Thu | Jun 1, 2023

BOJ reports digital currency pilot success

Published:Sunday | January 2, 2022 | 12:06 AM

The Bank of Jamaica, BOJ, says its trial run for the roll-out of its still unbranded central bank digital currency, CBDC, has been a success despite its take-up by only one financial institution.

National Commercial Bank Jamaica, NCB, was the only payment service or wallet provider that was ready to test the digital payment system in the months-long pilot period designated by the central bank for late this year and which was open to financial entities already approved for the central bank’s so-called sandbox for new, technology-driven financial solutions.

NCB tested the system using its Lynk payment platform, a service being provided by its newly formed subsidiary, TFOB Limited. TFOB, which stands for The Future of Business, is the bank’s newest vehicle for the roll out of a range of non-traditional and cutting-edge financial services, utilising the latest technology, in a bid to grow market share and keep up with emerging technology and market trends.

“National Commercial Bank, based on the extent of their experience in the sandbox, came onboard with the BOJ to test the range of services to be offered using the CBDC solution. Success of the pilot project was dependent on whether a central bank digital currency, along with the attendant technology solution, could be successfully implemented in Jamaica,” the BOJ said in a statement on Friday.

The central bank operates a ‘fintech sandbox’ that helps to drive tech innovations around financial products.

Under the pilot, which ended on Friday, December 31, some $230 million in digital currency was minted by the BOJ in August with the aim of eventual issue of the CBDC to deposit-taking institutions and authorised payment-service providers. The central bank included its staff in the CBDC pilot, issuing $1 million worth of the currency internally in August. Another $5 million worth was issued to NCB in October.

The central bank reported that NCB onboarded 57 customers, including four small merchants and 53 consumers, in what is being hailed as a retail success for the initiative.

“These customers conducted person-to-person, cash-in and cash-out transactions through 37 accounts and completed transactions with small merchants (local craft jewellers, footwear designers and fashion and garment boutiques) through an NCB-sponsored event, Market on the Lawn held earlier in December 2021,” BOJ said.

The central bank did not provide details on the timetable for a bigger rollout of the digital currency but several smaller fintech providers are believed to the lining up for BOJ approval to become CBDC wallet providers during this year.