Saturday, April 4, 2020

Coronavirus may speed up shift to digital payments-BIS

     The Covid-19 pandemic has fanned pubic concern the coronavirus can be transmitted by cash, potentially speeding up the shift toward digital payments, according to researchers at the Bank for International Settlements (BIS).
     Central banks have reported a jump in the number of inquiries from the media regarding the safety of using cash, and the number of internet searches pertaining to "cash" and "virus" are at record highs, three staff members of Swiss-based BIS said in a bulletin from April 3.
     Scientists find some viruses can persist for hours or days on banknotes but the virus seems to survive best on non-porous materials, such plastic or stainless steel, and to date there are no known cases of transmission of the virus via banknotes or coins.
     To bolster trust in cash, the Bank of England, has said the risk posed by banknotes is no greater than touching other surfaces and Germany's Bundesbank has said the risk of transmission through notes is minimal.
     Other central banks, however, have taken preventative measures.
     The People's Bank of China (PBOC) has sterilized banknotes from regions affected by the virus, the Federal Reserve has quarantined bills arriving from Asia, and central banks in South Korea, Hungary and Kuwait have also moved to sterilize or quarantine banknotes, the authors write.
     "Irrespective of whether concerns are justified or not, perceptions that cash could spread pathogens may change payment behavior by users and firms," said the article by Raphael Auer, Giulio Cornelli and Jon Frost.
     But at this point not all digital forms of payments are contactless, including those transactions that require a signature or a PIN entry on a device.
     Digital wallets or other smartphone-based payment are one solution while online payments for e-commerce are not susceptible to any viral transmission.
     Central bank digital currencies (CBDCs) could quickly become more prominent but would have to be designed to allow for access for those parts of the population that are unbanked or older to avoid opening a "payments divide" between those with access to digital payments and those without.
    "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 or payments to be resilient against a broad range of threats," the article said.

    Click to read BIS Bulletin "Covid-19, cash, and the future of payments."


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