Jamaica has become one of the few nations to release a central bank digital currency (CBDC) this year. On August 10, the Bank of Jamaica (BOJ) celebrated the minting of the Caribbean nation’s first batch of CBDCs in a pilot phase. The country began working on CBDC last year amid rapid growth in digital payments and the economy.
Jamaica Plans to Boost Financial Inclusion with CBDCs
Following the announcement, the central bank issued the first batch of the CBDCs worth J$230 million (about A$2 million). As part of the pilot program, the Jamaican CBDCs will be issued to deposit-taking institutions and authorised payment service providers in the country. The pilot exercise will last until December.
During the minting ceremony, the country’s Minister of Finance and the Public Service, Dr Nigel Clarke, noted that a legislative amendment would be introduced before year’s end to accompany the CBDC.
The Jamaican government believes the CBDC will improve cash management processes and costs for the central bank and deposit-taking institutions. Additionally, it anticipates the CBDC will increase financial inclusion since it can facilitate more efficient and secured payments.
Central Banks Embrace CBDC
The CBDC concept became more popular among the world’s central banks following the outbreak of Covid-19 last year. Notably, the pandemic resulted in a rapid transition to digital mediums for financial transactions, especially cryptocurrency. However, most central banks argue crypto is privately issued and can expose users to certain risks.
Hence they embraced the idea of central bank-issued digital currencies. The Republic of China is among countries working towards a CBDC, as well as Australia.
In a recent report, the Reserve Bank of Australia reiterated it is researching possible use cases of a potential CBDC. However, “[it] does not consider that a policy case has yet emerged for issuing a CBDC“.
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