Cashless, Crypto and Covid-19 lead a further step to Central Bank Digital Currency (CBDC)

The irreversible decline in the use of cash, the explosion of cryptocurrencies, the contactless payment usage increase because of COVID-19, and the implementation of the digital coins of china — no matter we are willing or not, we are standing in front of a cross road of payment.

It is still too early to see the fully impact of COVID-19, but the revolution never happened over one night, the details reveal the path of progress. And we have enough reasons to believe that Central Bank Digital Currency (CBDC) is coming.

What is CBDC? According to European Central Bank (ECB): “a digital euro would be a central bank liability offered in digital form for use by citizens and businesses for their retail payments. It would complement the current offering of cash and wholesale central bank deposits.”

1. The decline of cash usage from 2018 to 2019

People are shifting their payment habit rapidly these years. According to Capgemini, global non-cash payment surged nearly 14% from 2018 to 2019 to reach 708.5 billion transactions, the highest growth rate recorded in the past decade.

Specifically, European non-cash transaction volumes grew more than 12% from 2018 to 2019. (below)

Source: Capgemini

With a growth rate of nearly 25%, Asia-Pacific (APAC) led the global non-cash transactions space, with recorded volumes of 243.6 billion in 2019. (below)

Source: Capgemini

2. The explosion of cryptocurrencies

According to CoinMarketCap, the total number of cryptocurrencies is 6955 with a total market cap of $324.716 billion (as of September 9, 2020).

The technology and the possible future behind cryptocurrency lead lots of discussions. In addition to Bitcoin, the most famous cryptocurrency is Libra, a cryptocurrency developed by Facebook, which adds momentum to the discussion. Even though Facebook chief executive Mark Zuckerberg promise to lawmaker that Libra would not be launched anywhere in the world without obtaining approval from US regulators, the fact that cryptocurrency is threatening fiat currency still causes the government to be worried.

3. Cash withdrawals drop during COVID-19

According to Financial Times, the daily value of cash withdrawals from ATMs fell 40 % after the Irish government introduced lockdown measures, cash volumes in Spain dropped as much as 90 %. In France, according to data from BPCE (Banque populaire Caisse Epargne), the second largest bank in France, in April this year, more than 60% of the bank users used electronic payments, especially contactless payments with credit cards, which increased 30 % within a year.

Surprisingly, in front of such big crises, people did not go to bank and take their cash out. According to Le Monde, on the contrary, in France, cash withdrawals from ATMs have collapsed. “Between the start and the end of the confinement period, ticket withdrawals fell by 50% in volume and by 40% in value, unprecedented in the past fifteen years,” testifies Erick Lacourrège, general manager services to the economy and the network at the Banque de France. Since the reopening of convenience stores, the number of ATM withdrawals is still down 10% in value and 20% in volume compared to last year.

4. CBDC as a defensive strategy

If the electronic payment is the solution for the transformation of payment method, then CBDC is the defensive strategy to assure the status of legal tender.

As of today, such a necessity does not appear to have the character of urgency for most central banks (Barontini and Holden, 2019). However, this could change over long-term.

According to a recent survey by the BIS Committee on Payments and Market Infrastructures, 69 % of the 80 central banks in the panel are now conducting work related to CBDCs (Barontini and Holden, 2019) . Governments are preparing themselves to be ready for the innovation and financial transformation.

5. Three major markets: US, Europe, and China

Three leading non-cash transaction markets are US, Europe and China. And lastest development status listed below:

United States

A. The Federal Reserve is still assessing the possibility of issuing digital currencies.

B. Federal Reserve Bank publish “Comparing Means of Payment: What Role for a Central Bank Digital Currency? Accessible Data” on August 13rd 2020.

C. Lael Brainard, Board of Governors of the Federal Reserve System delivered a keynote speech on CBDC on the same day.


A. ECB published “Report on a Digital Euro” in October 2020.

B. The report indicates that: Towards mid-2021 the Eurosystem will decide whether to launch a digital euro project, which would start with an investigation phase


A. Shenzhen Government and the People’s Bank of China launched a pilot CBDC(DC/EP) red envelope. Funded by Luohu District, Shenzhen, a certain amount of CBDC(DC/EP) will be distributed randomly to individuals’ red envelope in Shenzhen. The public can spend issued CBDC(DC/EP) to any designated merchants within the validity period in Luohu District in October 2020.

B. Some employees of the Shenzhen branch of the four major banks in China were invited to participate CBDC(DC/EP) internal test. The test content is limited to basic functions such as download, registration, redemption, and transfer. In addition, some institutions in Shenzhen are currently using digital currency to pay party fees and union fees in September 2020.



God is a tireless and curious child.

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