Mr. Richard Byles, the Governor of the Bank of Jamaica (BoJ) has called on deposit-taking institutions (DTIs) and merchants, to accept the central bank digital currency (CBDC) as a means of settling financial transactions.
The Bank’s Governor stated that DTIs play a special role in the success of CBDC, and they should be proactive in encouraging their merchant to accept the digital currency by having a wallet with financial institutions.
“Getting consumers like, for example, a lot of these Government beneficiaries, people who use the toll roads and remittances to accept CBDC is only one half of the equation.
“If you have CBDC in your wallet but can’t spend it because the merchants have not been recruited to accept it, then we have a problem.”Mr. Richard Byles
According to the Governor, the digital currency is expected to be fully implemented in early 2022.
The Governor made this statement during the Jamaica Bankers Association and Jamaica Institute of Financial Services 10th annual Anti-Money Laundering/Counter-Financing of Terrorism virtual conference.
Speaking briefly on what CBDC is, Mr. Byles said it is a digital form of central bank-issued currency and is therefore a legal tender which can be exchanged (1:1 ratio) with physical Jamaican Dollar (JMD).
The Bank’s Governor described the use of the CBDC as a simple process. He said “it’s just a telephone-to-telephone transaction so all the merchant need is to have a telephone that a consumer can make transactions to, and it goes straight into their wallet at their DTI”.
“BOJ’s internal IT people have developed a wallet which we have tested, which works fine and is integrated into our banking system and allows our staff to use CBDC, and it will become interoperable with other wallets in the system shortly.”Mr. Richard Byles
Challenges with developing digital wallets
BoJ’s Governor acknowledged that some deposit-taking institutions are likely to face challenges in developing a robust framework for digital wallets.
“Developing a wallet, I’m told, [is] a fairly expensive operation and that has made some DTIs reconsider how and when they’re going to develop this wallet.
“But it’s inevitable. We know that at one stage or another we’re going to have a wallet because that’s where all transactions are going. It’s heading in that direction where your customers are going to want to have a wallet to house CBDC as well as other products.”Mr. Richard Byles
Mr. Byles affirmatively concluded that, if the Bank with the help of its internal IT capabilities could develop and test a digital wallet prototype, he believes the DTIs can also develop their digital wallets.
By taking a quick turn to address policy, the Governor noted that in order to fully adopt the digital currency, strategic amendments have been made to the Bank of Jamaica’s Act.
“When we look to the BOJ’s Act, all references to legal tender are referred to as notes and coins and so we had to update it for the 21st century by saying ‘and electronic currency’, and so we’re quite official and can issue CBDC legally.”Mr. Richard Byles
According to the Governor, the Bank will assess the pilot stage of CBDC which is expected to end in December 2021.
Also, Mr. Byles revealed that, a public education campaign is set to shortly roll-out to create public awareness of the digital currency.