The Bank of Jamaica is set to roll out a CBDC. The launch follows a vote by the country’s Senate to support the initiative.
The Central Bank Digital Currency is dubbed as Jam-Dex and designed to be beneficial, especially for the unbanked Jamaicans. It is designed to be stored in private wallets, and users will not be required to access banking services and other hurdles such as KYC verifications. However, hodling Jam Dex will not earn any interest as the currency has been designed for transactions.
This is not the first CBDC project in the Caribbean Region. The Bahamas recently unveiled its Sand Dollar, which is currently used for tax remittance purposes.
CBDC Offers Accessibility to Financial Services at a Low Cost
According to Senator Johnson Smith, the CBDC wallets will be designed and distributed by banks or other payment service providers. Smith adds that the allocation of the wallets will be simple and people-centric to ensure easy access.
One of the main benefits of the wallets and the CBDC use is that it will lower the cost of financial services. Additionally, it will complement the use of banknotes and offer an alternative means of payment. Following the advent of covid 19, the use of banknotes fell sharply, and CBDCs are expected to fill the void.
From a merchant’s perspective, CBDCs will lower the cost of cash handling for merchants. This will lead to an increase in profit margins which will encourage the adopters to be competitive.
The B.o.J Has Conducted Trials for its CBDCs
A CBDC infrastructure deployed on a national scale could be prone to risks such as failure or security risks. However, the B.o.J. started trials for the CBDC network in May 2020 and has addressed all the risks that may be inherent in the infrastructure.
The new bill also accommodates fiat money usage, meaning that the two currencies will complement each other. Citizens will therefore have the option of using a currency that suits their tastes and preference.
Following the growing demand for digital assets such as Cryptocurrencies, CBDCs have been popular among central and reserve banks. A recent report by the Atlantic Council shows that 105 countries are now exploring CBDC adoption. For instance, China has its iconic e-CNY CBDC, which has been airdropped in Shenzhen to promote public spending and spur economic activity.
CBDCs Are Less Volatile
The Crypto market is in a prolonged bear cycle triggered by an adverse macroeconomic. However, the public perception of digital assets is not waning as most prospective investors speculate that a recovery is in the offing.
On the other hand, CBDCs offer a more stable digital currency form that seamlessly facilitates commercial activities.