In response to the statement by the Bank of Jamaica (BOJ) indicating that the ministry of finance and public service is awaiting upgrade of automated teller machines, also called automated banking machines, for the release of new currency, local commercial banks and other financial institutions indicate that they are advanced in planning for the change.

The Victoria Mutual Group told the Jamaica Observer, “The Jamaican Government has announced an initiative to replace and upgrade local currency notes with more durable and secure polymer. These are expected to be in circulation in 2023. The existing paper notes currency will be gradually phased out while a new $2,000 note will be introduced.”

“VM Building Society will not require a change of machines but will be upgrading components of our equipment to support the new notes. The Bank of Jamaica is providing guidance on the developments as representatives from all institutions are invited to meetings where updates are provided.”

The group added, “VM Building Society’s trusted ABM provider, which partners with several other local financial institutions, is undertaking the upgrading exercise for the organisation.”

The NCB Financial group stated, “ABM vendor, PBS, will do the machine upgrade and they will be working with us to test the new notes from the BOJ, as part of the process to execute the ATM upgrade.”

The BOJ in its 2021 report indicates the number of installed automated banking machines (ABMs), as reported by deposit-takers in Jamaica, decreased by 0.3 per cent (two terminals) to 793 in the year ended.

Approximately 15.7 million transactions valued at $167.6 billion were processed at ABMs through the MultiLink network during the 2021.

Owen W R Francis, director of retail banking channels at CIBC FirstCaribbean, shared with the Business Observer, “As part of the ongoing maintenance of our ABMs, they will be updated with new currency templates by our technology team to facilitate acceptance of the polymer notes to be issued by the central bank. This therefore will not result in a replacement of the existing ABMs.”

The GraceKennedy Group stated, “First Global Bank advises that our machines will be reconfigured, not replaced, to accept the new notes. The cost of this system reconfiguration will be borne entirely by the bank.”

JMMB group told the Business Observer, “JMMB Bank’s ATM machines will not need to be replaced. Instead, they will be updated so as to be able to process the new polymer notes. This is an investment and activity that we will be undertaking. We understand that each bank in Jamaica will have to do their respective transitions, with their respective machines.”

Close to $200 billion in notes that are currently in circulation are set to be withdrawn as the BOJ gets ready for the introduction of new polymer notes in the country.

Finance Minister Nigel Clarke first publicised during the budget debates in March that new polymer notes will replace the existing ones which are mostly made of cotton this year.

Jamaica currently has five notes in circulation — $50, $100, $500, $1,000 and $5,000 notes. A sixth, the $2,000 note, will be introduced also. The $2,000 note is being introduced in order to make it easier for the settlement of cash transactions.

According to the central bank, as at November 16, 2022, there were 252 million pieces of notes in circulation in Jamaica with a total value of $198.3 billion. Of that, the majority, $161.75 billion, is in the hands of the public, while $43.2 billion is held in banks.

Dr Wayne Robinson, senior deputy governor at the BOJ, shared, “An equivalent amount of new series is available to replace the current series. Note, however, that the current series of banknotes will remain legal tender until Bank of Jamaica makes a decision regarding demonetisation of same.”

The BOJ indicates that both Jam-Dex — its central bank digital currency (CBDC) — and physical cash will co-exist in the payment space in the near to medium term for those persons wishing to still use cash as a means of payment.

The power of polymer, new security features

The BOJ notes that the upgrade of Jamaica’s banknotes is aimed at enhancing the security of the banknotes to combat counterfeiting, noting “counterfeiters are now using more sophisticated technology to threaten banknote security worldwide. The Bank of Jamaica has enhanced the integrity of our banknotes by incorporating state-of-the-art security features in the new series.”

The notes are also expected to better satisfying the needs of the visually impaired. Each of the current banknotes has one feature which is dedicated to the visually impaired, that is either large numbering or tactile printing, recognised through touching and feeling.

It is noted that because of the cotton substrate used, the effectiveness of these features on the current banknotes decreases over time. Consequently, this new banknote series includes an upgrade of the substrate which will allow for the longevity of the features for the visually impaired. In a March interview, deputy governor for banking, currency operations and financial markets infrastructure at the BOJ Natalie Haynes said the polymer substrate will last an average of six years compared to the cotton substrates which last four years. The fact that the polymer substrate lasts longer is expected to bring savings to the BOJ.

“As a result, going forward, the banknote order quantities will be lower, with less frequency relative to current practice, thereby yielding cost savings to the central bank. Should the need arise for destruction of banknotes, arrangements are being made for disposal of the polymer waste without compromising the environment.”

Haynes in March said the BOJ spends about $1.4 billion to order banknotes each year though she would not be drawn to say how much these new notes will cost. However, she admitted then that the initial cost of ordering the new notes will be higher given they are more expensive to produce and there are now six denominations instead of five.

The new notes will also aim at ensuring a clear distinction between the different denominations. The BOJ notes, “There are currently concerns among members of the public that the $500 and $5,000 banknotes are not easily distinguishable especially in low-light conditions. The redesign of the banknotes ensures that each denomination is clearly distinguishable given the distinct colours.”