Jamaica’s central bank wants cash-intensive industries to set up digital wallets to pay retirees, enable payments on toll roads, and facilitate remittances.

This would cover nearly a million people, in total, based on figures cited by Bank of Jamaica Governor Richard Byles at the virtual conference on anti-money laundering and terrorist financing. , organized Wednesday by the Jamaica Bankers Association and the Jamaica Institute of Financial Services.

The drive to deepen the mobile money market is part of the drive to bring a central bank digital currency, a Jamaican CBDC, into the economy and reduce the use of cash. Byles called on banks and other deposit-taking institutions, known as DTIs, to encourage their merchant clients to create CBDC wallets.

“I want to make a special appeal to DTIs to be proactive in getting their merchant customers to accept CBDC by having a portfolio with DTI themselves. It’s such a simple process, ”he said. “All the merchant needs is a phone,” he said.

For Byles, success means government payment services and private sector merchants are building wallets.

From a government perspective, the transactional needs are enormous, he said. The COVID Allocation of Resources for Employees or CARE program, which provides a cushion for households against the economic fallout from the pandemic, covers more than 400,000 beneficiaries; the PATH program supports over 300,000 people; and pensions are paid to more than 100,000 people linked to the national insurance scheme, plus 120,000 other government retirees, he said.

“To the extent that it can be done on CBDC, then it’s a huge efficiency move,” Byles said.

From a private sector perspective, BOJ representatives “are working with toll operators” to get them to allow customers to purchase tolls through wallets, said the central bank governor, who noted that each day, some 62,000 vehicles cross the east. The west toll highway and 10,000 use the north-south toll highway. In terms of the flow of remittances, he said that almost 10 million money transfer transactions take place every year.

“In general, getting the public to accept the CBDC is only half the equation. If you have CBDC in your wallet but can’t spend it because traders haven’t been recruited to accept it, then we have a problem. This is where DTIs have a role to play in the success of the CBDC, ”said Byles.

The Jamaican CBDC’s testing phase – to assess the fluidity of transactions and get a feel for the potential receptiveness of the market to a digital currency – is underway and is expected to be completed by the end of the year, with a rollout. audience expected shortly thereafter.

“We plan to roll it out nationwide in the first quarter of 2022,” Byles said.

The IT infrastructure for the BOJ’s digital currency is provided by the Irish company eCurrency Mint. In August, the central bank minted $ 230 million in CBDCs for distribution by DTIs and service providers. The minting process took 20 minutes and cost next to nothing, while an equivalent amount of cash would cost tens of millions to mint and an additional amount to ship, Byles told the conference. The BOJ spends billions of dollars each year to stamp money for Jamaica from overseas.

The CBDC is part of the BOJ’s drive to get Jamaicans, especially those without a traditional bank account, to own and start using digital wallets on a regular basis. So far in the world, only the Bahamas and the Organization of Eastern Caribbean States, whose members cover seven countries and two associates, are known to have issued central bank-backed digital currencies.

“We want financial inclusion with CBDC,” said Byles, who urged banking institutions to create their own portfolios if outside providers charge too much.

The Bank of Jamaica’s IT department, he added, has developed a portfolio for central bank staff.

“And it works well,” he said.

Money in circulation is growing by about 10 percent a year, a faster rate than inflation, which concerns Byles. Part of the increase in circulation comes from demand, but also from the replacement of old banknotes and others lost in circulation. The “mountain of money” keeps growing, he said.

“This concerns me, because cash has some inefficiencies in the way you manage it and in the transactions. Plus, there are unnecessary costs when you have another digital payment method, ”he said.

Growing cash means Jamaicans generally find it convenient to hold physical cash, but the working class suffers most of its drawbacks.

“I cry every Friday night for the people who walk to the bus stop and are held up and stolen from construction sites of one kind or another. It is the poor who are robbed, ”said the governor of the BOJ.

Merchants paying their workers digitally in wallets, he added, would reduce this threat.

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