Bank of Canada Issues Statement Asking Retailers to Continue Accepting Cash
On April 13, 2020, the Bank of Canada issued a news release “strongly advocating” that Canadian retailers continue accepting cash during the COVID-19 pandemic. This followed its prior March 18 has expressed potential financial inclusion concerns associated with not accepting cash, noting that retailers “[r]efusing cash purchases outright [would] put an undue burden on those who depend on cash and have limited payment options.” The Bank of Canada encouraged the use of other mitigation measures in connection with the public health risk associated with the acceptance of cash, such as the use of hygienic measures.
The news release also included some guidance on safe handling of cash, stating that individuals should follow the public health guidelines on COVID-19 and wash their hands often, as they would do for other activities, and advising that it is also possible to clean water resistant polymer bank notes with soap and water.
The Bank of Canada also stated it is working with financial institutions avoid disruption to the cash supply in Canada.
Non-cash payment methods can also bear risks, in particular where there is a requirement to physically input a PIN on payment devices. In this vein, both Mastercard and Visa raised their contactless limit for “tap” payments to $250 in Canada.
The Bank of Canada is not the only central bank issuing such statements. The Bank for International Settlements (“BIS”) in its April 3 bulletin on “Covid-19, cash, and the future of payments”, stated that “[t]o bolster trust in cash and guarantee universal acceptance, several central banks have actively communicated that risks are low, and taken further actions”. These include the Bank of England and the German Bundesbank. The BIS bulletin noted the potential risk of a “payments divide” between those with access to digital payments and those without.
The BIS bulletin also noted that the current pandemic’s impact on the use of cash globally is complex and may vary by jurisdiction. It stated that “[i]n past crises, demand for cash has often increased, as consumers have sought a stable store of value and medium of exchange. At the current juncture, data do not yet paint a uniform picture. In the United States, cash in circulation has recently increased. But in the United Kingdom, automated teller machine (ATM) withdrawals have fallen (…). In the medium term, the outbreak could in principle lead to both higher precautionary holdings of cash by consumers and a structural increase in the use of mobile, card and online payments. These developments may differ across societies, and between different consumers.”
Finally, and not unexpectedly, BIS noted that the current crisis could amplify interest in central bank digital currencies (“CBDC”), and impact their design, noting that “CBDC would in particular have to be designed allowing for access options for the unbanked and (contact-free) technical interfaces suitable for the whole population.”