This Week in CBDC ??

???? ?Jamaica's CBDC, known as JAM-DEX, despite initial optimism has, according to national Commercial Bank Bruce Bowen, had an underwhelming adoption rate with the project's progress now under scrutiny. National Commercial Bank, the sole provider of the JAM-DEX digital wallet, has expressed concerns about user engagement and the overall effectiveness of the CBDC roll-out. The project is grappling with operational hurdles such as technological barriers and limited public awareness.

Key Highlights:

?? Slow Adoption Rates: Early excitement has not led to widespread use of JAM-DEX.

?? Operational Hurdles: Technological challenges and low public awareness are significant obstacles.

?? Future Steps: Recommendations emphasize increasing educational efforts, improving user experience, and expanding wallet provider options to encourage broader adoption.

?? Long-term Outlook: Despite current challenges, the central bank remains committed to realizing JAM-DEX's potential for financial inclusion and economic transformation.

Strategic Initiatives:

?? Boosting Adoption: Initiatives will focus on educating the public and enhancing CBDC accessibility.

?? Collaboration: Plans are in place to engage new wallet providers to diversify access points and improve user experience.

The central bank envisions JAM-DEX playing a crucial role in Jamaica's financial ecosystem by overcoming these challenges and unlocking new economic opportunities. It is still early days for JAM-DEX and the world will continue to watch as these initiatives play out.

??Ghana’s central bank has taken a significant step towards regulating the burgeoning cryptocurrency sector by publishing draft guidelines for Virtual Asset Service Providers (VASPs). The Bank of Ghana's draft, released on August 16, highlights a spike in cryptocurrency demand within the nation, necessitating regulations to mitigate the risks associated with these emerging assets.

??Technological advancements, widespread internet access, and a tech-savvy population have contributed to the growth of cryptocurrencies in Ghana. Many residents have turned to alternative assets like Bitcoin to hedge against inflation amid economic challenges, similar to other African nations.

Key Highlights:

?? Increased Demand: A rise in cryptocurrency usage driven by tech-savvy citizens and broad internet access.

??? Purpose of Guidelines: To counter risks linked to cryptocurrencies amidst growing demand.

?? Proposed Measures: Stringent registration, enhanced reporting obligations, and adherence to global standards.

The central bank's proposal includes several key measures to regulate the sector:

• ?? Anti-Money Laundering: VASPs must follow anti-money laundering and counter-terrorism financing regulations, reporting suspicious transactions to the Financial Intelligence Centre.
• ?? Risk Assessments: Regular risk assessments and compliance with the FATF’s Travel Rule, which mandates reporting transaction details.

????When enacted into law, the guidelines will require VASPs to register with either the Bank of Ghana or the Securities and Exchange Commission, depending on their services. To operate, entities must show a satisfactory internal control and risk management framework, along with meeting capital and solvency requirements. Entities failing to register within the specified timeframe will be deemed illegal.

Further Steps:

?? Sandbox Testing: Prior to full implementation, the BoG will collaborate with other regulatory bodies to conduct a "sandbox testing process" with a controlled group of VASPs.

??? Public Feedback: The draft regulations are open for public feedback by August 31, 2024, after which they will be reviewed and potentially finalized.

???? Additionally, the Bank of Ghana is developing a central bank digital currency (CBDC) named eCedi, partnering with Giesecke+Devrient, a German banknote and securities printing company, to provide the foundational infrastructure for the project.

Pierre Poilievre, the Leader of the Conservative Party of Canada, has taken a firm stand against the creation of a CBDC in Canada, strongly endorsing Bill C-400. This bill aims to prohibit the development of a CBDC to safeguard Canadians' privacy and freedom.

Key Arguments Against the CBDC:

?? Privacy Concerns: The Conservative Party, represented by Poilievre, argues that a CBDC could grant the state extensive control over citizens' economic freedom and privacy. The potential for government overreach could jeopardize fundamental civil liberties.

?? Economic Risks: Poilievre and his party caution that a CBDC could lead the central bank to over-issue money, exacerbating inflation and national debt. The concerns are rooted in maintaining financial stability and preventing economic mismanagement.

?? Cryptocurrency Autonomy: Poilievre believes that cryptocurrencies should remain within the private sector to ensure they operate autonomously, minimizing government influence and preserving financial independence.

While plans to create a CBDC in Canada have been in the works for some time, significant opposition exists at high levels of government. Proponents of financial freedom and privacy, like Pierre Poilievre, are actively working to protect the private sector's autonomy and citizens' rights. Is this a legitimate concern for the privacy of citizens or merely electioneering? Only time will tell ?.

That’s a wrap on this edition of the CBDC Chronicles. Share your thoughts and drop them in the comments section below or send me a direct message.

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See you in the next edition, until then, stay engaged and keep exploring! ????