The Coronavirus pandemic highlights the need for central bank digital currencies, according to the latest report acquired by BIS (Bank of International Settlements). The COVID-19 pandemic only showed the clear need for central banks to speed up the development of the central bank digital currencies so let’s find out more in the upcoming cryptocurrency news.
The Bank for International Settlements outlined the ongoing payment digitalization phase and also predicted that if someone launches a currency first, they will see it prevail. The report noted that the financial sector is in a significant transition phase in which the central banks and other companies are trying to create and to also implement new payment options to facilitate user experience and to lower down the transaction costs as much as possible. Such examples coming from banks are exactly the central bank digital currencies:
“One option at the frontier of policy opportunities is the issuance of CBDCs, which could amount to a sea change. CBDCs could offer a new, safe, trusted, and widely accessible digital means of payment.
But the impact could go much further, as they could foster competition among private sector intermediaries, set high standards for safety, and act as a catalyst for continued innovation in payments, finance, and commerce at large.”
The paper also makes a difference between CBDCs and cryptocurrencies/ stablecoins. It also noted the central bank-backed virtual currencies not coming as a reaction to cryptocurrencies. They are a “focused technological effort by central banks to pursue a few public policy objectives at the same time.”
As the Coronavirus pandemic highlights the need for CBDCs, the BIS urged central banks in another comprehensive report to speed up the efforts for central bank digital currencies. In the upcoming months and the latest paper outlined how much the payment options will alter the virus. The pandemic has only outlined both the progress achieved and the shortcomings in payments:
“The COVID-19 pandemic has highlighted both the progress achieved and the remaining shortcomings in payments. The ability to use contactless payments in physical stores and for online purchases has supported economic activity. Yet, digital payments are still not sufficiently convenient or accessible to all.”
As the worldwide lockdowns imposed nation-wide lockdowns which included closing down physical stores and a few online payment services as well. The economic uncertainty because of the COVID-19 virus urged people to hold their cash rather than spending them which caused a huge drop in daily cash transactions.
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