Blockchain technology in public finance management will help identify potential corruption and waste.
Analysts from the Official Monetary and Financial Institutions Forum (OMFIF) have reported that blockchain in public finance management will provide a high level of transparency and traceability for budgets. That, in turn, will help reduce corruption and profligacy among public officials.
Blockchain will also enable the collection of more reliable information for shaping fiscal policy and the effective management of public finances. Smart contracts would automate many processes, such as collecting reports and tracking transactions, thereby reducing bureaucracy and the cost of public-private interactions.
Moreover, blockchain has great potential to counter hacking and fraud, given the global rise in cybercrime.
The analysts note that a central bank digital currency (CBDC) will be easier to integrate into a blockchain-based financial system. Actually, the main goals of creating the OMFIF are to study the integration of digital assets with traditional financial institutions and explore the potential of using wholesale and retail CBDCs.
It’s worth noting that according to the Bank for International Settlements, more than 90% of all central banks were studying and developing CBDCs in April 2022. Analysts at the European Central Bank even suggested that a CBDC is the only acceptable way to transform the existing monetary system.
