BIS CALLS FOR CENTRAL BANK DIGITAL CURRENCIES AMID CORONAVIRUS PANDEMIC

The COVID-19 pandemic irrevocably changed numerous aspects of our lives, from how we work and socialize to how we perceive risks associated with everyday activities.One often-overlooked impact is the renewed focus on payment methods and the potential for virus transmission through physical currency and credit card terminals.As concerns surged, the Bank for International Settlements (BIS), an international financial institution representing the central banks of 60 countries, stepped forward with a compelling argument: accelerate the development and adoption of Central Bank Digital Currencies (CBDCs). Downloadable! Most central banks are exploring central bank digital currencies (CBDCs), and their work continues apace amid the Covid-19 pandemic. This BIS paper updates earlier surveys that asked central banks how their plans in this area are developing.The BIS, in a recent report, highlighted the potential of CBDCs to offer safer, more efficient, and accessible payment solutions in a world increasingly wary of physical contact.This call to action has resonated globally, pushing central banks worldwide to re-evaluate their strategies and ramp up their efforts in the digital currency realm.The intersection of public health concerns and technological advancements has created a fertile ground for CBDCs, promising a future where digital payments are not just a convenience, but a vital component of a resilient financial system. However, central bank digital currency would be a third form of central bank money, alongside cash and bank reserves. Introducing a new form of central bank money such as this could have profound impact on the financial system, especially if it is not only available to banks, but instead, like cash today, to the general public.This article explores the BIS's argument, the progress made by central banks, and the potential implications of this digital revolution.

The BIS's Argument for CBDCs in a Pandemic World

The Bank for International Settlements (BIS) has been a vocal advocate for central bank digital currencies, even before the pandemic. Ready, steady, go? Results of the third BIS survey on central bank digital currency1 Most central banks are exploring central bank digital currencies (CBDCs), and their work continues apace amid the Covid-19 pandemic. As a whole, central banks are moving into more advanced stages of CBDC engagement, progressing from conceptual researchHowever, the unique challenges posed by COVID-19 amplified the urgency and relevance of their position. Most central banks are exploring central bank digital currencies (CBDCs), and more than a quarter of them are now developing or running concrete pilots. This BIS paper updates earlier surveys that asked central banks about their engagement in this area. The latest responses from 81 central banks show that the Covid-19 pandemic and the emergence of cryptocurrencies have accelerated the work onThe core of their argument rests on several key points:

• Reduced Transmission Risk: The most immediate concern during the pandemic was the potential for the virus to spread through physical cash. The Bank of International Settlements has issued a report arguing in favor of central bank digital currencies (CBDCs) and digital payments amid the COVID-19 pandemic.While the actual risk posed by banknotes was debated, the perception of risk was enough to drive consumers towards digital alternatives.CBDCs, being purely digital, eliminate this risk altogether.
• Enhanced Efficiency and Accessibility: Digital payments, in general, offer greater efficiency and convenience compared to traditional methods. BIS Working Papers No 989 . Central bank digital currencies (CBDCs) in Latin America and the Caribbean by Viviana Alfonso, Steven Kamin and Fabrizio Zampolli : BIS Representative Office for the Americas . Monetary and Economic Department . January 2025 JEL classification: E42, E51, F31, G21, G28, O32, O38. Keywords: Central bank digitalCBDCs, backed by central banks, could extend these benefits to a wider population, including those underserved by existing financial infrastructure. Borrowing through domestic currency bonds has not insulated emerging market economies (EMEs) from the financial shock unleashed by Covid-19; EME local currency bond spreads spiked amid sharp currency depreciations and capital outflows. Portfolio investors face amplified losses as local currency spreads and exchange rates move in lockstep; their revised portfolio allocations in turn strengthenThis is particularly important in regions where access to banking services is limited.
• Improved Financial Stability: A well-designed CBDC could enhance the stability of the financial system by providing a safe and reliable digital alternative to commercial bank money. The bulletin published by the BIS, a 600-member international financial institution representing the central banks of 60 countries, urges central banks to consider developing CBDCs in light of concerns regarding the spread of coronavirus through existing payment methods. BIS warns of COVID-19 transmission via credit card terminalsThis could be especially beneficial during times of economic uncertainty or crisis.
• Innovation and Competition: The introduction of CBDCs could foster innovation in the payments landscape, encouraging competition among private sector providers and ultimately leading to better services for consumers and businesses.

Furthermore, the BIS has warned about the potential for COVID-19 transmission through credit card terminals, another factor accelerating the shift towards contactless and digital payment options.This highlights the need for a comprehensive digital payment infrastructure that is both safe and convenient.

