The Bank of Jamaica (BOJ) has officially invited interested Central Bank Digital Currency (CBDC) providers to develop and test potential CBDC solutions.
The invitation, which was disclosed via the Bank of Jamaica recently established Fintech Regulatory Sandbox, noted that the CBDC is a digital form of central bank-issued currency and therefore is legal tender.
Notably, the Sandbox would provide a controlled environment where fintech innovations such as CBDC can be tested for viability while ensuring adequate consumer protection and data privacy before introduction to the Jamaican economy.
It would be recalled that earlier this year, the Bank of Jamaica hinted a willingness to consider the use of CBDC in all capacity and is currently working on the initiative.
Bank of Jamaica CBDC a legal tender, not Cryptocurrency
The Bank of Jamaica noted the proposed CBDC is a legal tender and should not be confused with cryptocurrencies.
“It is not to be confused with cryptocurrency, which is privately issued, generally not backed by a central authority, and does not perform all the essential functions of money,” the BOJ said.
The Jamaican bank further explained that households and businesses would be able to use CBDC to make payments and store value, as currently done with cash.
“CBDC is backed by the issuing central bank and issued to licensed deposit-taking institutions on a wholesale basis just as now being done with physical currency,” it said.
Additionally, the BOJ noted, the CBDC may act as a more efficient and secure alternative for payments, which will increase financial inclusion within Jamaica. Deposit-taking institutions are also expected to experience an improved cash management process that is more cost-effective.
Several countries looking into launching CBDC
While the Bank of Jamaica has shown willingness to consider the use of CBDC in its economy, it is worth noting that it is currently not the only country looking into creating a digital currency solution.
Recently, the Bank of France also announced eight financial institutions that would take part in its experiment to test central bank digital currency as a functional means of trading.
The People’s Bank of China also announced that despite the global economic crisis and the consequences of the coronavirus pandemic, the development of the digital Yuan is steadily progressing.
Noting that they have recorded an increase in the number of large companies joining the digital yuan initiative as partners in testing and implementing the technology is clear evidence of the progress the project is making in its development.
Also, Germany’s central bank, the Deutsche Bundesbank, and the European Central Bank partnered in co-hosting an innovation center in Europe within the framework of the Innovation Hub of the Bank for International Settlements.