Jamaica is the latest nation to dive into digital currencies
Jamaica has launched a national digital currency following the unanimous passage of the Senate , a bill authorizing the Bank of Jamaica’s issuing and backing a central bank digital currency. The adoption follows a pilot program last year to test-run the currency, which has been named the Jamaican Digital Exchange, or Jam-Dex.
Unlike cryptocurrencies, which are privately issued, central bank digital currencies–or CBDC, for short–are regulated and can be exchanged dollar-for-dollar with the paper currency in that country. They are not intended replace banknotes or coins, but are expected to complement them. The Bank of Jamaica notes that CBDCs won’t use , the blockchain technology backing popular private cryptocurrency like Bitcoin and Ethereum.
Jamaican legislators voted in favor of the measure. They believe it will be more efficient for businesses and will help “significantly reduce” the challenges faced by “many” residents who don’t have bank accounts. These residents might not have the right documentation or lack the funds to open one.
Jam-Dex will be available directly through a digital wallet called Lynk, which will be issued by “banks or authorized payment service providers,” but will not require an associated bank account. According to the FAQ page on Bank of Jamaica’s website users can add money into their digital wallet by visiting a Wallet Provider (such a commercial bank), transferring funds to their bank account using a Smart ATM, and transferring CBDC to another wallet. CBDC wallet holders may pay each other by scanning the QR code or entering their wallet ID. CBDC transactions are free from cash handling fees and charges.
In 2020, the Bahamas was the first nation to adopt a nationwide CBDC, known as the “sand dollar.” Multiple other island nations in the Eastern Caribbean have since followed suit with D-Cash, though the rollout has been thwarted by technical issues. The Atlantic Council’s Central Bank Digital Currency Tracker notes that dozens of other countries across the globe are now in various phases of exploring the idea. As of March, that includes the United States, as President Biden issued an executive order directing resources towards researching the pros and cons of a US-issued CBDC.