The pandemic could accelerate the global transition to digital payments: the digitization experience from Cadabrus Casino

The coronavirus pandemic has forced governments around the world to ask citizens to wear masks, maintain social distancing, and limit the use of cash whenever possible. And while scientific evidence suggests that banknotes do not transmit COVID-19, many countries are seeing a decline in fiat money in favor of cashless payments, which in turn is driving the rise of digital currencies. Enterprises from the service and entertainment sectors have switched to electronic payment methods: cafes, restaurants, gaming clubs (e.g. Cadabrus casino and others).

Factors accelerating the processes of digitization of payments

The trend began to be followed in mid-February 2020. Subsequently, Chinese banks began to disinfect all incoming banknotes, and the Central Bank of China began to process the banknotes with ultraviolet radiation using special lamps. In addition, a significant number of banknotes have been withdrawn from circulation and new ones have been printed in their place. The authorities of South Korea and Hungary have also taken action. In these countries, paper money received from banks was disinfected using special ovens in which it was kept for a few seconds at a temperature of up to 150 degrees Celsius.

To prevent the spread of the coronavirus, the US Federal Reserve introduced a "quarantine" in March for cash dollars originating in Asian countries. The banknotes were kept in the vaults of the Federal Reserve System for seven to ten days, after which they were checked and sent to financial institutions. And in Pakistan, the Central Bank introduced a 14-day "rupee quarantine," but in this case, the currency was held in various private banks in the country and it was not about paper money imported into the country, but about banknotes that banks received from hospitals and clinics. An illustrative example is a number of bets that have completely switched to digital payment methods, such as the Cadabrus Casino.

Impact of the pandemic on the acceleration of the pace of digitization of the economy

The coronavirus crisis, experts say, could be a trigger similar to the Westberg incident, which will accelerate the creation of digital currencies and eliminate the use of cash. So, in late April, China launched a digital yuan pilot program in several major cities. Four major banks in the country, including the Agricultural Bank of China, and 22 companies are participating in the large-scale testing. The digital currency is backed by the People's Bank of China and tied to the local currency. Such a yuan would hardly resemble traditional cryptocurrencies supporting decentralization and would likely use asymmetric cryptography and smart contracts to ensure controlled anonymity.

Despite the fact that Beijing's plan to convert the yuan into a world currency was fulfilled five years ago, when the IMF board voted for it, the yuan still occupies a rather modest place in the world economy and international finance (at the end of the first quarter of this year, the yuan's share in the foreign exchange reserves of the member states). The IMF was only 2.02% against 61.99% for the US dollar). The switch to DCCB (the digital currency of the Central Bank) will strengthen the position of the state and establish a monopoly on the issuance of money by a Chinese bank - in the country, the digital yuan will suppress attempts to use other cryptocurrencies. In addition to the PRC, Crypto Yuan will serve foreign trade and exports of Chinese capital. By introducing the digital yuan, Beijing is counting on a de-polarization of the economy and foreign economic relations, which is particularly important in the context of Washington introducing economic sanctions against the Middle Kingdom, experts say.

Application

Despite the fact that the process of adopting digital currencies has already begun, it is not worth rushing into anticipating the disappearance of cash in the near future. First, the need for an intermediary in financial transactions will disappear in the digital currency environment, which could cause serious unrest; in addition, cybercrime threats are multiplying - all these challenges will have to be addressed in one way or another, and countries need time to prepare for them. In addition, the IMF study found that elderly people love cash and do not want to give it up, so the beginning of a completely "cashless future", experts say, is only possible in the long run, although the pandemic has accelerated the process.