Researchers at the Bank for International Settlements (BIS) think COVID-19 may accelerate the adoption of digital payments and sharpen the debate over central bank digital currencies (CBDC).

The bank issued its forecast in BIS’ April 3 Bulletin. COVID-19 is changing the public's relationship with cash, BIS said, despite the scientific community’s consensus that coronavirus transmission via banknote is relatively unlikely. 

“Irrespective of whether concerns are justified or not, perceptions that cash could spread pathogens may change payment behavior by users and firms,” the researchers said. 

For starters, countries may expand digital payment infrastructure with more online, mobile and contactless options after COVID-19. Digital adoption actions could have an “especially severe impact” on millions of older and unbanked people, though. 

“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,” researchers said. Cash may therefore stage a comeback, the researchers admitted, but the pandemic “also calls for CBDCs.”

CBDC could bridge society’s need for digital payments with its responsibility to those who cannot easily access them. There are a few caveats: Central banks would have to tailor their CBDCs to “the context of the current crisis,” by making payment contactless and accessibility universal, the researchers wrote.

“The pandemic may hence put calls for CBDCs into sharper focus, highlighting 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,” they said.

Indeed, some politicians are already proving the researchers’ prediction true. Jorge Capitanich, governor of Argentina’s Chaco province, advocated for “digital currency transaction systems” that phase out cash usage in an April 1 coronavirus teleconference with President Alberto Fernández. 

Capitanich did not respond to a request for comment.

The idea of a digital dollar also appeared numerous times in the U.S., after language describing a central bank-operated system appeared in three different bills, including one by U.S. Senator Sherrod Brown.

Researchers also examined the question of whether the outbreak is having an impact on cash usage.

“The COVID-19 pandemic has led to unprecedented public concerns about viral transmission via cash,” researchers said.

They found different countries manifest their fear in often contradictory ways. Cash circulation surged in the U.S. while in the U.K. ATM withdrawal volume plummeted; some central banks sterilized reams of banknotes while others asked retailers to stop refusing cash, or called on the public to place science over fear.

Fear, however, appears most rampant in economies with small denomination bills like the U.S., U.K., Australia and others, the researchers found. Such countries spent the last 30 days googling banknote transmission terms with higher average search intensity than their large-denomination bill counterparts.