Jamaica Readies For CBDC Later In 2021

Among the countries looking at central bank digital currencies (CBDCs) is Jamaica, CoinDesk reported.

Nigel Clarke, Jamaica’s minister of finance, speaking at the annual National Budget Debate address to the legislature on March 9, said the CBDC will see a pilot by December before the official launch in 2022, according to CoinDesk.

But he made no bones about what it would be, saying the CBDC would not be a cryptocurrency and is “not to be confused with cryptocurrency, which is privately issued and not backed by a regulatory authority,” CoinDesk reported. He said it would be legal tender and interchangeable with the Jamaican dollar on a one-to-one basis.

Clarke said businesses will be able to make payments and store value at no cost. Customers, the report stated, will be able to do business with others directly from their mobile phones, bringing “tens of thousands” of Jamaicans into the financial system from being either unbanked or underbanked.

Jamaica has been working on the CBDC project since early last year, and in May, the Bank of Jamaica announced on Twitter that it was looking into the matter internally as part of its newly introduced FinTech regulatory sandbox. The month after that, the bank formally invited other CBDC providers to “develop and test” potential solutions, CoinDesk reported.

Early in 2020, the Central Bank of Jamaica said it would be regulating financial companies more closely after confirming it would be abiding by the Principles for Financial Market Infrastructures (PFMIs). The roster included various types of transactions, incorporating central counter parties and trade repositories, securities settlement systems, and central securities depositories.

FMIs, the bank said, are crucial to the country’s financial system and the broader economy. The government said they contribute to overall financial growth and those improperly regulated could end up causing difficulties for the broader economic stability.