COVID-19 is changing our relationship with money, know how?

Due to the corona virus epidemic, retailers are asking customers to wear masks, keep physical distance and avoid cash as far as possible. Despite scientific evidence indicating that cash or notes do not spread to Kovid-19, there is a strange lethargy among the people about the use of cash.

When the corona is at its peak, banks in China and South Korea have begun the process of disinfecting (destroying germs) and quarantining (stripping out) of notes to slow the spread of the novel corona virus. Other central banks have refused to adopt such measures, stating that there is a greater risk of handling cash than touching other things, which are often touched, such as PIN pads.

For example, the Bank of Canada has asked retailers to stop refusing cash, as this is causing trouble to those who depend only on cash for payment. Despite all these assurances, fear of the spread of the virus can increase the habit of digital payment and reduce the use of cash in the society. Although digital payment systems such as Apple Pay, Venmo and Google Pay have become widely popular in recent years, these payment apps were not meant to replace the cash system nowadays. In fact, due to these applications, there is no major shortage in the notes which are in circulation.

Crash in trouble
International settlement banks, which advise central banks around the world, launched a bulletin in April stating that the epidemic could increase the trend of digital payments around the world, even the digital currency of central banks As well. It is no wonder A global crisis acts as a catalyst for fundamental changes. For example, the Wastberga loot from a helicopter in Sweden gave birth to a Cashlash Society there. Due to the series of frequent burglaries in shops, banks and even buses, Sweden reduced the trend of cash to protect its workers. Cash trend in Sweden is gradually decreasing, where it was 39 per cent in 2010, it decreased to 13 per cent in 2018. Currently, about 20 percent of retailers in Sweden no longer accept cash or cash.

Sweden’s central bank Riksbank announced in 2017 that they wanted to initiate a pilot program to understand the feasibility of e-krona, a national digital currency in the country. Recently, Riskbank has started a joint technical project with Ascenter to decide the technical aspects of e-krona. So far, only information has come out that the upcoming digital currency will be based on block chain technology. However, according to earlier reports of the pilot program that took place, this currency will be centrally managed, to ensure that the central bank has complete control over the movement of money.

China’s digital currency test
China also recently started a pilot program related to its digital currency i.e. Digital Yuan in its four big cities, but the complete information related to this program of National Digital Currency could not come out. Digital Yuan is being backed by the Central Bank of China, The People’s Bank of China, and is linked to the national currency. These sovereign digital currencies will not be like traditional cryptocurrencies such as bitcoin, etc., which support decentralization, and are not managed by any central authority. It is being said about the Chinese digital currency that it is using unsymmetrical cryptography (public / private keys) and smart contracts, which allow for controlable measures and prevent fraud.

The centralization of digital yuan will give the Chinese government the power to monitor and monitor money transactions unmatched. In addition, the People’s Bank of China has filed 50 patents related to the digital yuan, and intends to distribute the digital currency through commercial banks. The bank is also planning to develop a tracking system through which the movement of digital currency can be monitored. The timing of the launch of the Digital Yuan is when interest rates are falling worldwide and the world is busy dealing with the Corona epidemic, giving China an unusual opportunity. The purpose of the digital yuan is to increase its trend and the ultimate objective is to become a global currency like the US dollar.

By maintaining control over the country’s financial security, another objective of China is to beat private rivals like Facebook’s libra. China believes that digital currencies that are not issued by the government or central banks of any country are a threat to the sovereignty of the countries.

Digital currency coming to Canada as well?
The Bank of Canada seems to have a keen interest in re-thinking about the cash trend and re-forming the role of the Central Bank. This was clearly indicated in the latest job post of the central bank. Designing and starting the central bank’s own digital currency will be ‘like starting a program of major social importance’. The proposed digital currency will protect the privacy of the user, but it will not provide the same benami facility as is found in cash transactions. It is intended to be accessible, indicating that all Canadian citizens will be able to use digital currency, even those who do not have a mobile phone or bank account.

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Ever since cryptocurrency has come under discussion, people’s interest in blockchain is increasing, many countries have started experimenting with digital currencies. As central banks are trying to enter the race to develop digital currency, governments must first test whether such a move will actually help the economy. Citizens should also think with mind before getting caught in this mess because there will be serious issues related to privacy with National Digital Currency.

Looking at the cases of experiments in China and Sweden, it seems that there is no difficulty in announcing the changes during the crisis, but the launch of digital currency during the crisis can give a new power to the governments. The role of the state can change drastically, if countries move towards the Cashlash Society, which encourages central banks to adapt to create stricter controls on money transactions.

(Anwar Mohammad McMaster is a PhD researcher in Political Science at the University and the views expressed in this article are his personal views)


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