Jamaican Prime Minister Andrew Holness said the country anticipates launching its central bank digital currency (CBDC) this year. The government plan suggests that it intends to discourage the use of bitcoin (BTC) in the Caribbean island territory, where it is expected that, in five years, 70% of its population will adopt the so-called Jamaican dollar.
Holness announced the imminent launch of the country’s digital currency in a lengthy thread on Twitter in which he revealed how plans to turn Jamaica into a land of prosperity and opportunity.
Although the Prime Minister did not reveal the exact launch date, the Bank of Jamaica (BoJ) had indicated previously that the general population would know the new payment system during the first quarter of this 2022.
The government’s proposal is to create a clear competitor for bitcoin, and the prime minister demonstrates this by highlighting the advantages that the population will supposedly have by adopting the digital currency.
As detailed by Holness, the CBDC will facilitate greater financial inclusion, will bring transparency by supposedly allowing the tracing of public funds. It will also “increase the speed of transactions and reduce the cost of banking for the people of Jamaica,” he added.
BoJ worked with National Commercial Bank (NCB) on their CBDC pilot program which they reportedly completed successfully and featured a limited number of wallet providers.
CBDC vs bitcoin, what will the population of Jamaica adopt more?
Digital currencies have become the measure that the central banks of the world are implementing to counteract the accelerated adoption boom that cryptocurrencies like bitcoin have gained. This is happening at the same rate that fears are growing that fiat money could be undermined by the popularity of crypto assets.
However, like fiat currencies, CBDCs give issuing bodies, in this case central banks, a direct right to control their value. It means that these financial assets depreciate over time, since being controlled by governments that issue inorganic money, excess cash is produced and, by the law of supply and demand, it loses its value.
Contrary to this, one of the properties of bitcoin is that the maximum number of coins that can be created is defined in their protocol and will therefore only be 21 million. Its value grows over time because it is based on digital scarcity, which is why cryptocurrency is seen by many as a store of value.
The ratification of Jamaica as a country interested in CBDCs was published by CriptoNoticias in the middle of last year, at the moment in which its financial institution opened a public call for suppliers in the field to present their initiatives that were later tested in the regulatory sandbox.
At that time, the issuing entity made it clear that the Jamaican dollar is not a new cryptocurrency, but a universal mechanism that would not be limited to private banks, but open to the public as a new form of cash.