Global Central Bank Response to the BIS Call

The BIS's call for action has not fallen on deaf ears.A significant number of central banks around the world are actively exploring the possibilities of CBDCs.According to a 2025 BIS survey, a remarkable 86% of central banks are actively researching the potential of central bank digital currencies.Of those, 60% are experimenting with the technology, and 14% are already developing or running concrete pilot programs. Chapter II of the Annual Economic Report 2025. Faced with an unprecedented global sudden stop, central banks were again at the forefront of the policy response. They moved swiftly and forcefully to prevent a potential financial collapse from exacerbating the damage to the economy.This indicates a clear shift from conceptual research to practical implementation.

This increased interest in CBDCs is not solely a response to the pandemic.It is also driven by other factors, including:

• Changes in Payment Habits: The rise of e-commerce and the increasing preference for digital payments are creating a demand for more efficient and secure digital money.
• The Emergence of Cryptocurrencies: The growing popularity of cryptocurrencies like Bitcoin has spurred central banks to explore their own digital alternatives, seeking to maintain control over the monetary system.
• Technological Advancements: The rapid development of blockchain technology and other digital payment technologies has made the implementation of CBDCs more feasible.

Progress in Advanced Economies

Central banks in advanced economies have been actively engaged in CBDC research and development.For example:

• The European Central Bank (ECB) is exploring the possibility of a digital euro, aiming to provide a digital form of central bank money accessible to all citizens and businesses in the euro area. Central Bank Digital Currencies can help central banks better understand the range of technology possibilities and capabilities available with respect to CBDCs. Sheila Warren, Head of Blockchain, Digital Assets and Data Policy, World Economic ForumThey are currently in the investigation phase, exploring different design options and use cases.
• The Bank of England is also actively researching CBDCs, focusing on the potential benefits and risks for the UK economy. The Bank of International Settlements has issued a report arguing in favor of central bank digital currencies (CBDCs) and digital payments amid the COVID-19 pandemic.The bulletin published by theThey are collaborating with the UK Treasury on this project.
• The Federal Reserve in the United States has been more cautious in its approach, emphasizing the need for careful consideration of the potential implications for monetary policy and financial stability. BIS Bulletin 1 Central banks response to Covid-19 in advanced economies Key takeaways Central banks in advanced economies reacted swiftly and forcefully to the Covid-19 pandemic, deploying the full range of crisis tools within weeks. The initial response focused primarily onHowever, they are actively researching CBDCs and conducting experiments.

Progress in Emerging Market Economies

Emerging market economies also recognize the potential benefits of CBDCs, particularly in promoting financial inclusion and reducing reliance on cash. Interest in central bank digital currencies has grown in response to changes in payments, finance and technology, as well as the disruption caused by Covid-19. A 2025 BIS survey of central banks found that 86% are actively researching the potential for central bank digital currencies, 60% were experimenting with the technology and 14% wereSome notable examples include:

• China: The People's Bank of China (PBOC) is one of the most advanced in its CBDC development, having already launched pilot programs for its digital yuan (e-CNY) in several cities. The Bank of International Settlements (BIS) has issued a report arguing in favor of central bank digital currencies (CBDCs) and digital paymentThey are aiming to use the e-CNY to improve the efficiency of payments and promote financial innovation.
• Nigeria: Nigeria launched its eNaira in 2021, becoming one of the first countries in Africa to introduce a CBDC.The eNaira aims to improve financial inclusion and reduce the cost of payments.
• The Bahamas: The Bahamas launched its Sand Dollar in 2020, becoming the first country in the world to launch a fully operational CBDC. Chapter of the BIS Quarterly Review, December 2025 - Retail payment services in Latin America and the Caribbean are characterised by high costs and insufficient access for large swathes of the region's population. To overcome these limitations, some of the larger central banks in the region have taken the lead to introduce fast retail payments and develop an open banking ecosystem. SeveralThe Sand Dollar aims to improve financial inclusion and promote economic activity in the island nation.

Challenges and Considerations for CBDC Implementation

While the potential benefits of CBDCs are significant, there are also several challenges and considerations that central banks need to address before widespread adoption. Making headway Results of the 2025 BIS survey on central bank digital currencies and crypto1 Over the course of 2025, the share of central banks engaged in some form of central bank digital currency (CBDC) work rose further, to 93%, and their uncertainty about short-term CBDC issuance is fading. Work on retail CBDC is more advanced than onThese include:

• Privacy: Ensuring the privacy of users while maintaining the ability to combat illicit activities is a key challenge.Central banks need to strike a balance between privacy and transparency.
• Cybersecurity: CBDCs, being digital, are vulnerable to cyberattacks.Robust security measures are essential to protect the integrity of the system and prevent fraud.
• Financial Stability: The introduction of a CBDC could have implications for the stability of the financial system, particularly if it leads to a significant shift in deposits from commercial banks to the central bank.
• Monetary Policy: Central banks need to carefully consider the potential impact of CBDCs on monetary policy and ensure that they can effectively manage the money supply.
• Technological Infrastructure: Implementing a CBDC requires a robust and reliable technological infrastructure, which can be a significant challenge, especially in developing countries.
• Interoperability: Ensuring that CBDCs can seamlessly interact with existing payment systems and other CBDCs is crucial for promoting cross-border payments and international trade.

