BOJ to pilot digital currency roll-out in August
BOJ Governor Richard Byles makes a presentaion to Kecia Taylor,newly installed and fifth female president of the Rotary Club of StAndrew. Byles was a guest speaker at the ceremony held on July 1.

The Bank of Jamaica (BOJ), now on the cusp of its much-awaited central bank digital currency (CBDC) says that it will pilot a roll-0ut of the service across financial instititions starting next month.

The delayed roll-out of the system, which should have started in May, will commence with a National Commercial Bank (NCB) pilot in which customers will be introduced to the new currency.

“We're currently looking at all the technical sides of the system and we have a sandbox in the bank that we have the whole infrastructure in. As we work through the technical minting [redeeming] of the currency, we have to test it rigorously as a pilot and that we'll do in August.

“In September to December we'll be recruiting more of the banks to come on board and then we'll gradually expand the pilot out into a full-fledged launch of the CBDC,” said BOJ Governor Richard Byles in detailing the roll-out plan for the service.

The governor, who was speaking at a Rotary Club installation ceremony last week, said that the CBDC, which was not the same as the more private based cryptocurrency, will only be sold to licensed commercial banks, deposit-taking institutions (DTIs) and payment service providers authorised by the BOJ. The issuance and distribution of the currency will also be fully integrated with the financial market infrastructure or Real Time Gross Settlement System (RTGS) used by banks.

“Bank of Jamaica will mint and issue CBDC to the authorised financial institutions. The financial institutions will sell CBDC to businesses and individuals at a rate of $1:1 CBDC. However, the financial institutions will hold the CBDC in digital wallet accounts at their respective banks for customers to access in order to make purchases, or receive payments from mobile phone to mobile phone," he stated.

Digital wallets are those electronic payment systems which allow customers to conduct transactions via digital technologies, including mobile phones.

The CBDC, a form of legal tender, will complement the use of bank notes and coins also issued by the central bank.

Byles, speaking about the benefits of using digital currencies, said that it was in most cases far more efficient than cash.

“It's instantaneous and it is a very efficient way of paying, in a way that cash cannot. It will reduce the cost of producing, transporting and securing cash which run into billions of dollars each year. There will also be no need for merchants to find change, as payment can be to a cent,” Byles stated, indicating that in cases where a phone is stolen, the CBDC cannot be accessed without a code, hence offering even more security.

He also called on the assistance of financial institutions and telecommunications companies (telcos) in helping the central bank to reach more customers as well as to attract more of the unbanked population. This, as people who do not have regular bank accounts will also be allowed to access CBDC accounts in a way deemed easier and without the mandatory know your customer (KYC) requirements.

The central bank governor also said that for the service to become mainstream, there will be the need for a far more robust telcos infrastructure coupled with high levels of merchant and consumer acceptability. He said that with Jamaica being among some of the few countries in the world now at testing phase for this digital currency, every effort must be made to ensure its success as another of those winning moves for the country.

“If you are walking around with your CBDC and nobody wants to take it, we'll have a problem. The commercial banks will therefore need to put their shoulders behind the wheel as they promote, adopt and recommend it for use to their customers. We also need Government to support and use CBDCs as much as possible, whether to make PATH, pension or other payments,” Byles said.

BY KELLARAY MILES Business reporter milesk@jamaicaobserver.com

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