Bank of Jamaica (BOJ), established by the Bank of Jamaica Law (1960), began operations in May 1961, terminating the Currency Board System which had been in existence since 1939.
The establishment of the central bank was in recognition of the need for an appropriately regulated financial structure to encourage the development process, particularly as Jamaica was about to embark on the road to political independence.
In the earlier years, the central bank’s role tended to be largely reactive, as the institution grappled with several national and international developments. However, in recent years, monetary policy implementation has been characterised by a more proactive stance, as the central bank has actively sought to encourage the appropriate environment for economic growth and development.
BOJ stands at the centre of the local financial system and is charged with the responsibility to promote and maintain financial system stability.
In addition to its responsibilities as the monetary authority, the Bank also supervises the activities of deposit taking entities as provided for under Section 34A, 34AA and 34B of the Bank of Jamaica Act and the Banking Services Act of 2014, as well as provides regulatory oversight for foreign exchange traders and remittance companies under Section 22B and Section 22G (2) of the Bank of Jamaica Act, respectively.
In addition, the Bank seeks to promote the development of the local financial markets, and regulates and supports the major clearing and settlement systems through which financial institutions execute the transfer of funds for a range of financial transactions. The safety and efficiency of these payment systems are therefore critical objectives of public policy. Bank of Jamaica is also designated as the Supervisory Authority under the Credit Reporting Act, 2010.
The Bank of Jamaica (Amendment) Act, 2020, which became effective on 16 April 2021, represents a significant development in the modernization of the central bank. These amendments have clarified the mandate of the Bank providing that the primary objectives of the Bank are price stability and financial system stability with price stability as the principal objective. Inflation targeting has been enshrined in the law as the monetary policy tool through which price stability is to be maintained.
The amendments introduced two new statutory committees of the Bank, the Monetary Policy Committee with responsibility for the development of monetary policies of the Bank and the Financial Policy Committee responsibility for financial policies, moving towards a more collegial approach instead of the former position where such decisions were ultimately determined by the Governor of the Bank. The provisions have also enshrined in law the independence of Bank of Jamaica in making decisions relating to monetary policy and under the law the Minister of Finance and the Public Service may not give the Bank directions in relation to monetary policy, purchases and sales by the Bank of foreign exchange, decisions to increase or reduce external reserves, the management of external reserves or supervisory matters pursuant to the Banking Services Act.
The amended law further includes provisions aimed at strengthening the governance and accountability of the Bank in keeping with international best practices. Importantly, the Bank has been adequately capitalised to properly discharge its mandate independent of the Government’s budget.
Current Governor, Richard Byles, is the 11th person to be appointed Governor – in 2019 – but the 12th Governor to be appointed, as the late G. Arthur Brown was appointed twice.