Although at first sight this may appear small, when cumulated over decades it leads to significantly lower standards of living. Empirical evidence also shows that higher deficit-to-GDP and debt-to-GDP ratios lead to higher interest rates even when there are no doubts about fiscal solvency.
TIPS therefore not only has the potential to help better prepare incumbents for the challenges arising from digital giants, such as Alibaba, Apple and Google, who are integrating payment services into their ecosystems, it also has the potential to be a catalyst for spurring progress in two old failings of our current system: cross-border retail payments and financial inclusion.12 Cross-border payments not only allow shoppers to easily buy goods online from overseas, but also allow foreign workers to send money home, supporting financial inclusion and development.