Government-to-person (G2P) payments have never been more important, as governments worldwide seek for ways to respond to the economic and social consequences of the COVID-19 pandemic. Eighty-four countries have reported changes to their social protection systems in response to the pandemic; fifty-eight countries of these are scaling up cash transfer schemes.
This IMF working paper presents a comprehensive framework for sustainable money solutions in support of social assistance. The framework consists of eight building blocks that may help policymakers i) take stock and assess emergency fixes taken to scale up mobile money in a crisis context and ii) develop sustainable long-term solutions for mobile government-to-person (G2P) transfers.
The National Bank of Ukraine (NBU) surveyed 100 financial market experts to determine the market niche and potential use cases for an NBU-issued central bank digital currency. Most respondents believe retail cashless payments and cross-border payments and settlements to be the most promising use cases for e-hryvnia. Second came G2P welfare payments, featuring smart contract technology to restrict the CBDC's use to specific purposes or during a special period of time. There was also considerable interest in the potential of e-hryvnia as an instrument for virtual assets settlements.
The National Bank of Ukraine (NBU) presented a draft concept for its potential e-hryvnia central bank digital currency (CBDC). It considers three possible design options. The first option would be a retail CBDC with smart contract functionality to implement targeted government (G2P) payments. The second option envisions what sounds like a wholesale e-hryvnia for usage in operations related to virtual asset operations, including on crypto exchanges. The third option include cross-border payments functionality, although it's not clear that this is being looked at at the retail or wholesale level. https://bank.gov.ua/ua/news/all/natsionalniy-bank-predstaviv-uchasnikam-platijnogo-rinku-ta-rinku-virtualnih-aktiviv--proyekt-kontseptsiyi-e-grivni
There are several ways to streamline and universalize an American national payment system. One easy way would be to build on the existing network of TreasuryDirect accounts. Any citizen or legal resident of the U.S., including any business, can open a digital account with the Treasury through which to transact with it. Accounts take five minutes to open and begin using. All the country would need to add is peer-to-peer connectivity between accounts, and then allow dollars to flow over the network.
These days, by far the fastest and most efficient way of delivering money is via smartphones and mobile devices. The U.S. government should simply provide a general portal to a wide range of payment delivery mechanisms. Visa and Mastercard are easily capable of handling these payments, especially as their normal transaction volumes have fallen significantly due to the shutdown. But the government should also work with platforms such as Venmo, Zelle, Square Cash, Paypal, Apple Pay and Google Pay [Chime, a San Francisco fintech startup, says it's piloted a way to distribute the $1200]. And it could also offer payment in cryptocurrency as an option.
Eleven members of Congress are calling on the U.S. Treasury Department to look at new technologies, including blockchain and distributed ledger technology, to help streamline how cash and supplies are distributed under a federal law trying to boost the economy during the COVID-19 crisis.
"The implementation of Central Bank Digital Currency (CBDC) in social assistance distribution offers significant advantages, particularly in the context of developing countries. CBDC enables more transparent and traceable transactions, which are crucial steps in reducing corruption and fund misappropriation. Traditional systems often suffer from high transaction costs and slow settlement processes, but with CBDC, both of these issues can be minimized. CBDC also eliminates intermediaries in fund distribution, which is highly relevant in developing countries where distribution chains are often long and complex, increasing the risk of fund loss. "
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