Hiccups hamper digital currency roll-out

THE central bank is urging all commercial banks to participate in the full roll-out of digital currency by the end of December 2023, but technical difficulties among large merchants have so far hampered the process.

At a meeting of the Public Administration and Appropriations Committee (PAAC) on Wednesday, which met to discuss the Government’s fiscal policy paper for 2022/23, governor of the Bank of Jamaica (BOJ) Richard Byles explained that successful roll-out of the central bank digital currency (CBDC) Jamaica Digital Exchange (Jam-Dex) requires getting merchants on board, an effort which the commercial banks have to undertake since these are their customers.

The only institution which has fully operationalised the use of the CDBC so far is National Commercial Bank (NCB). Jamaica National Bank has been testing a mobile wallet since September, and is likely to come on stream by the end of this year, the governor advised.

“Small merchants aren’t a problem, you can use a phone [but] for merchants who have point of sale machines, and retail systems that tie back into their inventory, the software for that has to be adjusted. I will claim responsibility for not assessing that this would be a challenge to overcome. Also all the ATM machines have to be adjusted to be able to dispense CBDC and to exchange it for cash. So those are significant technical issues even for NCB, but also from the other banks that have merchants with POS, as well as ATMs. There is some capital cost but doesn’t believe it is such that the banks would resile from adopting the currency,” Byles told the PAAC.

St Catherine Southern Member of Parliament Fitz Jackson, who has been vocal over the years about the need for transform banking policies, said he noted no sense of excitement in the transacting world, either by the consumers, or merchants.

“The advantages are clear but if you don’t have people coming on board but whatever advantages that there may be won’t be achieved, so it would be a good idea that will never manifest,” he remarked.

Byles said before the central bank can launch a mass digital currency campaign it has to get consumers to accept CDBC, but first ensure that merchants have sufficient infrastructure in place. He noted that already 100,000 people have digital currency, but have no way of testing it.

He advised that the groundwork has been laid to use the constituencies of St Andrew Southern and St Andrew North Western, as pilots during the Christmas period, to test the responsiveness of both individuals and merchants.

The head of the BOJ emphasised that the central bank hasn’t detected any disapproval or concern among merchants about the use of digital currency.

“We don’t detect from our survey or interactions with the market that there is any revulsion to it. It’s just a matter of laying the foundations, then starting the campaign to educate people to use it. I remain optimistic about it,” he said.

Byles noted that all the major commercial banks have provided a timetable for their participation in the CBDC, and that he was optimistic that full roll-out will happen by December 2023.

Parliament passed amendments to the Bank of Jamaica Act, to set the legal framework for the national roll-out of the CBDC Jam-Dex as legal tender, in June. The currency can currently only be used for local transactions, and not across international platforms, and has been touted as another layer of protection in the country’s anti-money laundering and combatting of financial terrorism framework.

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