Jam-Dex, Jamaica’s new central bank digital currency, or CBDC, ranked fourth among a group of top 10 countries that issue CBDCs in retail form for use as currency, according to a new report from PricewaterhouseCoopers.
The report “analyzes and ranks” major retail and wholesale CBDC projects, measuring “the maturity level of central banks in deploying their own digital currency.”
Nigeria, with its eNaira, tops the index, with hopes that e-money will raise the level of financial inclusion in the African country from two-thirds to 95%.
Jamaica also aims to reach more unbanked people through Jam-Dex, but its penetration target is not referenced in the report. The public rollout of the local CBDC is just beginning.
“In our region, the success of the sand dollar in the Bahamas and the planned CBDCs in Jamaica and the Eastern Caribbean will likely spur the development of CBDCs in other Caribbean territories where financial inclusion is one of the key desired outcomes. “said Zia Paton, PwC’s leading digital services in the Caribbean, in an organized response to the report.
The 2022 PwC CBDC Global Index comes as more than 80% of central banks around the world are considering or have launched CBDCs.
“This year’s index shows that central banks are stepping up their activities in the area of digital currencies. Countries are at different levels of maturity with CBDCs, and each country has different motivating factors. Increasing financial inclusion, facilitating cross-border payments and controlling financial crime are all factors that come into play,” Paton said.
The report categorized countries into one of two categories – retail or wholesale – based on their CBDC projects.
“CBDCs are measured via a synthetic index capturing the progress and position of central banks on the development of CBDCs, both in the context of retail and wholesale,” he noted.
PwC describes retail CBDC projects as “digital currencies designed for public use.” But while it places Jamaica in the group of retailers, the Bank of Jamaica, BOJ, does not. Instead, the cast of Jam-Dex would use a “hybrid” model.
The central bank, explaining its choice at the start of its project, noted that a retail CBDC is for digital currency issued directly to all users. This would mean that all users would have CBDC accounts at the central bank. Comparatively, wholesale CBDC involves the issuance of digital currency directly to commercial banks, which in turn is distributed by banks in the retail market.
The hybrid approach, the BOJ added, aims to combine the advantages of wholesale and retail in various forms.
“The Bank of Jamaica will use the hybrid model to issue CBDCs” and therefore “will not only issue to commercial banks, but also to other deposit-taking institutions – building societies, merchant banks and payment service providers licensed, all licensed or licensed by BOJ. These entities will distribute CBDCs to the retail market,” he said.
The top 10 retail projects in order of ranking are: Nigeria, Bahamas, China, Jamaica, Eastern Caribbean, Ukraine, Uruguay, Thailand, Sweden and South Korea.
The top 10 wholesale projects are: Thailand, Hong Kong, Singapore, Canada, France, South Africa, United Arab Emirates, Japan, Saudi Arabia and Switzerland.
The report adds that several retail projects are now underway. Big projects, however, are largely in less mature phases.
“The index’s retail projects are led by the Central Bank of Nigeria’s eNaira, the first CBDC in Africa, and the Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020, making Bahamas the first country to launch a CBDC. The Jamaican Jam-Dex was also recently launched and is now available through a digital wallet offered by one of the local banks,” PwC said in a statement to editors.
The BOJ ran ads saying that Jam-Dex is “coming soon”. Nigeria and China were furthest along in the process, based on key statistics from the PwC report.
Nigerians have created 666,000 eNaira wallets with over 35,000 transactions, mostly business-to-person rather than person-to-person, as of December 2021. In China, there were over 261 million CBDC wallets with transactions over US$14 billion in February 2022. .
The BOJ has yet to convince Jamaicans of the usefulness of Jam-Dex over physical cash and cards for transactions.
It’s a less than auspicious start, having been heavily mocked for choosing Jam-Dex as the brand name for the digital currency. Some of the criticism concerned the inclusion of “dex” in the nickname, which cryptocurrency traders typically associate with a decentralized exchange. This would contradict the centralized nature of Jam-Dex as a fiat currency. The BOJ, however, countered that “dex” was short for “digital exchange.”
To help spread awareness of the digital currency, Finance Minister Dr. Nigel Clarke used his Jam-Dex wallet to make a payment to his upstairs hairdresser in March.
Jam-Dex was developed by BOJ and Irish technology provider eCurrency Mint, and pilot-tested in 2021. BOJ struck $230 million for the pilot to be distributed through local banks, which it later declared a success. Only one of the eight commercial banks participated in the pilot program.