A blockchain to better spend EU funds after 2020

BlockchainSimplification, transparency and effectiveness are terms that often occur when it comes to public spending. The management of budgets is always extremely complex and European Union is not far behind, with all the transnational interventions it provides. Not to forget that only some of the Member States use the common currency, with further complications.

Implementing the funding policies for the growth of Europe is therefore a very difficult task. That's why in the current debate on how cohesion policy should be after 2020 stakeholders clamor for simplification of procedures. And the situation is not very different when it comes to the common agricultural policy.

Blockchain, i.e. the technology behind crypto-coins (bitcoin is the first and most famous), could support a simple, transparent and effective management of EU funds. A distributed database - not located on a single server - allows to trace the transactions between elements of the same "chain" and to share the related data, ensuring a public and unmodifiable archive of all the operations performed.

Obviously, effectiveness of spending is not determined just by bookkeeping, but it is also true that virtually instantaneous control over policy implementation ensures speed in both assessment analysis and introduction of corrective mechanisms. Today the latter takes place only after slow verification of so-called intermediate objectives and generally leads to substantial reprogramming of the expenditure itself.

A blockchain pilot project with the management of cooperation funds in developing Countries has already been launched by the World Bank.

European Union has well understood the potential of this technology. European Commission recently announced the EU Blockchain Observatory and Forum and it's preparing an action plan on cryptocurrencies, aware that their evolution will lead to disruptive consequences.

Given all the difficulties in implementing the cohesion policy and in the phase of rethinking it for the post-2020 multi-annual financial framework, it may be worthwhile to immediately consider a European pilot project with the use of blockchain databases to manage the funds, at least some of them, perhaps one that involves too many levels of governance or one where statistics report high rates of fraud and corruption.

For once the chains will serve to prevent rather than close the guilty.