The Two Layers of Digital Money: Why Economies Need Both

Two layers of digital money: one spreads opportunity, one extends support. Economies need both.

When I get in my car in the morning, I can drive wherever I want. When I board a bus or a subway, I go where the route is designed to take me. Both get me where I need to go, but they work very differently.

Money already works this way too. Some money is universal, like cash in your pocket—you can spend it anywhere. Other money is public, issued for specific purposes—food stamps, housing vouchers, childcare credits, training subsidies. Both circulate in the same economy, but they serve different purposes.

The shift to digital sharpens this distinction. Universal money becomes faster, cheaper, and easier to move across borders—as we see with stablecoins. Public money becomes smarter and more flexible—conditions like where it can be spent, how long it lasts, or who can use it can be written directly into code. Digital money doesn’t just replicate what money already does; it opens up a new design space.

Stablecoins are the clearest example of universal money gone digital—cars for the open road, flexible and user-directed. But the public side is misframed. Central banks are designing CBDCs as if they too should be cars—just digital versions of cash—when the real opportunity lies elsewhere. What governments need isn’t another car. They need buses: digital public money programmed for specific routes, collective goals, and destinations private money doesn’t reach.

Digital Economies Don’t Exist in a Vacuum

Modern economies are not stable systems humming along on their own. Waves of disruption routinely reshape them. Automation displaces whole categories of work. Climate disasters strike with increasing frequency, leaving households and regions scrambling to rebuild. Public health challenges—from obesity to pandemics—erode participation in the workforce and drive up long-term costs. Migration flows test both sending and receiving economies, demanding new forms of support and integration.

In every one of these cases, governments already intervene. They provide unemployment insurance, retraining subsidies, disaster relief checks, housing support, food assistance, and healthcare programs.

These disruptions are multiplying and intersecting. That means the fiscal tools governments rely on will need to scale, adapt, and deliver far more effectively than they do today. That is the real backdrop for thinking about digital public money.

What Digital Public Money Is

Governments deliver public money today through fiscal tools like food stamps, housing vouchers, childcare subsidies, education credits, and disaster relief checks. These programs help citizens participate in the economy, but they are slow, fragmented, and hard to scale. People wait weeks for paper checks, navigate systems that don’t talk to each other, and lose benefits through administrative friction.

Digital public money would modernize this by embedding conditions directly into code—where funds can be spent, how long they last, who can use them. Instead of clunky vouchers, support could be delivered instantly, transparently, and at scale. These are not replacements for cash or competition for bank deposits. They are complements: purpose-built fiscal instruments designed for collective goals.

Digital public money could be:

• Purpose-bound: usable only for food, childcare, or training.

• Time-bound: expiring if unused, creating stimulus with built-in velocity.

• Location-bound: spendable in specific regions to support recovery and local growth.

• Identity-bound: targeted to students, veterans, or unemployed workers.

Consider disaster relief. When hurricanes hit, households wait weeks for FEMA checks while they need food, shelter, and medical care immediately. Delays like this put people at risk. Digital public money could change this completely. Instead of waiting weeks for a paper check, households could receive support within hours—money that works right away for food, temporary housing, or medical needs in the affected areas. No checks to mail, no fraud to chase, no gap between crisis and support.

Crucially, governments don’t need to build everything themselves. Just as cities don’t manufacture buses but still design the routes, digital public money could be issued on top of regulated stablecoin infrastructure. Private actors are better suited to build the infrastructure—wallets, payment systems, and digital rails—because they have the talent, capital, and incentives to iterate quickly. Public institutions are better suited to design the programs—who qualifies, what funds cover, and how they advance collective goals—because they operate with public mandates.

Some worry this could give governments too much control. But restrictions already exist in today’s programs, only in slower and less transparent ways. A paper voucher that can be redeemed only at certain grocery stores is restrictive too, just clunky, leakier, and harder for citizens to use. The goal is to make collective resources reach their intended purpose quickly and effectively.

