BIS Report: COVID-19 Pandemic Could Spur CBDC and Digital Payments Adoption
In a report issued on April 3, 2020, the Bank of International Settlements (BIS) opined that it could soon ramp up its operations to make way for central bank digital currencies (CBDC) and digital payments amid the COVID-19 pandemic.
COVID-19 Could Spur CBDC Development
Reacting to fears of transmission of the COVID-19 virus via currency notes and coins, the BIS recently published a report titled “Covid-19, cash, and the future of payments” stating that the pandemic could spur the growth and adoption of CBDCs across the globe.
The report reads in part:
“In the context of the current crisis, CBDC would in particular have to be designed allowing for access options for the unbanked and (contact-free) technical interfaces suitable for the whole population.6 The pandemic may hence put calls for CBDCs into sharper focus, highlighting the value of having access to diverse means of payments, and the need for any means of payments to be resilient against a broad range of threats.”
According to the report, there are concerns among people that banknotes and coins could be some of the most active carriers of the COVID-19 virus. A large number of media houses have approached various financial and banking institutions the world over to know in detail about the legitimacy of such concerns.
With regard to such concerns, the report cites a recent study conducted by van Doremalen (2020) which found that COVID-19 can for three hours in the air, 24 hours on cardboard, and even longer on other hard surfaces.
Banks Leaving Nothing to Chance
That said, however, scientists concluded that the probability of transmission via banknotes is low vis-a-vis other frequently-touched objects. Notably, to date, there are no known cases of COVID-19 transmission via banknotes or coins.
Despite the minuscule risk, central banks around the world are taking active measures to mitigate the risks associated with the transmission of the virus through fiat currency. For instance, the People’s Bank of China in February 2020 began sterilizing banknotes in regions affected by the virus.
Similarly, in March, the U.S. Federal Reserve noted that it was quarantining bills arriving from Asia prior to recirculation within the economy.