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The Bank of International Settlements (BIS) has issued a report arguing in favor of Central Bank Digital Currencies (CBDCs) and digital payments amid the COVID-19 pandemic.

The bulletin published by the BIS, a 600-member international financial institution representing the central banks of 60 countries, urges central banks to consider developing CBDCs in light of concerns regarding the spread of coronavirus through existing payment methods.

The report notes a significant negative change in consumer attitudes regarding the use of cash in response to the World Health Organization’s (WHO) warning regarding the spread of COVID-19 via banknotes.

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

“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.”

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.”

While the BIS identifies a recent increase in the circulation of cash in the U.S., the report notes that current does “not yet paint a uniform picture” — with ATM withdrawals falling in the United Kingdom.

In the medium term, the 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.”

BIS anticipates that the current climate could lead to central bank operated payment infrastructures such as CBDCs quickly gaining prominence.

However, the report emphasizes the need for CBDCs to be designed to withstand a wide variety of shocks — “including pandemics and cyber attacks.”

Despite advocating for a central bank digital currency, the BIS warns that a move away from cash as a generally accepted means of payment “could open a ‘payments divide’ between those with access to digital payment and those without” — likely having a “severe impact on unbanked and older consumers.”

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