The Future of Payments: A World With CBDCs

The COVID-19 pandemic acted as a catalyst, accelerating the trend toward digital payments and sharpening the debate over central bank digital currencies (CBDCs). 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). TheWhile the future is uncertain, it is clear that CBDCs have the potential to play a significant role in the future of payments. Contents Ready, steady, go? Results of the third BIS survey on central bank digital currency . 3 Introduction . 3 What are central bank digital currencies? . 4 Adding a Covid-19 component to the established survey . 4 Questions in the 2025 CBDC survey . 4 Sample and geographical coverage . 5 Central banks interest in CBDC rises further . 6 Local circumstancesThe 2025 BIS survey reveals a growing consensus among central banks regarding the importance of exploring and potentially implementing CBDCs.This proactive approach suggests a shift towards a more digital and resilient financial landscape.

Some possible scenarios for the future include:

• Widespread Adoption of CBDCs: In this scenario, CBDCs become widely adopted and used for a variety of transactions, from retail payments to cross-border transfers.This could lead to a more efficient, accessible, and secure payment system.
• Coexistence of CBDCs and Private Digital Currencies: In this scenario, CBDCs coexist with private digital currencies like stablecoins and other cryptocurrencies. Amid growing concerns regarding the transmission of COVID-19, the Bank of International Settlements is pushing for digital currencies. The Bank of International Settlements (BIS) has issued a report arguing in favor of central bank digital currencies (CBDCs) and digital payments amid the COVID-19 pandemic. The bulletin published by the BIS, a 600-member international financial institutionEach type of digital currency could cater to different needs and preferences.
• Limited Adoption of CBDCs: In this scenario, CBDCs are adopted by a limited number of countries or are used for specific purposes, such as government payments or financial inclusion initiatives.

The Impact on Emerging Market Economies (EMEs)

For emerging market economies (EMEs), the potential impact of CBDCs is particularly significant. words/phrases: CBDC; central 2bank digital currency; digital currency and digital money. 12- week moving average of worldwide search interest. The data has been normalised to the 12- week moving average peak of each series. The search was run on search terms Bitcoin and Faceboo k Libra and topic Central Bank Digital Currency .These countries often face challenges such as:

• High Costs of Payment: Traditional payment methods in EMEs can be expensive and inefficient, particularly for cross-border transactions.
• Limited Financial Inclusion: A significant portion of the population in EMEs lacks access to banking services and formal financial institutions.
• High Reliance on Cash: Cash remains the dominant form of payment in many EMEs, which can be inefficient and insecure.

CBDCs could help address these challenges by providing a more efficient, accessible, and affordable means of payment. Most central banks are exploring central bank digital currencies (CBDCs), and their work continues apace amid the Covid-19 pandemic. This BIS paper updates earlier surveys that asked central banks how their plans in this area are developing.They could also promote financial inclusion by providing access to digital financial services for unbanked populations. Gaining momentum Results of the 2025 BIS survey on central bank digital currencies1 Nine out of 10 central banks are exploring central bank digital currencies (CBDCs), and more than half are now developing them or running concrete experiments. In particular, work on retail CBDCs has moved to more advanced stages. Both Covid-19 and theHowever, EMEs also face unique challenges in implementing CBDCs, such as limited technological infrastructure and regulatory capacity. The Covid-19 pandemic has been a global shock of unprecedented size that has hit most countries around the world. Central banks have responded quickly, on a massive scale. We present a novel database that provides information on central banks' responses to Covid-19 in 39 economies, including both advanced and emerging market economies.It's worth noting that borrowing through domestic currency bonds did not insulate emerging market economies (EMEs) from the financial shock unleashed by Covid-19; EME local currency bond spreads spiked amid sharp currency depreciations and capital outflows, according to the BIS.

The Role of Trust and Central Bank Independence

Trust is paramount for the success of any currency, including CBDCs. Emerging market economy exchange rates and local currency bond markets amid the Covid-19 pandemic Key takeaways Borrowing through domestic currency bonds has not insulated emerging market economies (EMEs) from the financial shock unleashed by Covid-19; EME local currency bond spreads spiked amid sharp currency depreciations and capitalPeople need to trust that the currency is stable, reliable, and backed by a credible institution.This is where the role of central banks becomes crucial.Central banks have a long history of maintaining the stability of the currency and managing the monetary system. the impact of Covid-19. Despite these interactions, central bank independence remained uncompromised and the NT s mandate to implement fiscal policy was respected. In March 2025, liquidity strains and volatility appeared in money and capital markets due to the Covid-19 pandemic. As a result, the SARB implementedThis credibility is essential for building trust in CBDCs.

