The World Health Organisation (WHO) released a statement on March 9 recommending people to turn to cashless transactions to fight the spread of Covid-19. In a recent interview conducted by Joseph E. Aoun, president of Northeastern, with Bill Winters, chief executive of Standard Chartered Bank, told “The whole economy will go cashless in recent years.” Thousands of banknotes were destroyed or disinfected to eliminate the spread of the virus. The primary mode of COVID-19 transmission is through close person-to-person contact. It may be possible that a person can get COVID-19 simply by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this isn’t thought to be the main way the virus spreads.
In the U.S., the Federal Reserve has started storing banknotes before recirculating them back into the economy. Rumours persist that some people have been shoving banknotes into washing machines to rid them of the virus – taking advantage of the fact that their ‘paper’ money is made of plastic. Digital payments, once born out of convenience, have become a necessity for some. Some retailers have banned the use of cash in their stores to keep employees and customers safe, opting for contactless payments instead. Meanwhile, for those confined to their homes, online shopping is a lifeline.
There are plenty of benefits to going cashless: digital payments are convenient and – in current circumstances – are increasingly necessary. However, the transition from cash to cashless isn’t at all that straightforward. Online payments may seem easy enough, but there still remains a lack of standardisation in the system that delays payments and creates bottlenecks. For example, real-time payments within the UK are a reality, but challenge your bank to make an instant payment to a recipient in India or Brazil, for instance, and delays are inevitable. Liquidity is essential for people to remain confident in the whole financial system. Following the global financial crisis, banks’ financial buffers have become much more robust, but liquidity may soon dwindle as banks introduce a number of measures to prop up corporate clients and the economy, including emergency funding for repo markets, debt restructuring, mortgage holidays, new credit lines, huge credit drawdowns, and more.