Bank of Jamaica rolls out its digital currency “Jam-Dex”

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by
Peter Christopher
Central Bank of Jamaica

T&T Guardian – The Central Bank of Jamaica’s decision to pursue its own digital currency is as much an effort to reach the relatively unbanked segment of the population as it is to continue the Western Caribbean country’s efforts to digitize its economy.

The Sunday Business Guardian has reached out to Natalie Haynes, Deputy Governor of the Bank of Jamaica and Chair of the Central Bank’s Digital Currency Implementation Committee (CBDC), to discuss introducing the Jam-Dex to the public Jamaican. She explained that the development of digital currency had a dual purpose.

“We still have a large percentage of the population that remains outside the formal financial system, the financial excluded,” Haynes said.

“And so we wanted, as part of the whole government push for digital transformation, the Central Bank thought that they could issue their own digital currency, which is really just a digital representation of the Jamaican dollar at our citizens, to every citizen especially for those who are now financially excluded, so financial inclusion is a consideration and of course our support for the digital transformation of the whole economy by the government.

After two years of testing the waters, the largest English-speaking country in the Caribbean Sea is rolling out Jam-Dex, the third digital currency in the Caribbean after the Bahamian Sand Dollar which launched in October 2020 and the Eastern Caribbean Deployment of DCash by the Central Bank in Antigua and Barbuda, Grenada, Saint Kitts and Nevis.

Hoping to encourage Jamaicans to adopt digital currency just as early, the Jamaican government offered the first 100,000 subscribers from April 1st JA$2,500 or US$16 to encourage them to get digital wallets for use digital currency.

The incentive was first announced by Jamaica’s Minister of Finance and Public Service, Dr. Nigel Clarke, during the presentation of the country’s budget on March 10. In this presentation, Dr. Clarke used the change to pay his hairdresser.

Jam-Dex is a central bank digital currency that is legal tender unlike cryptocurrency, which is privately issued, generally not backed by a central authority, and does not perform all of the essential functions of money.

Haynes explained that the process behind the eventual selection and eventual development of the digital currency differed from the approach taken by the Bahamas and the ECCB. For one thing, Jam Dex is not powered by blockchain technology like the Sand Dollar and DCash, as Bank of Jamaica made the decision to chart its own course.

“We started with a clean slate, first decided we were going this way,” she said, “we decided this was where we were going and how best to get there.”

Haynes said several options were considered before choosing the digital framework around which their digital currency would be developed.

“We were agnostic (to technology) when we started. We had to go through a procurement process to choose the technology provider for the digital currency. So we put out a request for proposal.

“We had a number of entities, over 60 local and foreign entities, that submitted their bids and when we narrowed it down, eCurrency Mint was the one that was successful.

“They don’t use blockchain technology. And so the lessons learned from the other two entities would be really limited in that regard because they use different technology.

Haynes said the new currency was particularly appealing to those who had become accustomed to using credit and debit cards and had gradually found carrying cash to be cumbersome or, in some cases, dangerous. However, she was wary that much of the Jamaican public was skeptical of digital transactions, and the BoJ had a job to do to make sure Jam-Dex was a safe option.

“Some of them are skeptical, especially those who have never used an electronic means of payment,” she said, “For those who have used it in terms of credit cards, debit cards , they see this as a golden opportunity to replace physical cash, which some of them find a bit inconvenient and, of course, insecure.

“Actually, if you’re using physical money, to pay, let’s say some small merchants, like you have a food vendor or so you should be face to face, you know, to pay people while having a digital wallet , you can pay remotely.

“Of course the security issues in terms of walking around with large sums of money, you know, you can lose it or it can be stolen from you. So that convenience and ease of use, these people find it very appealing. »

The next few weeks and months will prove crucial in gaining confidence in the digital currency. Currently, only the National Commercial Bank of Jamaica has a publicly available digital wallet, with other Jamaican banks expected to join the party in the coming months.

Haynes said that at this time, the BoJ continues to conduct tests to ensure that when the various digital wallets go live, transactions will be smooth. She hopes that by the end of April, these problems can be fully resolved.

During this period, Haynes also looks forward to the required amendments to the Bank of Jamaica Act which will confirm the Bank of Jamaica as the sole issuer of the CBDC and for it to be legal tender in Jamaica.

Haynes explained that the switch to coinage would not only save citizens from having to travel with cash, but also save the government time and money in terms of printing new banknotes.

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Sylvia B. Polson