Bank of Jamaica invites technology companies to test solutions for its CBDC

The Bank of Jamaica invited technology solution providers to develop and test potential solutions for central bank digital currency, or CBDC.

According to a statement released on July 17, interested companies were asked to submit details of their solutions to the bank by August 7, 2020.

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The solutions developed will be tested in the Fintech Regulatory Sandbox, recently established by the bank. This will ensure adequate consumer protection and data privacy before the solutions are introduced into the Jamaican economy.

Not a crypto-currency
The central bank stated that a digital currency issued by a bank would be a fiat currency and should not be confused with crypt coins.

The bank drew a line between CBDCs and other crypto-currencies, saying that crypts do not perform all the essential functions of money and that they are generally not backed by a central authority.

Although the bank clarified that it does not seek to develop cryptomonry, it is not clear whether it intends to use blockchain technology.

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Possible use cases
Once launched, both individuals and companies will be able to use the CBDC as a means of payment and as a store of value, just as they do today with cash.

However, the bank noted that the CBDC can act as a more efficient and secure alternative for payments, which will enhance financial inclusion within Jamaica. Deposit taking institutions are also expected to experience an improved cash management process that is more cost effective.

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The Bank of Jamaica said the analysis of the capabilities of a CBDC is the latest step it has taken to create a more efficient digital retail payments infrastructure that can offer citizens the ability to send or receive payments.