Court order required for tracking digital transactions
Bank of Jamaica located in Kingston.

THE Bank of Jamaica (BOJ) says it anticipates savings from the expansion of digital currency use as the cost of producing digital is much less in the long run than for paper and coins.

However, unlike physical currency with unique numbering which can be tracked, apart from wallet holders and those who issue them, those interested in tracking the digital transactions will have to get a court order to do so.

The BOJ told the Jamaica Observer, “Due to the fact that CBDC [central bank digital currency] has a digital footprint, the ability to track exists. What's important to note is that the customers' personal information and transactions can be monitored by the wallet provider. “However, this information is not shared with the Bank of Jamaica and any other authority due to customers' confidentiality and data protection. This information can only be shared under a court order. Bank of Jamaica will only capture general data for economic analysis,” it was outlined.

A total of $230 million dollars in digital currency, currently referred to as CBDC, has been minted under the central bank's CBDC pilot exercise which ends in December 2021. An official name for the currency is to be revealed soon. Following a successful pilot which ends 31 December 2021, national roll-out is expected in 2022. Use cases (person-to-person, person-to-business and GOJ welfare payments) and interoperability of existing retail payment systems are being tested in the pilot.

The BOJ expects cost savings to arise from its proprietorship of the technology involved in producing digital currency. The production of physical currency is done by a third party via a procurement process. The Bank of Jamaica instructs the third party on the amount to be printed (bank notes) and minted (coins). For digital currency, however, the bank by virtue of the technology (which is owned by the bank), has the capacity to mint on its own. In terms of cost, the minting of digital currency is lower than the cost to acquire physical currency through third-party providers.

CBDC is a digital form of central bank-issued currency and therefore is legal tender. It is not to be confused with cryptocurrency, which is privately issued, generally not backed by a central authority, and does not

perform all the essential functions of money. As legal tender, CBDC can be exchanged dollar for dollar with physical cash. Households and businesses will be able to use CBDC to make payments and store value, as now obtained with cash. CBDC is backed by the issuing central bank and issued to authorised financial institutions to include deposit-taking institutions on a wholesale basis just as now being done with physical currency.

For digital transactions, the issue of denomination such as a ten cent piece or $5000 note is not applicable. Denomination only applies to physical currency. Digital currency never takes physical form. It always remains on a computer network and is exchanged via digital means. For example, instead of using physical dollar bills one would instead make purchases by transferring digital currency to retailers using a mobile device. CBDC, when deemed legal tender for general use, will enable transactions of any kind except cross-border payments, the BOJ indicates.

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