The Central Bank of Jamaica commissioned companies providing the latest technological solutions to develop and test potential ways of introducing a digital currency, i.e. CBDC.
According to the Statement, which was published on July 17, companies interested in cooperation are to present a detailed virtual currency implementation plan by August 7, 2020.
Some time ago, the Central Bank of Jamaica created the Finetech Regulatory Sandbox company and it is within this framework that the first tests are to take place. This is to ensure that consumers are adequately protected, as well as their privacy, before the new solutions are introduced to the Jamaican community.
Fiat money instead of cryptocurrency
As BOJ stated, the digital currency they issue is to be fiat money and will have nothing to do with cryptocurrencies.
According to the Bank, a significant difference between CBDC and all cryptocurrencies is the fact that the latter do not fulfill the basic functions of money, are privately issued and are generally not supported by central authorities.
Although the bank does not intend to develop its cryptocurrency, there is no information about whether it plans to use blockchain technology.
Benefits of using CBDC
Once the plan is implemented, individuals and businesses will be able to use CBDC as a means of payment, as is currently the case with cash.
If a viable solution is adopted and implemented, the projected benefits of CBDC for citizens, businesses and the government of Jamaica include increased financial integration. This solution will provide a new way to make efficient and secure payments. For institutions taking deposits, CBDC provides an opportunity to improve their cash management processes and costs.
The bank’s management also wishes to assure the public that bank notes and coins will continue to be issued to facilitate all economic activity.
Exploring the potential of CBDC is an important undertaking for the Central Bank of Jamaica, as digital currencies can prove helpful in creating an efficient digital infrastructure. Thus ensuring faster and safer circulation of money in society.