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JA moves to digital economy

Regional 22 Feb, 2022 Follow News

Jamaica’s digital currency will boost its economy

The Jamaican dollar has wilted in value

Jamaica’s Prime Minister Andrew Holness has announced that the Bank of Jamaica plans to roll out its central bank digital currency (CBDC) after its successful pilot last year.

The Bank of Jamaica said in December that it completed a pilot project that issued JA$230 million (US$1.5m) of the new currency, an effort that comes after a similar project launched by a group of Eastern Caribbean nations.

Holness said: “This will serve as a foundation for Jamaica’s digital payments architecture and will facilitate greater financial inclusion, increase transaction velocity while reducing the cost of banking for the Jamaican people.”

Jamaica’s upcoming CBDC follows the lead made by China, Nigeria, and Venezuela that have deployed CBDCs. Meanwhile, the European Commission has disclosed it will be unveiling a digital euro bill in 2023, and the Federal Reserve is researching its own CBDC project.

Bank of Jamaica worked with National Commercial Bank on its CBDC pilot and a limited number of wallet providers. Jamaica’s central bank issued $230 million worth of the CBDC on 9 August. Holness expects more than 70 percent of the Jamaican population to adopt the CBDC in five years.

Sabrina Cooper, vice-president of retail banking at Sagicor Bank Jamaica, told Jamaica Observer that the CBDC wallet will not be just for leveraging the CBDC.

“Your digital wallet is not just the CBDC, you can have debit and credit cards,” Cooper said. “If you look at what’s happening globally, the wallet is going to look just like your physical wallet in your pocket or in your handbag. It’s going to have your CBDC or some kind of digital currency cash equivalent, credit cards or even prepaid cards.”

Customers sign up for a digital wallet, where they can deposit funds in exchange for digital currency that can then be used in transactions. Other benefits for the public include immediate settlements in comparison to the typical automated clearing house and real time gross settlement transfers. There will also be little to no processing delays and cheaper payments as it will have little to no fees in comparison to credit/debit card payments. It will also be beneficial to the central bank and government as well, due to its centralised nature. The government claims it will be able to decrease money laundering, financing of criminal enterprises, locate tax evaders more efficiently, calculate the exact amount of money in circulation, and have a stronger grip on monetary policy.

Jamaica's digital currency follows a similar program by a group of Eastern Caribbean nations launched last year called DCash. Antigua and Barbuda, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines are now using DCash. In 2020, Bahamas was the first country in the region to issue digital currency.

Sceptics in Jamaica fear potential privacy, ethical, rights, and infrastructural issues.


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