Governments could boost digital money alternatives to prevent the spread of the disease.
The current crisis that the lung disease Covid-19 generated could boost the development of Central Bank Digital Currencies (CBDCs). This virus has caused serious economic problems worldwide. However, CBDCs can become the most viable option to face the limitations resulting from the quarantine that citizens are facing in recent months.
In this sense, the macro strategist of the financial company Deutsche Bank, Marion Laboure, stated her opinion regarding this situation on her Twitter account. According to Laboure, the pandemic could be the reason why the world’s largest central banks are considering promoting digital alternatives.
The increasing risk of Covid-19 spreading more strongly may lead banks to think about more efficient solutions, according to a series of tweets published by the expert last April 3rd. CBDCs could benefit the most since governments need reliable and safe alternatives.
CBDCs Could Prevent Coronavirus from Spreading
One of the main measures that China took last February to prevent the spread of Covid-19 was to suspend the use of cash. These types of protocols emerged after an investigation discovered in 2008 that the Influenza virus could survive up to 17 days on cash.
According to Laboure, this action shows that governments can consider the use of cash as a risk factor in circumstances such as the ones we see today. Therefore, some financial institutions may be looking for new ways to boost digital money transactions to avoid risks. This decision could be another opportunity for digital currencies.
Mentioning the same idea, the official Deutsche Bank also supports the solution. “A once-in-a-century pathogen demands once-in-a-century solutions. An obvious place to start is to accelerate the inevitable shift toward (digital cash)”. The institution sent this message through its official Twitter account at the beginning of April 2020.
Supporting the thesis on the risk associated with the use of cash during the pandemic, Laboure published an article last March 19th. She explained, along with other experts in the field, that it is imperative to take digital measures to prevent the spread of the Covid-19.
“While Chinese authorities have been destroying banknotes that have potentially come into contact with the coronavirus, Western countries remain woefully behind not just in their response to the pandemic, but also in adopting digital payments. One silver lining to the Covid-19 crisis is that this may soon change”, the article says. Laboure considers that Western countries are having problems, this way, to face the pandemic that has killed 108.614 people around the world.
Although collaborators of Laboure supported her words in the article, the affirmation contrast with the research of the Deutsche Bank. The research published in January only recognizes the decrease in cash payments in China. However, the study details that money can still spend a long time in circulation and Central Bank Digital Currencies would not replace fiat money in a short time either.
By María Rodríguez