Advertorial | Digital Currency Becomes Jamaican Economy Game Changer | Business
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The imminent introduction of digital currencies into Jamaica’s financial situation will be a game changer that will advance the country and expand financial inclusion, said leading local economists and technical experts.
They are responding to the Bank of Japan’s announcement that digital currencies are expected to be introduced in early 2022, and pilots will be tested in the Bank of Japan’s FinTech regulated sandbox from now until December of this year. I am.
Digital currencies are primarily currencies that are managed, stored, or transferred electronically.
“The potential for turmoil is great. What the Bank of Jamaica is trying to do is issue digital currencies in a way that is not destructive and retains the traditional role of commercial banks,” said the Caribbean Policy Study. Dr. Damian King, the economist and secretary general of the institute, said. Capri).
He explained the advantages of digital currencies, which reduced transaction costs, did not bear storage costs, minimized risk, and was easy to trade.
“This is a breakthrough for the economy, because it allows us to do all this that we couldn’t do before. It makes it easier to pay for people who don’t have micropayments and bank accounts. Sell at the corner. You could buy drinks with mobile payments from a man who is a bank account, “he explained.
In addition, he said digital currencies will increase the efficiency of the economy and reduce the enormous cost of trading. It also addresses the issue of financial inclusion.
“One of the advantages of digital currencies is that even people who don’t have a bank account can make mobile transactions, so they can use digital currencies,” he said.
Chevaughn Robinson, senior software developer at MC Systems, a technology company in the Jamaica National Group, said that central bank digital currencies minimize the eligibility requirements to participate in the financial system, and access and inclusion of people without bank accounts. Said to promote.
“The ability of a person without a bank account to become part of a formal financial system is a bonus because they have access to savings, loans and credit facilities,” he said.
Digital currency and mobile money
Dr. King addresses the possibility that the introduction of digital currencies will follow the same fate as mobile money, which has not yet begun in Jamaica despite its introduction a few years ago, and the response to digital currencies issued by central banks is different. I’m guessing it’s possible from a bank that issues mobile money.
“The situation is different because everyone is on the same platform. Before everyone needs to sign up for a provider. Now anyone who wants to issue a mobile wallet will have the underlying architecture of Jamaica Bank. It will be published and will be interoperable, “he said.
“That is, whoever issues a mobile wallet can pay to another wallet owner, which helps to achieve interoperability and scalability,” he said.
Robinson was just as optimistic. “For the first time in history, a central bank-backed e-money solution has emerged that provides a unified and equitable solution across financial institutions that is interconnected and interoperable with existing financial systems. It is a great opportunity to address the inefficiencies and gaps of existing financial infrastructure, which traditional mobile money solutions have not been able to achieve independently of the central bank. “
However, Robinson said there are certain important criteria that must be met to ensure the success of the system.
“Barriers to entry must be very low, like cash, and everyone should be able to participate with minimal friction and documentation requirements. This system is POS (point of sale), online. It needs to be interconnected with existing financial systems such as banking, e-commerce and ATM infrastructure, “he said.
Senior software developers further stated that systems need to provide open and equitable access to drive innovation by SMEs. He also said that he needed to be able to seamlessly access cash when needed and be able to convert cash to digital currencies 24 hours a day, 7 days a week.
How does it work?
According to the Bank of Japan, the Central Bank Digital Currency (CBDC) is not a cost to consumers, but a perfect complement to the banknotes and coins issued by the Bank of Japan. Both CBDC and physical banknotes and coins coexist in the payment space. The CBDC has a major aspect of money, as it is now available in banknotes and coins, but the only important difference is that it is an alternative to cash, which is primarily used for trading. However, like cash, it becomes the standard for face value stores, exchange media, single account units, and payments.
As fiat currency, the Bank of Japan said the CBDC can be exchanged for physical cash on a one-to-one basis. Households and businesses can use the CBDC to make free payments and save value. However, unlike cash, consumers can use the CBDC to make payments on compatible devices anytime, anywhere.
The central bank’s digital currency issued by the Bank of Japan is for domestic use only, and the Bank of Japan has announced that it will use a hybrid model to issue CBDC. Therefore, the Bank of Japan issues not only to commercial banks, but also to other deposit handling institutions (DTIs) (building-and-loan associations, merchant banks, licensed payment service providers (PSPs)). All of these are licensed or licensed by the Bank of Japan. These entities distribute the CBDC to the retail market.
In order to use the CBDC, the Bank of Japan states that consumers must have a CBDC account. This is a much easier and easier acquisition with streamlined and simplified Know Your Customer requirements, also known as KYC, unlike regular bank accounts. .. If you already have a bank account, you can automatically get a CBDC account, but authorized PSPs and DTIs can onboard customers who do not have a bank account. Customers will be able to seamlessly transfer and convert funds between their regular and CBDC accounts.
To execute CBDC transactions anytime, anywhere, consumers use the networks of both major telecommunications service providers to access, download, and download mobile wallet apps to smartphones, tablets, or similar compatible devices. Can be deployed. Customers can also replenish their accounts with the CBDC through all authorized agents or smart ABM and do business with the CBDC over the phone with merchants.
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