The Bank of Jamaica has invited technology solution providers to develop and test potential central bank digital currency (CBDC) solutions.
On July 17, it has been reported in a statement that interested companies have been requested to submit the details of their solutions to the bank by August 7, 2020.
However, the bank said that the developed solutions will be tested within the Fintech Regulatory Sandbox recently established by the bank, as it will ensure adequate consumer protection and data privacy before the solutions are introduced to the Jamaican economy.
The bank stated that a bank-issued digital currency would be a fiat currency and it should not be confused with cryptocurrencies.
Also, the bank drew a line between CBDCs and other cryptocurrencies by saying that cryptos do not perform all the essential functions of money and they are also generally not backed by a central authority.
While the bank has clarified that it’s not looking to develop a cryptocurrency, there are no specifications about whether it intends to use blockchain technology.
It has been analyzed that once launched, both individuals and businesses will be able to use the CBDC as a means of payment and a store of value just as they currently do with cash.
Likewise, the bank noted that the CBDC may act as a more efficient and secure alternative for payments which will increase financial inclusion within Jamaica.
Deposit-taking institutions are also expected to experience an improved cash management process that is more cost-effective.
Thus, the bank said that exploring the potential of a CBDC is their latest step toward building a more efficient digital retail payment infrastructure that may provide citizens the ability to send or receive payments.