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BIS Pushes for Central Bank Digital Currencies to Cope with COVID-19 Pandemic

The COVID-19 pandemic is dreadful due to its highly-transmissive ability. As people wash their hands rigorously and practice social distancing, some items such as money are still being exchanged in a hand-to-hand manner on a daily basis.

The Bank of International Settlement (BIS) has published a report urging central banks from across the globe to consider the development of the Central Bank Digital Currencies (CBDCs). This new digital form of money can help to mitigate the risk of unintentional spread of the coronavirus through the traditional way of paying for goods and services.

The World Health Organization (WHO) also has been warning the spread of the virus via the physical forms of money such as banknotes. However, the recent report from BIS pointed out that the risk of contracting COVID-19 from using credit cards and touching PIN pads are even larger.

The demand for cash has seen a shortfall in many countries, where in the past crises demand for physical money often increased. The report also predicted that the outbreak could lead to the precautionary holding of cash by consumers and increase of contactless payment such as mobile and online payments.

The BIS also anticipates that the current state of pandemic and fear could, in fact, be a good environment for the central banks to push out state-own digital currencies. As it will gain prominence more quickly and people would be happy to embrace the new changes in the forms of money.

You may also want to read: Bank of France Calling for Applications under CBDC Program

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