Bank for International Settlements (BIS) researchers have reiterated reports that the coronavirus could be spread through physical cash; hence, it could eventually result in the adoption of digital payments.
In accordance with the Bulletin recently released by BIS, the researchers noted that the impact of the virus is slowly altering the relationship of the general public towards fiat currencies, as there are chances that the coronavirus can be transferred through the use of banknotes.
They argued that the public sentiment on the possible spread of COVID-19 through the use of physical cash could relatively affect the cash method of payment, both by individuals and companies, not minding if the concerns are justified or not.
While they believe that the adoption of digital payments among countries will expand if done virtually, and does not necessarily require physical contact, it might also have a severe effect on so many individuals, particularly those that are unbanked and old in age.
“If cash is not generally accepted as a means of payment, this could open a ‘payments divide’ between those with access to digital payments and those without.” Such a scenario could result in a comeback for physical cash, the researchers added.
Quest for CBDCs raises accordingly.
Meanwhile, BIS researchers also admitted that COVID-19 could also heighten the call for Central Bank Digital Currency (CBDC). According to them, CBDC can satisfy the need for the quest for digital payments by the public.
The current impact of the coronavirus pandemic signals the need for diverse payment methods, especially a medium that will be contactless, and flexible enough to withstand any sort of threats, and financial crisis.
Hence, before the adoption of digital payments like CBDCs gains ground, central banks ought to create these virtual currencies to suit the ongoing crisis, that is, by ensuring the payments are accessible globally and contactless, according to the researchers.
The BIS forecast could be considered as a fact, following recent actions by the governments on the area of payments. For instance, there are recent proposals for the digital version of the United States dollar (USD) and Euro.
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