The Bank of Jamaica, established by the Bank of Jamaica Law (1960), began operations in May 1961, terminating the Currency Board System which had been in existence from 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 of a largely reactive nature as the institution grappled with several national and international developments. However, in recent years, monetary policy implementation has been characterized by a more proactive stance, as the Central Bank has actively sought to encourage the appropriate environment for economic growth and development. In this regard, in 1985, in collaboration with the International Bank for Reconstruction and Development, the Central Bank introduced a programme for financial reform – The Financial Sector Reform Programme (FSRP). This initiative was aimed at more effective intermediation, through the encouragement of market forces and the strengthening of the Central Bank’s capacity to implement monetary policy.