Technology can help mitigate the economic and social impact of the Covid-19 crisis, said Benoît Cœuré, head of the Bank for International Settlements Innovation Hub, at the Reinventing Bretton Woods Committee during a Chamber of Digital Commerce webinar on “The world economy transformed”.
The debate is raging on how technology can help track the virus spread, enforce quarantines and administer remote consultations – and on which safeguards are needed to protect privacy. Technology can also help mitigate the economic cost of lockdowns and avoid irreversible damage to the social fabric. The most vulnerable in our societies are less likely to be reached by traditional support measures.
This is particularly the case in economies where direct tax infrastructures are less developed and the informal economy is pervasive. Digital payments can enable governments to provide emergency support to households and small businesses affected by the virus. They can help “pump the rescue funds down the last mile”.
Jurisdictions which have established retail payment and identity rails are already leveraging them to enhance their crisis response. As noted by the World Bank, the ID-linked basic account in Chile, Cuenta Rut, will allow 2 million vulnerable Chileans to benefit from Covid-related support already this month. International coordination is key, for example to keep remittances flowing, as those normally sending them are disproportionately affected by the crisis.
For those jurisdictions which haven’t established digital infrastructures, it is not too late to do so. Recent guidance by the CPMI and World Bank helps them design the right strategies to advance financial inclusion through innovation in payments. Learning the right lessons from this crisis is not enough – there is still time to act.