Thread by @BaritaLimited

1/ Central Bank Digital Currencies (CBDCs).
What are they?

Why is GOJ & BOJ pursuing them?

Today we are going to dive into CBDC, how it might impact Jamaica & your portfolio.

#FinanceTwitterJA #BILNewsletter #BaritaMoneyIQ #BaritaInsights

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2/ A digital currency is simply digital money. The most popular are cryptocurrencies (Bitcoin, Ethereum, etc.).

The main benefit of cryptocurrencies is the fact that they are decentralized (i.e. not controlled by any one institution).

3/ Secondary benefits are the fact that money can be sent around the world at a fraction of the cost of traditional wire transfers and much faster.

As a result of those benefits, investors and consumers have flocked to cryptocurrencies in droves over the last decade.

4/ Global Central Banks have begun studying & adopting CBDCs in an attempt to reap the same benefits as cryptocurrencies by issuing their own version of a digital currency for their country.

A CBDC is a Central Bank issued Digital Currency. Aka, a Digital JMD.

5/ BOJ will issue them like they do paper currency, to financial institutions and payment service providers (Paymaster, etc.).

JA’s CBDC will be built on top of the Real-Time Gross Settlement (RTGS) infrastructure, which makes integration into the financial system easier.

6/ If everybody has a digital wallet on their phone, then more people (typically the unbanked & underbanked) will be brought into the financial system.

Benefits include:

7/ - Petty Robberies decrease because it’s harder to steal a traceable digital currency than untraceable paper currency.

8/ - The govt can more easily & more efficiently support the most vulnerable with cash transfers preventing theft from reducing the amount of cash that eventually reaches them.

9/ - Financial institutions can more easily offer tailored services & products directly to the most vulnerable.

- Examples of products include:
- Micro-loans, based on their wallet’s transaction history.
- Micro-insurance for agricultural fresh produce, vending inventory, etc.

10/ These products & services tailored to the previously unbanked & underbanked section of the population, will lead to new lines of revenue & profitability for financial institutions and significant innovation from financial institutions and for the economy at large.

11/ So, not only can CBDCs make it easier to conduct commerce throughout the economy, assist the government in providing help to the most vulnerable, it can unlock much needed innovation & productivity throughout the economy, benefitting equities generally.

12/ Sign up to our weekly newsletter to keep an eye on how BOJ’s CBDC is rolled out and the impact it will have on the markets, so you can take advantage of any equity investing opportunities that may present themselves.

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