Report in favor of digital currencies issued by central banks

The International Settlement Bank (BIS) has issued a report in favor of digital currencies issued by central banks (CBDC). The bulletin published by BIS analyzes the evolution of digital payments against the background of COVID-19.

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1 Report in favor of digital currencies – CBDC

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The report urges central banks to consider developing CBDC to address concerns about the spread of the virus through existing payment methods.

The World Health Organization (WHO) has issued a warning regarding the spread of COVID-19 through banknotes. As a result of this fact, BIS signals that the tendency to give up cash will increase. For example, in the UK, the amount of cash has dropped drastically since the outbreak of the pandemic.

Report in favor of digital currencies – CBDC

In the medium term, the report predicts that the pandemic could

“It leads both to reducing the amount of cash held by consumers and to a structural increase in the use of mobile, card and online payments.”

The BIS anticipates that the current climate could increase the importance of the payment infrastructure operated by the central bank. This emphasizes the need to develop solutions such as CBDCs.

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The report highlights the need for CBDCs to be designed to withstand a variety of shocks – “including pandemics and cyber attacks”.

Despite supporting a central bank digital currency, BIS warns that eliminating cash as a generally accepted means of payment could also have negative effects. Specifically, it could have a severe impact on consumers who do not have access to banking services and the elderly.

BIS is an international financial institution that includes 600 members representing central banks in 60 countries.