement. Barita’s 2023 annual report which was due by January 28 is still pending and should be submitted by April 30. The annual report would contain the notice of annual general meeting (AGM).

The BOJ is set to become the prudential financial regulator for the Jamaican financial system at a later date under a twin peaks model. There are currently different forms of regulation that will expand the BOJ’s scope of oversight. The Co-operative Societies Amendment Bill would shift regulatory oversight from the Department of Co-operatives and Friendly Societies — an agency within the Ministry of Industry, Investment, and Commerce — to the BOJ, while the The Credit Unions (Special Provisions) Bill would define the licensing and prudential supervision by the BOJ.