The Bank of Jamaica (BOJ) is currently working to modify the existing payment infrastructure to create a more accommodating environment for the acceptance of Jam-Dex (Jamaica Digital Exchange), Jamaica’s central bank digital currency (CBDC).

This was revealed in an article titled “Richard Byles on Jamaica’s inflation – targeting baptism of fire” on centralbanking.com — a financial website with emphasis on central banks, international financial institutions and financial market infrastructure and regulation — which was published last Wednesday from an interview done on November 9 in St Kitts.

The BOJ launched Jam-Dex in July 2022 with TFOB (2021) Limited, operator of the Lynk mobile application, being the sole digital wallet provider for the digital currency. JN Bank Limited was onboarded in December 2022 to be a digital wallet provider with JN Pay, but it has yet to make it available to the public. The BOJ mentioned in August that a third digital wallet provider was to enter the market soon and into the BOJ’s regulatory sandbox. Several other financial groups have also announced intentions to develop digital wallets but have yet to publish anything concrete, especially based on the US$500,000 plus price tag to develop the digital wallet.

“There are about 260,000 wallet-holders now. It was successful to the extent there are people with a wallet to use Jam-Dex, but it was not entirely successful in that many merchants want to use their existing point-of-sale [POS] machines that accept credit and debit cards to handle Jam-Dex and that has caused some delay on onboarding merchants to accept Jam-Dex as a form of payment. They do not want to have to contend with another infrastructure channel,” said BOJ Governor Richard Byles.

Jam-Dex was introduced to the population in April 2022 when the Government of Jamaica gave $2,500 worth of Jam-Dex to the first 100,000 users which totalled $250 million Jam-Dex . Also, TFOB and JN Bank received some amount of Jam-Dex from the BOJ when they were added as wallet providers as well.

The concept of Jam-Dex has resonated with companies such as TransJamaican Highway Limited working to drive an 80 per cent cashless goal by 2028 which would include persons being able to use Lynk in the lanes. It is working with TFOB to also make Jam-Dex an option to handle payments from the numerous transactions it processes each year on Highway 2000.

Even Aldo Antonio, co-founder and acting executive chairman of the National Transporters Alliance Group (NTAG), has been lobbying amongst transport owners to embrace Jam-Dex as a means of improving the efficiency of their operation and to reduce costs and security risks.

However, everyday commercial acceptance has not been as widespread based on the current reception observed by the BOJ nearly 18 months later. Despite this initial response, the BOJ is planning to work with the market to improve acceptance. Jamaica had 50,085 POS machines installed at the end of June 2023.

“Merchants that use a POS want to have that POS modified to be able to take the dynamic QR code for Jam-Dex. Bank of Jamaica has undertaken to get a tech provider to come in to put the QR code on the more modern of these 10,000 POS machines. We are willing to form a joint venture to finance that along with the DTIs to replace the old POS machines, so that they can take the QR code. Once that is done, we will have created an ecosystem where we can really launch a mass campaign for Jam-Dex. Once the ecosystem is prepared, with the merchants having the appropriate POS machines, we will launch a mass retail campaign to recruit more persons to Jam-Dex. I think it will be successful, eventually,” Byles added on the plans.

CBDC roll-outs have been mixed across the region and world as different central banks work on the technological change. The Eastern Caribbean Central Bank (ECCB) CBDC programme was paused in February 2022 as the platform for DCash crashed. The ECCB is preparing for a full commercial deployment of DCash2.0 as it plans to conclude its pilot and launch it in 2024. The pilot platform closed on January 12 with the transition ongoing for DCash2.0.

The Bahamas Sand dollar was the first CBDC implemented in the Caribbean in October 2020. The Digital Euro Association Blog had a publication titled “Lessons from the first implemented CBDC: the Sand dollar” which highlighted that up to June 2023, the adoption rate was still relatively small to the overall money supply.

Regional payment integration

Unlike the European Union where the euro is used among 20 member states, Caribbean Community (Caricom) members have their own regional currencies and monetary systems. There has been discussion for some time about considerations for regional stock exchanges, but a critical question which occurs is not only about legislation, but also the way transactions would be settled.

Following the 61st Meeting of the Caribbean Community Committee of Central Bank Governors held in Jamaica from November 2-3, the regional banking heads pushed ahead on advancing work on a Caricom payments and settlement system. This would be done on a pilot by leveraging the technology of the Pan-African Payments & Settlement System of the African Export-Import Bank.

“We support it and we would participate although there are still some questions to be answered. How are those settlements to be made? Is it going to be made in international currency or local currencies? If, let’s say, Trinidad and Jamaica were to settle trade with Jamaica taking Trinidadian dollars and Trinidad taking Jamaican dollars and the trade was equal, there would be no problem. But once the trade is lopsided, it raises the questions of what do you do with your surplus Trinidad and Jamaican dollars — and can you settle that in US dollars or not? These are issues still to be worked through. However, in concept and in theory we are supportive of it,” Byles closed.