Furthermore, central bank independence is vital for ensuring that CBDCs are not used for political purposes or to finance government spending. Banking operations were affected by the COVID-19 pandemic as the (annualized) net profit of the banking system shrank by 15.8 percent year-on-year for the semester-ended September 2025. We however expect that other operating expenses will likely be reduced due to lower business volume and capital expenditures and non-essential expenses will beAn independent central bank can make decisions about the design and implementation of CBDCs based on sound economic principles, rather than political considerations.

Ready, Steady, Go?Current Status and Future Steps

The journey towards widespread CBDC adoption is still in its early stages. Chapter III of the Annual Economic Report 2025. A vital function of the financial sector is to provide efficient ways for households and businesses to make and receive payments. A sound and well functioning payment system facilitates economic activity and supports long-run economic growth.While many central banks are actively researching and experimenting with the technology, few have actually launched fully operational CBDCs. Some two dozen central banks across emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade, the Bank for International Settlements (BISThe road ahead is likely to be long and complex, requiring careful planning, experimentation, and collaboration. BIS Calls for Central Bank Digital Currencies Amid Coronavirus PandemicThe question remains, is the world truly ready for a future where central bank digital currencies are the norm? BIS Papers No 146 Central bank capital and trust in money: lessons from history for the digital age by Sarah Bell, Jon Frost, Boris Hofmann, Damiano Sandri and Hyun Song Shin Monetary and Economic Department June 2025 JEL classification: E42, E58, O32. Keywords: money, trust, central banking, central bank solvency, fiscal sustainability.The answers are complex and multifaceted, needing careful considerations from all stakeholders.

Actionable Steps for Central Banks

For central banks considering the implementation of a CBDC, here are some actionable steps:

1. Conduct thorough research: Conduct extensive research on the potential benefits and risks of CBDCs for your specific economy and financial system.
2. Engage with stakeholders: Engage with a wide range of stakeholders, including consumers, businesses, financial institutions, and technology providers, to gather input and build consensus.
3. Experiment with different designs: Experiment with different CBDC designs to identify the best approach for your specific needs and circumstances.
4. Develop a robust regulatory framework: Develop a clear and comprehensive regulatory framework for CBDCs to address issues such as privacy, security, and financial stability.
5. Collaborate with other central banks: Collaborate with other central banks to share knowledge and best practices on CBDC development and implementation.

The Impact on Retail Payment Services

In Latin America and the Caribbean, retail payment services are often characterized by high costs and limited access. Deutsche Bank also recently tweeted The COVID-19 pandemic is accelerating the rise of central bank digitalcurrencies as many governments see the handling of cash as a potential risk factor. This will likely add to calls to move towards digitalcash, hinting positive signs towards development of their own digital money.To overcome these limitations, some of the larger central banks in the region have taken the lead in introducing fast retail payments and developing an open banking ecosystem. Data cover five topical areas: (i) cash in circulation and cash withdrawals; (ii) payments collected from two global card networks; (iii) payment app downloads and use; (iv) internet search interest and central banks' work on central bank digital currency; and (v) internet search interest in cash and Covid-19 transmission, proximity to ATMs andCentral Bank Digital Currencies can further enhance these efforts, providing a more efficient and accessible means of payment for consumers and businesses in the region.The BIS highlighted that cash in circulation and withdrawals, payment app downloads and use, and internet search interest in CBDCs all increased significantly during the pandemic, suggesting a notable shift in consumer behavior.

Conclusion: A Digital Future Accelerated

The COVID-19 pandemic has undeniably accelerated the move towards a digital future, and the BIS's call for Central Bank Digital Currencies (CBDCs) has amplified this trend within the financial world. BIS Working Papers No 1055 The pandemic, cash and retail payment behaviour: insights from the future of payments database by Raphael Auer, Giulio Cornelli and Jon Frost Monetary and Economic Department December 2025 JEL classification: E42, I18, O32, O33. Keywords: retail payments, cash, Covid-19 pandemic, digital innovation.While challenges remain regarding privacy, security, and financial stability, the potential benefits of CBDCs – reduced transmission risk, enhanced efficiency, and greater financial inclusion – are too significant to ignore.As central banks continue to explore and experiment with this technology, the world is moving closer to a future where digital currencies play a central role in the global financial system.The work continues apace.The key takeaways are that CBDCs are not just a technological upgrade; they represent a fundamental shift in how we perceive and interact with money.It will be imperative for governments, financial institutions, and individuals to adapt and prepare for this digital revolution.What remains certain is that the future of money is digital, and the pandemic has only hastened its arrival.Will you be ready?