The COVID-19 pandemic is pushing the global economy toward a major recession, but there may be a silver lining in all this for the crypto industry: The accelerated adoption of central bank digital currencies.

The use of cash seems to be plunging these days — particularly now, as people are increasingly wary of engaging with potentially germ-infested surfaces. Meanwhile, some central banks are reevaluating their strategies in favor of digital currencies, which they believe may carry more benefits than just stopping the virus from spreading further. So, how likely are we to see a central bank digital currency being released in the near future?

More hygienic than cash

CBDCs, or national digital currencies, are digital assets that are issued, monitored and regulated by a federal regulator. CBDCs represent fiat money in a digital form. Each CBDC unit acts as a secure digital equivalent of a paper bill and can be powered by blockchain or some other form of distributed ledger technology, but it is worth noting that concrete plans for implementation and motivations vary significantly depending on the country.

CBDCs seem to be an increasingly popular concept among central banks. As per a 2019 report issued by the Bank for International Settlements, a Switzerland-based organization representing 62 of the world’s central banks, as many as 70% of financial authorities worldwide were researching the potential effects that CBDCs could have on their economies.

During the pandemic, that percentage could reach even higher, as countries like the United Kingdom — where cash and ATM usage dropped by 50% over just a few days last month — might start looking for alternatives. Even in Germany, where cash is more popular than in neighboring countries, there has been a recent surge in contactless payments. Locals, including senior officials such as Chancellor Angela Merkel, are now using debit cards for their grocery shopping.

This poses the question: Is physical money actually that dangerous? At this point, it’s difficult to say whether banknotes transmit the disease, given that COVID-19 is still largely under-researched. Christine Tait-Burkard, an infection expert for the Roslin Institute at the University of Edinburgh, explained that the risk is relatively low, “Unless someone is using a bank note to sneeze in.”

According to a recent paper by the Bank for International Settlements that cites medical reports, there is also risk of transmission through contact with credit card terminals and PIN pads that might be more significant compared to the health risks posed by physical money.

Either way, the coronavirus’s alarming rate of infection has been causing major panic. For example, a man in South Korea reportedly attempted to sanitize 1.8 million won ($1,500) in a microwave, irrevocably damaging around half that sum as a result. Meanwhile, a video of someone washing Indonesian rupiahs in a bucket has been making rounds on Twitter, and in India, someone apparently developed a machine to sanitize banknotes. A World Health Organization spokesperson has had to squash reports that it recommended not using “dirty banknotes.”

However, it isn’t just the public who has begun to steer away from cash. In February, the People’s Bank of China ordered all local banks to disinfect cash with ultraviolet light and high temperatures and then hold it for seven to 14 days. Similar measures were reportedly introduced in Russia as customers and businesses were urged to use digital payments instead of cash and asked banks to limit the amount of physical rubles in circulation. Identical methods have also been implemented in India, Indonesia and Georgia, among other countries.

CBDCs are trending, but will they help stop the virus?

The risk of cash spreading COVID-19 is already motivating authorities to consider digital alternatives. “A once-in-a-century pathogen demands once-in-a-century solutions,” argued Deutsche Bank macro strategist, Marion Laboure, “An obvious place to start is to accelerate the inevitable shift toward [digital cash].”

BIS researchers seem to agree with the sentiment. “Irrespective of whether concerns are justified or not, perceptions that cash could spread pathogens may change payment behavior by users and firms,” it claimed in a recent report, which also stated:

“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.”

According to John Paul Schnapper-Casteras, founder of Schnapper-Casteras PLLC — a law firm that has been researching CBDCs among other digital phenomena — digital currencies entail more benefits for a virus-stricken economy. Payment speed and facilitated distribution could also be seen as important perks, Schnapper-Casteras explained in a comment for Cointelegraph:

“Two core features make CBDCs efficient and comparatively attractive as a policy tool: payment speed and helicopter money. Those would be especially useful in the current crisis, since a government could rapidly send direct payments to citizens (compared to the long delays in check issuance, tax refunds, etc.) and could also provide geographically and temporally targeted relief/stimulus.”

As digital currencies start to seem like a plausible update to the current financial system, some players are going as far as forecasting the end of physical cash entirely. Edwin Bautista, president and chief executive of UnionBank of the Philippines, claimed that the coronavirus outbreak will necessitate banks to leave physical cash behind. “Certainly, this pandemic amplifies the need for all banks to go digital now,” he said.

