Jamaica minted its first central bank digital currency (CBDC) in 2021 which officially went live in 2022. However, despite plans for all banks to provide CBDC wallets, so far there’s just one, National Commercial Bank (NCB) Jamaica. Its CEO is not particularly bullish on the JAM-DEX CBDC project.
Last Friday was the bank’s financial results announcement. CEO Bruce Bowen noted that its banking wallet Lynk has very successful volumes, but not the CBDC that’s also available within the wallet.
“It is simpler for people to use Lynk today without converting to CBDC,” said Mr Bowen, according to Radio Jamaica News. “And the question that certainly we’ve raised, and there is dialogue going on, is it worth putting a lot of effort into eliminating that friction to use CBDC? Or, as an industry and a society, are we better to put that investment into just building the ecosystem?”
Even though NCB provides the only JAM-DEX wallet, users don’t need a bank account to use the CBDC. They simply provide some identity top open a Lynk wallet. Users can buy JAM-DEX with cash and convert their JAM-DEX back to cash at ATMs.
So far one other bank, JN Bank, has a CBDC wallet in the central bank sandbox, but was close to going live a year ago. The target was to get all banks into production by the end of 2023. The lack of available wallets will have impacted adoption.
Incentivizing JAM-DEX adoption
The government introduced various incentives. Initially it offered consumers a J$2,500 ($16) giveaway. In 2023 the central bank introduced financial incentives for merchants to adopt JAM-DEX which were ten times higher. It also offered consumers 2% cash back on CBDC spending of up to J$5,000 ($32). Earlier this year the Bank of Jamaica committed funds for a technology provider to upgrade 10,000 of the more modern Point of Sale (PoS) machines to support the CBDC.
By the end of 2023 there were 260,000 consumer wallets out of a population of 2.8 million. In February the central bank reported there was J$257 million ($1.64m) of JAM-DEX in circulation. At the time it said take-up is lower than desired, which is partly because of poor merchant adoption, particularly by larger merchants. Hence, the PoS upgrades.
However, momentum is important. If the first and only wallet provider is getting cold feet, that’s not good news.
