For those of us who still live in a cash society, the one question that is being asked is, ‘Can banknotes and coins transmit the coronavirus?’. Historically, during times of crisis, the demand for cash increased exponentially. If the cash is in one’s pocket, one feels in control. If it is in a bank somewhere, one feels at the mercy of other peoples’ decisions and systems. However, considering that when it comes to disease control, a credit card can leave one more exposed, as you still have to enter a PIN on a touchpad. Handling a credit card or touchpad could pose a much higher risk than handling cash, as the virus lives for much longer on surfaces such as plastic and stainless steel than on a polymer note.
For some time now, the central banks of several countries have been contemplating digital cash formats. Kenya’s and China’s Ant Financial have developed innovative mobile phone payment solutions. But it is important to remember that the notes and coins in your purse are issued directly by your country’s central bank – the cornerstone of a nation’s financial system. The stability of digital currencies, on the other hand, will depend on the economic success of commercial banks. The reality is that banks could very likely succumb to financial stresses in unstable times where lapses in a home loan and other repayments are more likely than ever before.
The Bank for International Settlements (BIS) is an international financial institution that aims to promote universal monetary and financial stability by coordinating the activities and fiscal policies of central banks . Simply put, the BIS acts as a ‘central bank’ for central banks globally. They have recently released a study of possible digital currency formats for consideration and comment, as each has its upsides and downsides. It has been noted that in countries such as Korea, Sweden, and the UK, cash usage is rapidly decreasing. Korea leads the way with reports stating that up to 86% of the value of all transactions are cashless. Some European countries such as Spain and Italy remain in their early teens at 14%.
When it comes to replacing analogue predecessors with new technologies, there are a few critical considerations. Something as simple as a power outage could cause significant panic, and double-spending is a risk. It stands to reason that digital identification systems will have to be failsafe.
Moving away from a cash system, could also seriously compromise the wellbeing of the previously unbanked in developing countries because informal trading is still the norm. This, and the fact that the elderly may not be able to adapt, have had many central banks actively encouraging the acceptance of cash.
The Bank of England has stated ‘The risk posed by handling a note is no greater than touching other common surfaces such as … doorknobs or credit cards’. With the SA Reserve Bank confirming that they are not contemplating withdrawing cash from circulation, cash is here to stay – for now. No harm in heeding the call to wash those hands before biting into the sandwich you just bought, though.
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