BIS Calls For Central Bank Digital Currencies (CBDCs) And Digital Payments

The Bank of International Settlements, known as BIS, recently issued a report in which it argued in favor of the central bank digital currencies (CBDCs) as well as digital payments during the COVID-19 pandemic. As we can see from the cryptonews today, BIS calls for the use of central bank digital currencies by countries that have established them.

The bulletin published by the organization (which counts more than 600 members in 60 countries) urges the central banks to consider developing CBDCs in light of concerns related to the spread of the coronavirus through existing payment methods.

We can also see that while BIS calls for use of digital payments and CBDCs, there is a negative change in consumer attitudes regarding the use of cash in response to the World Health Organization (WHO) which warned regarding the spread of COVID-19 through banknotes.

While the BIS echoes WHO’s concerns, this report shows that the risk of coronavirus transmission through contact with credit card terminals and PIN pads is even a greater risk. The report reads:

“Scientific evidence suggests that the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads.”

We can also see that BIS calls for better handling of money, and in the report notes that “in past crises, demand for cash has often increased, as consumers have sought a stable store of value and medium exchange.”

Still, the current data “does not yet paint a uniform picture” with ATM withdrawals declining in the United Kingdom. In the medium term, this report predicts that the outbreak could “lead to both higher precautionary holdings of cash by consumers and a structural increase in the use of mobile, card and online payments.
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BIS calls for better actions and anticipates that the current climate could lead to central bank operated payment infrastructures such as CBDCs which would quickly gain prominence. Still, the report emphasizes the need for CBDCs to be designed to withstand a wide array of shocks including “pandemics and cyber attacks.”

All in all, the Bitcoin and altcoin news today show that BIS warns that a move away from cash as a generally adopted means of payment “could open a ‘payments divide’ between those with access to digital payment and those without” – and this could in turn have a “severe impact on unbanked and older consumers.”