The Bank of Jamaica (BoJ), the country's central bank, has officially recognized its "Jam-Dex" central bank digital currency (CBDC) as legal tender, the first country to do so, alongside first world countries across the globe who are also developing CBDC implementations for their own economies.
The move is seen as an effort to provide an alternative currency for its mostly fiat/cash-based economy. The Jamaican senate issued this authorization to the Bank of Jamaica, allowing it to issue the CBDC through its project, Jamaica Digital Exchange (Jam-Dex). The central bank has also disclosed that the project's CBDC will be officially launched for domestic use within the month.
Jamaica's local businesses are also already working to integrate with the new law. JMMB Group, a financial services firm, is developing a suite of products aimed at Jamaican consumers. This includes point-of-sale, e-commerce, and other digital payment solutions that would help facilitate and increase the adoption of the country's CBDC. Notably, the country's National Commercial Bank (NCB) is also working on Lynk, which is slated to be the CBDC's official wallet. Bank of Jamaica Governor Richard Byles claims that the digital version of the Jamaican dollar (JMD) "offers a more secure, convenient alternative to physical notes and coins, and can be used without a bank account."
The CBDC technology was developed by eCurrency, a blockchain technology firm which the Jamaican central bank has contracted to work on the project.
“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," shares eCurrency CEO Jonathan Dharmapalan.
According to Dharmapalan, CBDCs are necessary for national economies to connect to a globally merging technology through digital transformation. Due to its digital nature, a CBDC allows users to access their finances remotely at any time.
"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," Dharmapalan adds.
The project has been in development since Q3 2021. However, the official launch of this CBDC was delayed due to undisclosed internal matters. Nevertheless, the Bank of Jamaica is now moving full steam ahead with the CBDC's legal tender status.
This makes Jamaica one of the first countries in the world to have a CBDC that is recognized as legal tender. The BoJ aims to have at least 50% of its economy using CBDCs by 2023.
Jamaica is the first nation to legalize CBDCs like cash, but it is not the only one considering them. Historically, the world's first CBDC was established in 2020 with the Central Bank of the Bahamas’ Sand Dollar. Other countries close to Jamaica's economy are also exploring the implementation of a CBDC, with Brazil, Haiti, and Nigeria already on the move.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.