Jamaica is planning to launch a central bank digital currency (CBDC) in 2022.
While giving the annual National Budget Debate address before the national legislature on March 9, Jamaica’s Minister of Finance, Nigel Clarke, announced the CBDC will be piloted in December ahead of launch.
The government of Jamaica views the accelerated transition to a digital society and economy as vital to economic recovery following the COVID-19 pandemic, Clarke said, adding that a CBDC can greatly improve financial inclusion by making financial services available to the Caribbean nation’s unbanked population.
“It is therefore the policy of this government, Madame Speaker, to introduce a central bank digital currency,” Clarke said, addressing the Speaker of the House.
He also clarified that a CBDC issued and backed by the central bank of Jamaica (BoJ) is not a cryptocurrency.
“It is not to be confused with cryptocurrency, which is privately issued and not backed by a regulatory authority,” Clarke said.
The CBDC will be legal tender and interchangeable with the Jamaican dollar in cash on a one-to-one basis, according to Clarke.
Last month, the governor of the Bank of Jamaica, Richard Byles, said the bank had been laying the groundwork for cabinet approval of the initiative for the last couple of months. At Tuesday’s budget debate, Clarke said “procurement of the system” had been approved by the cabinet the previous day.
Jamaica has been working on a CBDC project since early 2020. In May 2020, the Bank of Jamaica tweeted it is researching CBDCs internally as it introduced its new fintech regulatory sandbox. The following month, the bank formally invited interested CBDC providers to “develop and test potential CBDC solutions” in its sandbox.
According to Clarke, with the government-issued CBDC, households and businesses will be able to make payments and store value at no cost, while customers can do business with other people directly using their mobile phones, bringing “tens of thousands of Jamaicans” into the formal financial system.
“You’re going to be able to pay for the sky juice, Madame Speaker, with your phone,” Clarke said, referring to the colorful shaved ice beverage sold by street vendors in Jamaica.