Financial Inclusion: A Case Study of the Covid Stimulus Payments - - PowerPoint PPT Presentation

▶
financial inclusion a case study of the covid stimulus
SMART_READER_LITE
LIVE PREVIEW

Financial Inclusion: A Case Study of the Covid Stimulus Payments - - PowerPoint PPT Presentation

Sep 03, 2023 31 likes •137 views

Financial Inclusion: A Case Study of the Covid Stimulus Payments Aaron Klein Fellow, Economic Studies, Brookings Institution @AaronDKlein Total stimulus payments recieved in weeks following the CARES Act 180,000,000 160,000,000 140,000,000

slide-1
SLIDE 1

Financial Inclusion: A Case Study of the Covid Stimulus Payments

Aaron Klein Fellow, Economic Studies, Brookings Institution

@AaronDKlein

slide-2
SLIDE 2

2

20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 1 2 3 4 5 6 7 8 9 10

Number of Households Number of weeks since passage of CARES Act

Total stimulus payments recieved in weeks following the CARES Act

Number of households that have received payments Estimated number of households that need payment

slide-3
SLIDE 3

Solution Requires 3 Steps:

1) Accounts – Everyone needs an account to receive the money. 2) Information -- The federal government needs information to match people and accounts 3) Infrastructure -- The payment system’s infrastructure must be able to immediately send funds from the government to people.

slide-4
SLIDE 4

4

  • 1. Accounts

Source: 2017 FDIC National Survey of Unbanked and Underbanked Households, Federal Deposit Insurance Corporation

Fully banked, 68% Underbanked 20-25% Unbanked, 6.5%

BANKING STATUS OF AMERICAN HOUSEHOLDS

slide-5
SLIDE 5

5

  • 1. Accounts

Cost of Account/Lack of Money Trust/Privacy Branch Location/Hours 5 10 15 20 25 30 35 40 45 50

Cost, not Access, drives Unbanked: Why Unbanked?

slide-6
SLIDE 6
  • 2. Information

The federal government needs information to match people with their accounts.

slide-7
SLIDE 7

Less than half of Americans were able to get ‘direct deposit’ 2-3 weeks after law passed. 25 million had ‘shell’ bank account information on file from tax preparers. 70 million+ Americans had to wait to have their stimulus payments mailed as paper checks, pre- paid debit cards, or eventually deposited.

7

  • 2. Information

9 million Americans still haven’t received their payments 6 months later!

slide-8
SLIDE 8
  • 3. Infrastructure

The payment system infrastructure must be able to rapidly transmit funds from the government to the people.

slide-9
SLIDE 9

Why Are We Waiting? Real-time Payments simple solution:

  • ‘Direct deposit’ still takes days. Technology can solve

this: Clearinghouse RTP system, Square payroll announcement.

  • Treasury’s decision to use the Fed’s slow ACH system

shows limits to non-government solutions.

  • FedNow real-time payment system scheduled to come
  • n line in 2024.

9

  • 3. Infrastructure
slide-10
SLIDE 10

10

  • 3. Infrastructure

Image sourced from Celent, https://www.celent.com/insights/934259672