Fiat Money Circulation Might be Shortened due to Coronavirus

As the COVID-19 pandemic rages across the entire globe, people are searching for ways to stop or at least halt its spread. As cash is considered to be a potential source of contamination, people are looking to limit its use turning to digital money and contactless payments instead.

It has all started in China, both the pandemic and the idea of refusing from cash. Coinidol.com, a world blockchain news outlet, reported that the country has been considering the refusal from fiat money for some time. However, having evaluated possible consequences, the government decided to quarantine and disinfect banknotes instead.

When coronavirus started spreading throughout Europe, the WHO warned people against using cash. As the UK news outlet Daily Telegraph has reported, the organization advised Europeans to use contactless payments whenever possible and wash their hands each time after dealing with cash. Later on, the WHO clarified that they have been misinterpreted, and their advice wasn't coronavirus-specific. 

“WHO did NOT say banknotes would transmit COVID-19, nor have we issued any warnings or statements about this. We were asked if we thought banknotes could transmit COVID-19 and we said you should wash your hands after handling money, especially if handling or eating food.” Doing so is “good hygiene practice,” WHO spokeswoman Fadela Chaib stated to MarketWatch news outlet.

Any port in a storm

Nevertheless, countries started following China’s lead. Korea started disinfecting cash in order to make it less dangerous to people. The National Bank of Hungary has put billions of dollars in two-week quarantine. Moreover, they also decided to disinfect banknotes before putting them back into circulation. 

Ukrainian banks Alpha Bank and Privatbank halted currency exchange transactions in cash, thus forcing people to go and transact online, as local news outlets report. From March 18, Ukrainians can exchange currencies in these banks only using digital money.

Venezuela has gone even further. President Nicolas Maduro has decided to close banking institutions, considering them dangerous as they gather lots of people inside, which facilitates coronavirus spread. 

Can cryptocurrency become a lifeboat?

The spread of COVID-19 and strict lockdown measures see people turn to the Internet. From a certain point of view, it seems only natural. People are forced to stay at home 24/7. In some countries like Italy, it is forbidden to go outside without special permission, ao people have no other choice except ordering delivery of the goods they need and therefore pay online to minimize contact with the delivery-guy.

This opinion is shared by George Gor, the CEO of Coinidol. He stated:

“Coronavirus is transforming our reality, whether accidentally or on purpose, as it is believed by conspiracy theory adherents. As people have no chance to go shopping during quarantine, they will be forced to retreat from fiat money and turn to cashless payments over the Internet. In some countries, the only way to buy food is to order a delivery and pay online in advance to minimize contact with the courier. The food is simply left in front of the customer’s door. 

This new reality can transform our way of thinking irrevocably during these months. Such a situation is advantageous for governments, as it allows them to track all payments through fully controlled Visa, Mastercard and other payment services. In its turn, this can make people consider using less controllable cryptocurrencies, boosting their adoption.” 

It seems banks and other financial institutions realize it perfectly well. The overall global situation makes traditional industry players also explore innovative technologies. Italian Banca Sella has launched a bitcoin trading platform to keep up with changing times. As of now, the trading is limited but the platform is accessible to around 1.2 million of the country’s citizens.

The USA is also exploring the possibility of using digital money instead of cash. Democrats in the house of Representatives have recently proposed two bills stipulating the development of a Digital Dollar. This new legislation allows the Federal Reserve to create a Digital Dollar system including the creation of virtual wallets to deliver payments to the citizens.  

Meanwhile, there are 542,031 cases of COVID-19 infection worldwide with 24,365 deaths. 125,304 people have recovered as of March 27. 

What do you think, can the COVID-19 pandemic make people switch from fiat money to cryptocurrency? Let us know in the comments below!