Summary
This paper explores how retail central bank digital currencies (CBDCs) could enhance the delivery of social safety nets (SSNs). It assesses CBDC design features and their implications for payment administration and delivery. Findings suggest that using CBDCs solely as payment delivery solutions offers limited advantages over existing systems such as faster payment systems. However, leveraging CBDCs as payment administration platforms—with peer-to-peer transfers, decentralized ledger access, and advanced programmability—could transform SSN delivery by enabling agencies to automate transfers, operate independently from private financial intermediaries, and monitor transactions directly. These benefits come with significant challenges, including privacy concerns, compliance risks, and infrastructure requirements. The paper emphasizes that realizing CBDCs’ full potential for SSNs will depend on thoughtful integration with existing systems and a clear understanding of their comparative advantages. Aimed at social protection policymakers and finance specialists, it highlights the need for collaboration between CBDC developers and SSN administrators to ensure that digital currencies effectively support inclusive and efficient benefit delivery.
Subject: Blockchain and DLT, Central Bank digital currencies, Digital currencies, Smart contracts, Technology
Keywords: Blockchain and DLT, cbdc design, cbdc ledger, CBDC platform, CBDC wallet, Central Bank Digital Currencies, Digital currencies, Financial Inclusion, Fintech, Government Transfers, IMF working papers, Payment Systems, Smart contracts, Social Safety Nets, ssn administrator, ssn delivery, ssn ecosystem