The Official Monetary and Financial Institutions Forum, or OMFIF, an independent global think tank for central banks and economic policy, has released a report suggesting that blockchain technology in a public financial management system can provide key information for “financial policy formulation and design.”
According to a report released on Tuesday, OMFIF said that modernizing public financial management through blockchain can help governments identify potential corruption and waste by providing “enhanced transparency and traceability of payments.” The report noted that technology could facilitate the prevention of misappropriation of funds given the global increase in fraud cases including ransomware and cybersecurity attacks.
In addition to helping reduce the risk of theft from bill fraud — allowing users to send payments “with the click of a button” rather than providing personal information — the think tank reports that with the system set up for a central bank digital currency, the “government’s financial position” can be clarified. . An updated system using blockchain can provide transparency to government spending.
“While a digital currency would fit in well with this type of system, it is certainly not a necessity,” the report said. “Many benefits can be achieved without changing payment pathways, simply by improving [public finance management] Architectural Engineering. Governments will also be more effective in managing their money efficiently and in predicting their cash position in the future.”
Ernst & Young Global commented in the report:
“Blockchain for public finance can reduce administrative effort associated with financial settlements, tracking and reporting. Business terms or eligibility and compliance rules can be included in the system to automate transaction controls via smart contracts. Automated tracking and reporting can significantly reduce the cost of partners’ interaction with the government.”
Related: UNCTAD targets cryptocurrencies in the developing world in a series of important policy briefs
Founded in 2010, OMFIF has released several reports on blockchain and digital assets. In 2020, the think tank launched the Digital Cash Institute, which aims to link digital currencies to traditional financial institutions and the potential use of CBD in payments between wholesale and retail markets.
from San Jose News Bulletin https://sjnewsbulletin.com/a-global-think-tank-suggests-that-blockchain-in-public-finance-can-help-reduce-fraud/
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