Growth and Jobs | Digital currency to promote financial inclusion and equity – JN exec | New

INTRODUCING Central Bank Digital Currency (CBDC), JAM-DEX, into the financial ecosystem will enable more Jamaicans to access financial services, according to Ricardo Dystant, Head of Digital Transformation and Special Projects at JN Bank.

As a result, Dystant said JN Bank will launch its own digital wallet very soon.

A phased rollout of JAM-DEX is currently underway. A local commercial bank has already launched its digital wallet to allow Jamaicans to use digital currency.

He noted that while CBDCs are not a silver bullet, they will provide financial inclusion opportunities for unbanked and underbanked Jamaicans. Dystant noted that innovative public payment infrastructures, such as CBDCs, help reduce barriers to financial access and open up new avenues for upward mobility.

According to the World Bank, more than 1.7 billion adults worldwide are excluded from the formal financial system. This means that almost a third of all adults, or eight percent of the population in advanced economies, lack access to traditional banking services, including savings accounts, credit, loans and insurance.

In Jamaica, the National Financial Inclusion Strategy (NFIS) notes that although 78% of Jamaicans have bank accounts, most are not active users of the system, with 23% not making deposits or withdrawals during a 12 month period. This level of inactivity was 11% higher than that recorded in the Latin America and Caribbean region. Moreover, only 30% of Jamaicans save through a regulated financial institution.

The NFIS noted that those trapped outside the financial system are forced to operate within the confines of the monetary economy, becoming overly dependent on physical assets, susceptible to financial shocks and stressors, and cut off from means of wealth creation.

JN Bank’s head of digital transformation is optimistic that the increased access to financial products and services, such as savings and investment tools, that will come from increased use of CBDCs and digital wallets within the population, will enable more Jamaicans to gain upward mobility.

“It is hoped that this expansion of access to financial services can reduce poverty and increase economic growth,” he said.

“For example, certain banking requirements may be considered prohibitive for some people, such as having multiple pieces of ID or even a formal address. Opening a CBDC or wallet account would be much simpler and eliminate some of the rigid requirements of the formal banking system,” he explained.

The JN Bank executive also noted that CBDCs have the potential to create greater equity in society. “The man in the Cockpit Country or any remote area can easily and seamlessly bank and pay for goods at the touch of a button on his cell phone,” he said.

“It puts service at their fingertips and they can text to pay a bill or pay for a service or product with ease and convenience. Even in his own community, instead of walking with cash to the corner store, he can order a bun and cheese and simply transfer the cash to the merchant’s digital wallet.

Dystant noted that wallet accounts can therefore serve as entry points for developing a personal financial footprint, which will be integral to accessing credit and accessing integrated digital financial services.

Importantly, he said, CBDCs can help reduce transaction costs by up to 50%, including for cross-border transactions and remittances, and increase transaction speed from days to seconds. .

“For households and local economies like Jamaica that depend on remittances, this helps [to] strengthen economic livelihoods and resilience,” he said.

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About Ruben V. Albin

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