Rise in electronic payment among J'cans resulted in currency demand falling below projection - BOJ
Published:Sunday | January 5, 2020 | 12:00 AM
The Bank of Jamaica (BOJ) says the growing number of Jamaicans resorting to electronic payment methods may be a factor for the amount of currency in circulation during December falling below its projection.
The BOJ had projected for currency circulation during the busiest shopping month of the year to grow by 17.2 per cent or $22.4 billion.
However, the central bank said it was below the projected amount. It said the amount of currency in circulation for the month only grew by 14.5 per cent or $18.9 billion. The overall currency circulation for the year totalled $148.9 billion as at December 31, which represents a yearly increase of 11.5 per cent but is lower than the 20.4 per cent growth recorded in 2018.
According to the BOJ, there was "higher than expected redemptions during the last five working days of the month when financial institutions returned more banknotes to the central bank than projected".
The central bank cited increasing use of credit and debit cards among Jamaicans, which is growing at a faster rate than currency use.
"While notes and coins, and in particular the $1000 note, remain the dominant means of settling retail transactions in Jamaica, the Bank has noted the steady rise in the use of electronic means of payment by bank account holders (point of sale debit and credit card transactions as well as Internet-based credit card transactions)," the BOJ explained.
It said its own analysis has pointed to annual average growth in the use of electronic payments of about 24 per cent for December for the past five years (2014 to 2018), which is higher than the average growth in currency of about 14 per cent.
"This trend will likely continue in line with the efforts to broaden the participation of more unbanked Jamaicans in the financial system," the central bank concluded.
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