On the road or in payment systems, traffic jams are a nightmare. But unlike our roads, our payment systems can avoid congestion thanks to redundancies. Simply put, the Bank of Canada invests in backup systems to ensure our operations are smooth and resilient, even in the face of disruptive events.
COVID?19 offers one example. The pandemic has disrupted every aspect of our lives, and payment systems are no exception. Amid concern that bank notes could carry the virus, many stores stopped accepting cash. Other shops were forced to close their storefronts. A lot of shopping moved online, where many retailers accept only certain forms of payment, such as credit cards and PayPal.
This shift away from cash and toward online shopping made it difficult for people with limited payment options to buy their basic needs. So we asked retailers to continue accepting cash for in-store transactions. We also saw the use of e-transfers become more popular. In response to physical distancing measures, businesses and Canadians are finding different ways to exchange money smoothly.
The pandemic may also increase the risk that a financial institution could be temporarily short of funds or face operational challenges because essential staff are working remotely. Since payment systems are interconnected, if one institution can’t settle what it owes on time, that could affect the financial strength of other institutions. To prevent this, we have controls in place to make sure that all participants meet their payment obligations.