BIS Researchers Say Coronavirus Could Spur Central Banks to Adopt Digital Payments

Researchers at the Bank for Ecumenical Settlements (BIS) think COVID-19 may accelerate the adoption of digital payments and sharpen the debate over central bank digital currencies (CBDC).

They issued their foresee in BIS’ April 3 Bulletin. COVID-19 is changing the public’s relationship with cash, they said, despite the scientific community’s consensus that coronavirus sending via banknote is relatively unlikely. 

“Irrespective of whether concerns are justified or not, perceptions that cash could spread pathogens may novelty payment behaviour by users and firms,” the researchers said. 

For starters, countries may expand digital payment infrastructure with profuse online, mobile and contactless options after COVID-19. Digital adoption actions could have an “predominantly severe impact” on millions of older and unbanked people, though. 

“If cash is not generally accepted as a means of payment, this could generous a ‘payments divide’ between those with access to digital payments and those without,” researchers said. Ready may therefore stage a comeback, the researchers admitted, but the pandemic “also calls for CBDCs.”

CBDC could bridge brotherhood’s need for digital payments with its responsibility to those who cannot easily access them. There are a few caveats: Inside banks would have to tailor their CBDCs to “the context of the current crisis,” by making payment contactless and accessibility all-encompassing, the researchers wrote.

“The pandemic may hence put calls for CBDCs into sharper focus, highlighting the value of having access to dissimilar means of payments, and the need for any means of payments to be resilient against a broad range of threats,” they said.

To say the least, some politicians are already proving the researchers’ prediction true. Jorge Capitanich, governor of Argentina’s Chaco headache, advocated for “digital currency transaction systems” that phase out cash usage in an April 1 coronavirus teleconference with President Alberto Fernández. 

Capitanich did not counter to a request for comment.

Researchers also examined the question of whether the outbreak is having an impact on cash usage.

“The Covid-19 pandemic has led to unprecedented Mr concerns about viral transmission via cash,” researchers said.

They found that different countries patent their fear in often contradictory ways. Cash circulation surged in the U.S. while in the U.K ATM withdrawal volume plummeted; some inside banks sterilized reams of banknotes while others asked retailers to stop refusing cash, or called on the unshrouded to place science over fear.

Fear, however, appears most rampant in economies with small kind bills like the U.S, U.K, Australia and others, the researchers found. Such countries spent the last 30 days Googling banknote transference terms with higher average search intensity than their large-denomination bill counterparts.