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Central Bank of Jamaica Warns About Bitcoin and Defends Its CBDC

Cryptocurrency Jun 21, 2022 01:00PM ET
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Central Bank of Jamaica Warns About Bitcoin and Defends Its CBDC

  • The issuing institute of the Caribbean country believes that the cryptocurrency is not appropriate for transactions.
  • Instead, it proposes its citizens use its central bank digital currency (CBDC).
  • Central bank chairman Richard Byles, however, noted that BTC is not banned and could be used as an investment instrument.

Taking advantage of the crypto winter that has evaporated most of the value of cryptocurrencies, central banks and governments from almost all over the world that have CBDCs or work on the development of state digital currency projects, are warning about the risks of using and investing in private virtual money.

The Central Bank of Jamaica (BOJ) has joined that choir led by the International Monetary Fund (IMF), which seeks to discourage the trade of cryptocurrencies and other digital assets among its population. Instead, issuers are encouraging the use of central bank digital currencies, which they see as safer and more secure.

The governor of the financial entity, Richard Byles, warned Jamaicans about the volatility of the price of Bitcoin (BTC) and other cryptocurrencies during the Jamaican Diaspora Conference held last week, where the issue of digital assets was addressed.

Use of BTC Is Not Prohibited

“We do take the time to warn people that those values can go up and down, and quite [volatilely] so too,” Byles said at the event, according to a note posted on the Jamaica Information Service blog. However, the official clarified that the government is not prohibiting the use of Bitcoin or other cryptocurrencies. Byles commented that he sees cryptocurrencies more as an investment instrument “because its value is not stable enough to be a good means of payment,” as a CBDC is.

“So, if you’re, hopefully, a sophisticated investor [who] can understand cryptocurrency, go ahead and use it,” he advised. "But we don’t see it as a currency that is good for transactions and for making payments," he added. The Bank of Jamaica continues to advise consumers that "we only back our Central [Bank] Digital Currency, [and that] it’s not backed by any private investor," the official noted. He added that “so, from that point of view, it’s stable. The dollar that you have in your pocket today is the dollar that you have in your pocket tomorrow. It’s not going to go up and down on the market like cryptocurrency.”

On the Flipside

  • The BOJ is working on the full launch of its digital currency called ‘JAM-DEX’ this year.
  • Banking authorities said that the large-scale implementation of the Jamaican CBDC will be done gradually.
  • Last December, the pilot plan for the digital currency was successfully concluded, according to the central bank.

Why You Should Care

  • The crisis of cryptocurrencies and, specifically, the stablecoins considered safer, has only proved the central banks right about the risks and lack of support for private digital money.
  • After this first litmus test for private digital currencies, there will surely be a purge of the market and the cryptosphere.
  • Then the real competition between cryptocurrencies and central bank digital money will begin.

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Central Bank of Jamaica Warns About Bitcoin and Defends Its CBDC
 

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