Jamaica’s central bank announces the test of CBDC, says its a legal tender and not cryptocurrency

The Jamaica's Central bank invites fin-tech solution providers to test the state owned digital currency.However it calls the CBDC as legal tender,not crypto

By · Jul 21, 2020 . 6min read

Source – Freepik

The Bank of Jamaica has openly advocated the interest in the adoption of a state-owned virtual currency. It’s further stressed on its a willingness by inviting tech solutions providers to test and build potential solutions for its CBDC established in Fin-tech Regulatory Sandbox. The latter is a regulatory framework that allows fin-tech innovations in a controlled and supervised environment by the regulators.

Jamaica’s Central Bank officially announced its decision through an official press release on 21st July 2020. The Central bank is keen on testing its CBDC before introducing it into the Jamaican economy in order to comprehend its viability. Moreover, the former aims to address this to ensure utmost data privacy along with consumer protection.

CBDC a legal tender and not a cryptocurrency

The Bank of Jamaica, however, clarified that the CBDC should not be mistaken for cryptocurrency. Rather the CBDC is a legal tender more like a fiat currency but in a virtual way. The CBDC will carry all properties, unlike cryptocurrencies in terms of central authority and monitoring. The bank further stated that it will perform all the essential functions of money, unlike cryptocurrency. The CBDC will also be accepted by licensed deposit-taking institutions just like cash. It will be exchanged in the same way as fiat for household and business purposes.

With the widespread adoption of state-owned virtual currency, the government aims for financial inclusion with the citizens and businesses.

Jamaica’s primary aim to transiting to a digital economy is with respect to developing a retail infrastructure to provide financial convenience to its citizens. Hence the latest step is adopting the central backed virtual currency. It also aims to benefit from reduced costs and smooth cash management processes. Therefore the CBDC may prove to be the most efficient way of securing transactions. The Central bank is truly exploring all aspects of Central bank currency in terms of its feasibility.

In conclusion, the bank assures the public that it will continue to issue fiat currencies for all economic and business-related activities. This year is full of adoption towards a digital financial economy. Governments and Central banks are realizing the need for virtual currencies in terms of their efficiency and feasibility. Recently we reported on how the Central Bank of France has appointed eight potential partners to test its CBDC. Countries across the world are actively changing regulations to accommodate the need for virtual currencies and crypto.

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