Use of two Public Distributed Ledgers to track the money of an economy

Abstract

A tool to improve the effectiveness and the efficiency of public spending is proposed here. In the 19th century banknotes had a serial number. However, in modern days the use of digital transactions that do not use physical currency has opened the possibility to digitally track almost each cent of the economy. In this article a serial number or tracking number for each cent, pence or any other monetary unit of the economy is proposed. Then, almost all cents can be tracked by recording the transactions in a public distributed ledger, rather than recording the amount of the transaction, the information recorded in the block of the transaction is the actual serial number or tracking number for each cent that changes ownership. In order to keep the privacy of the transaction, only generic identification of private companies and individuals are recorded along with generic information about the concept of transaction, the region and the date/time. A secondary public distributed ledger whose blocks are identified by a hash reference that is recorded in the bank statement available to the payer and the payee allows for checking the accuracy of the first public distributed ledger by comparing the transactions made in one day, one region and one type of concept. However, the transactions made or received by the government are recorded with a much higher level of detail in the first ledger and a higher level of disclosure in the second ledger. The result is a tool that is able to accurately track public spending, to keep privacy of individuals and companies and to make statistical analysis and experiments or real tests in the economy of a country. This tool has the potential to assist public policymakers in demonstrating the societal benefits resulting from their policies, thereby enabling more informed decision-making for future policy endeavours.