Researchers at the Bank for International Settlements (BIS) are of the view that the current COVID-19 crisis facing the world may speed up the adoption of digital payments.
In their April 3 bulletin, the BIS researchers said the COVID-19 pandemic is changing the public’s payment behavior with cash, though the scientific community claims transmission via banknotes is relatively low.
According to the researchers, irrespective of whether this concern is justifiable or not, the public’s perception that cash could serve as a medium of transmission for the virus may change their payment behavior.
They added that, if cash is not generally accepted as a means of payment, this could bring up a payments division between those who have access to digital payments and those who do not. With this, the researchers admitted that cash may therefore stage a comeback. However, they still believe the pandemic also calls for central bank digital currencies (CBDCs).
The researchers are of the view that CBDC could bridge the gap between society’s need for digital payments and those who cannot easily access them. They said the central banks would have to tailor their CBDCs to the context of the current crisis, by making payments contactless and universally accessible.
They said the COVID-19 crisis may hence put calls for CBDCs into sharper focus, highlighting the value of having access to diverse means of payments. They said it will also point out the need for any means of payments to be resilient against a broad range of threats.
As to the question of whether the pandemic is having an impact on cash usage, the researchers said indeed, it has led to unprecedented public concerns about viral transmission through cash. They said different countries exhibited their fears in various contradictory ways.
While cash circulation surged in the U.S., ATM withdrawal volume declined in the U.K. Some central banks even quarantined and sterilized their various banknotes, while others asked retailers to stop refusing cash.
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