Can Retail Central Bank Digital Currencies Improve the Delivery of Social Safety Nets?

Denis Nikitin, Johan Schmalholz and Carolina Bloch

No 2025/211, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Central Bank Digital Currencies; Social Safety Nets; Payment Systems; Government Transfers; Fintech; Financial Inclusion; CBDC platform; ssn delivery; cbdc ledger; IMF working papers; ssn ecosystem; cbdc design; CBDC wallet; ssn administrator; Blockchain and DLT; Digital currencies; Smart contracts (search for similar items in EconPapers)
Pages: 43
Date: 2025-10-24
New Economics Papers: this item is included in nep-cba, nep-fle, nep-mon and nep-pay
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=568447 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2025/211

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().