How the pandemic pushed forward the development of digital payments

According to an April study published by the Bank for International Settlements (BIS), in fear of transmitting COVID-19 via cash, people are increasingly looking into cashless payments.

With a sudden increase in consumer demands for cashless payments, the pandemic can accelerate the worldwide transition to digital payments while serving as a catalyst for the modernization of the financial industry.

And it’s not the first case where a global crisis serves a catalyst for a major structural change.

After the Great Depression in the 1930s, the devastating economic crisis accelerated the process of eliminating the international gold standard while expanding social welfare and strengthening labor unions.

However, we don’t have to look that far to see how a global crisis accelerates major economic changes.

The 2008 debt crisis was followed by strict regulation of the banking industry, creating a system where banks have weaker financial performance but bear fewer risks to the world economy.

Shifts similar in magnitude to the previous economic crises are happening now.

First, consumers are looking for alternative ways to replace cash. This includes contactless credit cards, mobile, and cryptocurrency payments.

Furthermore, the COVID-19 pandemic highlighted the importance of central bank digital currencies (CBDCs), which many (including the BIS) see as the next step in the evolution of money and global finance.

After China began testing its digital yuan, many countries around the world have been picking up the pace in regards to CBDC research and implementation.

Britain, EU countries, Sweden, US, Canada – all of them are heavily discussing this topic right now.

Just recently, Japan also revealed that it’s going to add the matter of a central bank digital currency into its official economic plan.

To read more, please click on the link below…

Source: How the pandemic pushed forward the development of digital payments