BIS Innovation Hub head asserted the decline of cash use amid the pandemic has renewed the pertinence of bank-issued digital currencies.
Benoît Cœuré, the head of the Bank for International Settlements Innovation Hub, recently asserted that central bank digital currencies, or CBDCs, have been brought “into sharper focus” amid the coronavirus pandemic.
Speaking during a webinar hosted by Accenture, the ReReinventing Bretton Woods Committee, and the Chamber of Digital Commerce on April 17, Cœuré asserted that “the crisis has exposed the value of technologies which enable the economy to operate at arm’s length.”
He also revealed that the Bank of International Settlements, or BIS, is exploring tokenization as a possible solution for restarting segments of the economy during the lock-down.
Coronavirus pandemic accelerates decline of cash
The Innovation Hub head highlights the likely decline of cash-based payments amid the COVID-19 pandemic, asserting that the current economic climate has given greater cause for discussions surrounding CBDC:
“The current discussion on central bank digital currency also comes into sharper focus. Whether Covid-19 will accelerate the demise of cash is an open question. But already, it highlights the value of having access to diverse means of payments, and the need for any means of payments to be resilient against a broad range of threats.”
Cœuré notes that “payments have been at the forefront of technological change recently,” arguing that “a rapid shift towards digital payments can improve cost, transparency, and convenience for billions of consumers.”
BIS looks to trends in DLT for post-lockdown financial landscape
However, Cœuré asserts that ”Covid-19 will accelerate the digital transition beyond payments,” asking: “Will customers find their way back to banking branches when lockdowns are lifted and economies restart? Will this accelerate the shift towards virtual banking?”
Under this pretext, Cœuré stated that the BIS Innovation Hub will continue to examine “technological trends in finance” and their impact on central banks and regulators.
“Issues such as tokenization, open banking, and using technology to support regulatory and supervisory compliance (‘regtech’ and suptech’) are high on our agenda,” he added.
At the start of April, the BIS published a bulletin asserting that CBDCs could alleviate the risk of coronavirus transmission via banknotes. However, the report noted that CBDCs may alienate the elderly and the unbanked.