In Historic Move, Jamaica Makes CBDC Akin to Cash

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  • Jamaica’s cen­tral bank offi­cial­ly rec­og­nizes a dig­i­tal Jamaican dol­lar as legal tender
  • It is the first time in his­to­ry a coun­try has passed this type of legislation

In a move to offer an alter­na­tive in a cash-heavy econ­o­my — and but­tress the finances of the unbanked — Jamaica has become the first coun­try to ren­der a CBDC legal tender.

Jamaica’s sen­ate autho­rized the country’s nation­al bank to issue its CBDC (cen­tral bank dig­i­tal cur­ren­cy), the Jamaica Dig­i­tal Exchange, or Jam-Dex, via an amend­ment. The fresh leg­is­la­tion expands the def­i­n­i­tion of legal ten­der to include vir­tu­al tokens, as well as phys­i­cal notes and coins. 

Jam-Dex, which has been in a pilot since 2021, will launch offi­cial­ly for domes­tic use lat­er this month, Cen­tral Bank of Jamaica Gov­er­nor Richard Byles told Blockworks.

The CBDC is expect­ed to sig­nif­i­cant­ly lim­it the chal­lenges asso­ci­at­ed with Jamaica’s pri­mar­i­ly cash-dri­ven econ­o­my. A dig­i­tal Jamaican dol­lar offers a more secure, con­ve­nient alter­na­tive to phys­i­cal notes and coins, Byles said — and can be used with­out a bank account. 

“Leg­is­la­tors in Jamaica have all now unan­i­mous­ly moved a dig­i­tal dol­lar for­ward in Jamaica,” said Jonathan Dharma­palan, CEO of eCur­ren­cy, which pro­vides tech­nol­o­gy for cen­tral banks to issue and dis­trib­ute CBD­Cs. “You can use this to set­tle any debt in Jamaica. It is the medi­um of exchange. It is the medi­um of account.” 

The suc­cess of the pilot, Dharma­palan said, proved Jam-Dex’s under­ly­ing tech­nol­o­gy and infra­struc­ture works, but see­ing cit­i­zens use the cur­ren­cy in the real world in the com­ing weeks and months will demon­strate the true val­ue of CBDCs.

“What is pri­mar­i­ly impor­tant is that coun­tries start to rec­og­nize that their mon­ey can come in dig­i­tal form,” he said. “Because it’s dig­i­tal, you don’t have to be in the same place at the same time to exe­cute a transaction…It’s a real­ly, real­ly pow­er­ful tool.”

While Jamaica is the first coun­try to make CBD­Cs akin to cash, it is not the only gov­ern­ment look­ing into the tech­nol­o­gy. Brazil, Nige­ria and Haiti are among the juris­dic­tions explor­ing the estab­lish­ment or expan­sion of CBD­Cs. The Cen­tral Bank of the Bahamas’ Sand Dol­lar became the world’s first CBDC in 2020.

Emerg­ing mar­kets look­ing into CBD­Cs have sim­i­lar goals and moti­va­tions, the Bank for Inter­na­tion­al Set­tle­ments said in a May report.

“Pro­vid­ing a cash-like dig­i­tal means of pay­ment, in light of reduced cash usage and an increase in pri­vate dig­i­tal pay­ment ser­vices, is the most com­mon con­sid­er­a­tion,” the report said. “Oth­er sig­nif­i­cant con­sid­er­a­tions include strength­en­ing com­pe­ti­tion among pay­ments ser­vice providers (PSPs), increas­ing effi­cien­cy and reduc­ing the costs of finan­cial services.”


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  • Casey Wag­n­er

    Block­works

    Senior Reporter

    Casey Wag­n­er is a New York-based busi­ness jour­nal­ist cov­er­ing reg­u­la­tion, leg­is­la­tion, dig­i­tal asset invest­ment firms, mar­ket struc­ture, cen­tral banks and gov­ern­ments, and CBD­Cs. Pri­or to join­ing Block­works, she report­ed on mar­kets at Bloomberg News. She grad­u­at­ed from the Uni­ver­si­ty of Vir­ginia with a degree in Media Studies.

    Con­tact Casey via email at [email pro­tect­ed]

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