Bank of Jamaica wants to test digital currency with private partners

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The Bank of Jamaica has invited tech companies to collaborate on the development of digital currency solutions, in a bid to build its central bank digital currency.

The central bank asked companies to come up with technological solutions for the CBDC, to be submitted by August 7 for consideration. Proposed solutions would be invited to trial within the bank’s regulatory sandbox, in order to test for sufficient data privacy and consumer protections before a wider rollout for successful applications.

The news is the latest example of a national central bank working on developing a digital currency, in order to benefit from the efficiencies of blockchain currency and payments. However, the bank was keen to stress that the CBDC is a fiat currency, and should not be confused with other digital currencies.

The bank explained that digital currencies were not backed by a central bank, and did not perform the functions of money. The digital currency would instead be a digital representation of fiat currency, under the control of the central bank.

Once the currency is launched, the bank plans to allow consumers and businesses to use the digital currency both for payments and as a store of value, much the same as they currently use cash within the Jamaican economy.

However, the bank said that the digital currency would be more efficient for payments and cash management, as well as being more secure than current fiat transactions.

While the bank did not expressly set out blockchain as the framework for the currency, it is widely expected that the solution will be powered by distributed ledger technology.

The bank said the process was part of its bid to explore digital technologies, as it works on building a more efficient digital payment infrastructure in the country.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.