The BIS Bulletin notes unprecedented concern about whether cash is safe to use in times of corona by analyzing the sharp rise of online searches on the matter. The report answers their questions with a collection of conclusions from medical experts, who have deduced that:
"the probability of transmission via banknotes is low when compared with other frequently-touched objects."
Ultimately, this BIS report highlights "the value of having access to diverse means of payments", and that means keeping cash an option.
- The Covid-19 pandemic has fanned public concerns that the coronavirus could be transmitted by cash.
- 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.
"A realistic assessment of the risks of transmission through cash is particularly important because there could be distributional consequences of any move away from cash."
- To bolster trust in cash, central banks are actively communicating, urging continued acceptance of cash and, in some instances, sterilising or quarantining banknotes. Some encourage contactless payments.
- Looking ahead, developments could speed up the shift toward digital payments. This could open a divide in access to payments instruments, which could negatively impact unbanked and older consumers. The pandemic may amplify calls to defend the role of cash – but also calls for central bank digital currencies.
"If cash is not generally accepted as a means of payment, this could open a ‘payments divide’ between those with access to digital payments and those without. This in turn could have an especially severe impact on unbanked and older consumers. In London, one reporter (Hearing, 2020) has already noted the difficulties of paying with cash, and the consequences for the 1.3 million unbanked consumers in the United Kingdom.
In many of the emerging market and developing economies where authorities have recently called for greater use of digital payments, access to such alternatives is far from universal. This could remain an important debate going forward, potentially asking for a strengthening of the role of cash."