It is no secret that the majority of world governments are actively pursuing the idea of a Central Bank Digital Currency (CBDC). The past week highlighted this global interest perfectly, with development being seen in the continents of Africa, Asia, and North America.
Jamaican companies have been enamoured with blockchain for years. One example, dating back to 2018, saw the Jamaican Stock Exchange and Blockstation establish a strategic partnership with the goal of developing a tokenized IPO platform. This interest in blockchain extends beyond this pair however, with the Bank of Jamaica (BOJ) recently minting the first $230 million worth of its own CBDC.
This initial $230 million is earmarked for the first phase of a pilot program, which will see distribution among ‘deposit-taking institutions and authorized payment service providers’. Looking forward, Minister of Finance Dr. Nigel Clarke indicated that the necessary ‘legislative amendment’ surrounding the CBDC will be in place before the year is out – aligning with the culmination of the aforementioned pilot program.
Minister of Finance Dr. Nigel Clarke also commented on the benefits of a CBDC, and the role one will play moving forward.
“CBDC offers a more secure, more efficient form of currency that offers the potential of significantly broadening financial inclusion. Along with national identification the CBDC will form the foundation of the digital transformation of our society.”
In October of 2020, Cambodia launched its own CBDC project known as ‘Bakong’. In the time since, growth surrounding the project has increased greatly, with nearly 6 million users to date.
In a recent interview, National Bank of Cambodia’s Director General Chea Serey, spoke on this growth and the timing of its CBDC in relation to COVID, stating that it, “…is quite satisfying to see…The circumstance was ripe for people to switch to using a more digital medium.”
While the reason for development of a CBDC may vary from country to country, Cambodia has made its own quite clear – consolidate a ‘fragmented payments system’, and to reduce the nations reliance on USD.
Around the globe, South Korea is known as a tech-giant among nations, playing home to companies such as Samsung, LG, and more. As such, it is not surprising to hear that the Bank of Korea (BoK) is believed to be partnering with Samsung in a pilot of the nations anticipated CBDC.
This partnership will see immediate, and massive exposure of the BoK CBDC, with Samsung expected to integrate support for the asset directly in to its line of Galaxy smartphones. This integration is part of an on-going pilot, which is scheduled to conclude in mid-2022.
While Samsung may be integrating the CBDC in to parts of its product line, the technology behind the scenes is the result of a joint venture between the BoK and Ground X. Beyond providing the ability to function as an ‘everyday currency’, the technology will be tested for its viability to upend not only the remittance industry, but to facilitate offline payments between users.
As made evident from the CBDC developments listed a above, their development is almost always a joint effort between central banks and a tech-provider. In the West African nation of Ghana this remains true, as the Bank of Ghana (BoG) has just announced that is moving forward with its CBDC pilot, partnering with Giesecke + Devrient (G+D) along the way.
In its announcement, the BoG states that, “G+D is providing the technology and developing the solution adapted to Ghana’s requirements, which will be tested in a trial phase with banks, payment service providers, merchants, consumers and other relevant stakeholders.”
This CBDC, which will be known as the ‘e-Cedi’, is being developed with the primary goal of financial inclusion among the nation’s 30 million inhabitants. The BoG indicates that over the course of its three-stage trial, it will be looking at the following areas.
- End user acceptance
- Infrastructure security
- Impact on monetary policy
- Impact on existing payment system
- Legal implications
Governor of Bank of Ghana, Dr. Ernest K. Y. Addision, commented on what a CBDC means for the future of Ghana.
“CBDC presents a great opportunity to build a robust, inclusive, competitive and sustainable financial sector, led by the Central Bank. From all indications, the concept has a significant role to play in the future of financial service delivery globally. This project is a significant step towards positioning Ghana to take full advantage of this emerging concept.”