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The CBDC is now expected to reduce the difficulties that come with Jamaica’s predominantly cash-based economy.
The Central Bank of Jamaica has officially legalized the “Jam-Dex” central bank digital currency (CBDC) as legal tender, making it the first country to do so. The latest move by the Caribbean country is to provide a fitting alternative to its cash-heavy economy.
According to Richard Byles, the governor of the Central Bank of Jamaica, Jam-Dex will go live for domestic use later this month after being in a pilot since August 2021. According to reports, the country’s senate authorized the country’s national bank to issue its CBDC (central bank digital currency), the Jamaica Digital Exchange, or Jam-Dex, through an amendment.
The new legislation in the country now broadens the definition of legal tender to include virtual tokens in addition to physical notes and coins.
The CBDC is now expected to reduce the difficulties that come with Jamaica’s predominantly cash-based economy. According to Byles, a digital Jamaican dollar is a safer and more convenient alternative to conventional notes and coins, and it can be used without a bank account.
Jonathan Dharmapalan, the CEO of CBDC technology provider eCurrency, spoke after the news and stated:
“Legislators in Jamaica have all now unanimously moved a digital dollar forward in Jamaica. You can use this to settle any debt in Jamaica. It is the medium of exchange. It is the medium of account.”
Dharmapalan highlighted the importance of countries recognizing that their money can come in digital form, adding that 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,” he stated.
According to the Jamaica Observer, the JMMB Group, a financial services firm, plans to develop several new products, including point-of-sale, e-commerce, and new payment solutions, to help the Jam-Dex gain traction.
Additional reports state that the CBDC is also being pushed by the National Commercial Bank (NCB) via its Lynk wallet.
According to the Atlantic Council’s CBDC tracker, 105 countries representing over 95% of global GDP are actively exploring or developing a CBDC. 10 countries have reportedly launched a CBDC which includes Nigeria, the Bahamas with its “Sand Dollar’ and several Caribbean island nations. However, Jamaica is the first country to legalize CBDC as a legal tender.
The Bank for International Settlements, in a report published in May, stated that emerging markets looking into CBDCs have similar goals and motivations.
“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.”