And accountability runs both ways. Programmable disbursements on transparent digital rails can hold governments to their commitments as well, creating a baseline for how public funds are spent.

Beyond Issuance

Most debates about digital money have been trapped on a different axis: who should issue it—private firms or public authorities? Stablecoins or CBDCs? That framing misses the deeper question: how should money be programmed, and to what ends? When the conversation stays focused on issuance, it circles around deposit caps, interest rates, and bank intermediation. These details matter for monetary policy, but they miss what digital money could enable for citizens.

Programmability changes what money can be. It allows private actors to build conditional transactions—escrow, automated payouts, bundled transfers—that reduce complexity in commerce and finance. And it allows governments to direct fiscal support with new precision—funds that are purpose-bound, time-bound, or location-bound. One side drives innovation in markets, the other advances collective goals.

Stablecoins extend the universal layer of money—cars on the open road. Digital public money extends the public layer—buses on programmed routes. The deeper divide is about purpose. What should each kind of money actually do?

Closer to Citizens

Government experiments around digital public money to date have largely focused on CBDCs, led by central banks in partnership with commercial banks and industry. Most of these pilots emphasize wholesale applications. Their frameworks are designed for monetary settlement, not fiscal delivery, which means experimentation happens far from the citizens these systems are ultimately meant to serve.

Agencies and municipalities work differently. They already run the programs that touch people’s lives most directly—childcare subsidies, housing assistance, job training, public health campaigns. They know how to target support, measure outcomes, and adjust programs. More importantly, they already share what works across borders: cities compare approaches to homelessness, employment offices trade retraining models, health agencies coordinate on vaccination campaigns. This is the natural learning environment for digital public money.

Some of this is already happening. In parts of Latin America and East Africa, NGOs have piloted digital disbursements to cut corruption and speed aid to households. These programs aren’t perfect, but they show how close-to-citizen delivery produces faster learning and clearer results than central-bank pilots.

And the economics are compelling. Public transit delivers up to a 5-to-1 return on investment because it expands access to jobs, schools, and healthcare. Digital public money operates on the same principle: by enabling broader participation in the economy, it multiplies private opportunity. Studies of subsidy programs in emerging markets show that digitizing delivery not only cuts leakage but also improves uptake, creating measurable gains in household welfare and productivity.

Why Both Layers Matter

The future of money will need two layers. Universal money spreads: it lowers friction, connects markets, and gives people a way to transact freely across borders. Public money reaches: it targets the places, people, and problems that universal markets leave behind.

Migration shows why both are essential. For migrants, universal money is a lifeline: remittances today are slow and costly, with fees often 6–7% and transfers taking days. Stablecoins can make them faster and cheaper, preserving more of what workers send home.

At the same time, migrants depend on public money in their host countries—housing assistance, food programs, job training, childcare. These programs exist, but they are fragmented and slow. Digital public money could deliver them instantly and programmatically, making integration faster and contributions stronger.

The same applies to other disruptions. Workers displaced by automation need retraining subsidies that arrive quickly, not through months of forms and reimbursement. Regions hit by climate disasters need relief in hours, not weeks. Families struggling with healthcare costs need programs that integrate seamlessly across providers. Digital public money could deliver this directly, instantly, and in ways traditional subsidy systems cannot.

This future won’t arrive automatically. Consumers will need to embrace wallets as everyday tools, learn new behaviors with programmable money, and trust that these systems work for them. Businesses will need to integrate programmable payments into commerce. Governments will need to shift focus from monetary policy to fiscal delivery, putting experimentation in the hands of the agencies and municipalities closest to citizens.

Aligning this shift with benefits makes adoption easier. People already understand the purpose of unemployment insurance, childcare subsidies, or disaster relief. Delivering those through digital public money provides a clear baseline for comparison and experimentation. By contrast, the retail case for CBDCs as “digital cash” is far harder to explain, and even harder to measure.

Modern economies need both layers of money. Universal money powers exchange; public money anchors support. We already know how this works in transit: when cars and buses run together, the whole city moves better.