Indeed, some countries have recently sped up development of their digital cash projects. In the United States, for instance, the term “digital dollar” was mentioned in three separate coronavirus-related bills reviewed by the Congress as part of the CARES Act, although it has since been dropped from two of the documents.

Other countries such as South Korea and Sweden have recently launched pilot programs to assess the feasibility of issuing a CBDC. In its statement, the Bank of Korea clarified that it has no immediate plans to roll out a digital currency, but the pilot scheme will ensure that it remains an option, as market conditions are changing.

Sweden’s Riksbank, in turn, mentioned that “the use of banknotes and coins is declining in society” in a press release issued in February, when the COVID-19 epidemic was largely situated in China. The bank stressed it was cautious about the marginalization of cash. “The policy conversation around CBDCs was already starting to substantially accelerate in early 2020,” Schnapper-Casteras summarized, “The outbreak of coronavirus is going to propel it even further.”

Notably, China, which has been considered a leader of the CBDC race after completing basic function development for the digital yuan, is now apparently coming back online after drastically curbing the coronavirus outbreak on its territory. On April 4, the People’s Bank of China issued a statement saying that it will “undoubtedly continue” the CBDC development, while earlier that week, the central bank said that the digital yuan was among its “top priorities.”

Related: Eastern Caribbean Central Bank’s CBDC Could Beat China to the Punch in 2020

However, such persistence is not the case everywhere amid the pandemic due to the economic impact, especially among Western nations, according to John Todaro, head of research at TradeBlock. Moreover, Todaro believes that, “In Western Nations, you will first see a greater push towards non-physical cash payment channels before discussions really move along,” adding that governments are most likely looking to resolve the current crisis quickly:

“The COVID-19 pandemic could push governments to move the internal process of launching CBDCs along, but I would not expect this to be a high priority. Not only are governments tasked with considerable challenges on both healthcare and economic fronts in fighting the spread of this virus, but there already exist electronic payment channels in place that, if adopted to greater extent, could limit the use of physical cash and the germs that it carries.”

CBCDs might require more time

While the global interest in CBDCs has clearly peaked over the past few months, it is unlikely that any digital currencies will be released before the pandemic ends. In January 2020, before the WHO recognized the outbreak as a pandemic, the BIS released a survey conducted among 66 central banks that cover 75% of the world’s population and 90% of economic output. As per the results, only 10% of central banks said they are likely to issue a general purpose CBDC in the short term, while 20% are allegedly ready to roll out digital currencies in the medium term.

Two notable advocates for a digital dollar, J. Christopher Giancarlo and Daniel Gorfine, who worked together in the past at the Commodities and Futures Trading Commission, recently stressed in an interview with Cointelegraph that CBDCs are a delicate matter that can’t be rushed. Specifically, Giancarlo mentioned that while the digital dollar would be useful in a crisis, its development requires more time than the current emergency aid demands, adding, “One needs to be very cautious about trying to launch something as big as this amidst a crisis.”

Further, the interest in CBDCs might start to fade once the COVID-19 outbreak is dealt with, as Konstantinos Stylianou, associate professor of competition law and regulation at the University of Leeds, suggested to Cointelegraph:

“The primary drive behind CBDC’s was never to create a more hygienic form of payment, nor were they primarily considered as financial stability or liquidity enhancing mechanisms, which is what the world needs now. Once the pandemic conditions are longer an urgent concern, the usual reservations that held CBDCs back will take hold again.”

Consequently, Stylianou believes that it is unlikely that a CBDC will be released in the near future, “Or at least one that is not specifically targeted to deal with the pandemic.” He explained:

“The financial system is in such disarray at the moment that introducing an untested unprecedented financial instrument that was risky even during normal times would be neither prudent nor representative.”

Thus, CBDCs will eventually become a reality. “This is like predicting that flying cars will exist,” says the University of Leeds professor, “Sure, we’ve known that for a while, the question is when and how.” Schnapper-Casteras agreed that some forms of sovereign digital currencies “are surely going to happen,” but believes that those currencies might largely vary in their nature, “when they occur at scale, who leads, and what goals and policy values they will serve in a given country.”

Meanwhile, Todaro did not exclude the possibility of a CBDC being released even within “the next 6 months or so,” granted that it comes from Asia: