Coronavirus News Asia

How Covid-19 could accelerate CBDC adoption


The Covid-19 pandemic is pushing the global economy toward a major recession, but there may be a silver lining in all this for the crypto industry: The accelerated adoption of central bank digital currencies, according to Cointelegraph.

The use of cash seems to be plunging these days – particularly now, as people are increasingly wary of engaging with potentially germ-infested surfaces. Meanwhile, some central banks are reevaluating their strategies in favor of digital currencies, which they believe may carry more benefits than just stopping the virus from spreading further. So, how likely are we to see a central bank digital currency (CBDC) being released in the near future?

More hygienic than cash

CBDCs are digital assets that are issued, monitored and regulated by a federal regulator. CBDCs represent fiat money in a digital form. Each CBDC unit acts as a secure digital equivalent of a paper bill and can be powered by blockchain or some other form of distributed ledger technology, but it is worth noting that concrete plans for implementation and motivations vary significantly depending on the country.

CBDCs seem to be an increasingly popular concept among central banks. As per a 2019 report issued by the Bank for International Settlements, a Switzerland-based organization representing 62 of the world’s central banks, as many as 70% of financial authorities worldwide were researching the potential effects that CBDCs could have on their economies.

During the pandemic, that percentage could reach even higher, as countries like the United Kingdom – where cash and ATM usage dropped by 50% over just a few days last month – might start looking for alternatives. Even in Germany, where cash is more popular than in neighboring countries, there has been a recent surge in contactless payments. Locals, including senior officials such as Chancellor Angela Merkel, are now using debit cards for their grocery shopping.

This poses the question: Is physical money actually that dangerous? At this point, it’s difficult to say whether banknotes transmit the disease, given that Covid-19 is still largely under-researched. Christine Tait-Burkard, an infection expert for the Roslin Institute at the University of Edinburgh, explained that the risk is relatively low, “Unless someone is using a bank note to sneeze in.”

According to a recent paper by the Bank for International Settlements (BIS) that cites medical reports, there is also risk of transmission through contact with credit card terminals and PIN pads that might be more significant compared to the health risks posed by physical money.

Either way, the coronavirus’s alarming rate of infection has been causing major panic. For example, a man in South Korea reportedly attempted to sanitize 1.8 million won ($1,500) in a microwave, irrevocably damaging around half that sum as a result. Meanwhile, a video of someone washing Indonesian rupiahs in a bucket has been making rounds on Twitter, and in India, someone apparently developed a machine to sanitize banknotes. A World Health Organization spokesperson has had to squash reports that it recommended not using “dirty banknotes.”


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