The Bank of Jamaica is set to expand the country’s central bank digital currency (CBDC), JamDex, in collaboration with the government to boost its adoption rate.
JamDex Expansion on the Horizon
According to a recent report, the country’s CBDC drive began in 2022 in partnership with Lynk, a mobile wallet services provider. Since September, the project has registered 115,000 subscribers, with 146,000 transactions processed.
However, compared to the expected number of people engaged with a country’s financial sector, that figure appears to be relatively low.
Attracting more people into the financial sector is the main reason for establishing JamDex, said Dr. Novelette Panton of the Bank of Jamaica.
Meanwhile, a report shows less than 500,000 Jamaicans rarely interact with local financial services. The reason is that many people earn in cash and have no or fewer reasons to interact with digital financial services providers.
Due to this, Jamaica’s central bank will direct government payments to social protection programs to achieve widespread participation and acceptance of JamDex.
Looking at the current situation, the government is the largest spender, said Panton. Thus, “the aim is to target the government payment plans to include other social benefits to be integrated into digital finance, “Panton added.
According to the report, Panton also stated that the central bank of Jamaica would inform the public on the difference between James and other cryptocurrencies. It will also educate them on the security of virtual currency.
Furthermore, the Central Bank of Jamaica will organize Christmas work programs in December to inspire people to make payments in CBDCs.
In partnership with the mobile wallet provider Lynx, the monetary authority will converse with corner shop owners and encourage them to use Lynx while paying using JamDex.
How CBDC will Shape Transactions
With the rise of CBDC, retrial consumers will be able to have a resp form of money to settle transactions. However, the place of CBDC concerning wholesale transactions is also worth considering.
Industry experts believe that if any country succeeds in adopting the use of CBDC, its focus will be on its retail use. Retail use implies individual consumers using the digital token to pay for their purchases and utilities.
On the other hand, wholesale CBDC will involve transactions between large corporations or countries. It will likely replace the use of the current cross-border transactions between two different entities.
To some extent, CBDC might replace cash transactions, especially for retail outlets. Most central banks are working towards reducing the supply of physical cash and cutting costs associated with printing new currencies.
Therefore, experts see the CBDC as the key to shaping the direction of payment and other forms of transactions.
Meanwhile, there is currently no country that has completed its CBDC projects. Some are just beginning, while others are currently in the pilot testing phase.
No matter the length of the wait, CBDC will undoubtedly change the pattern of transactions.