Amidst the decline of cash usage, the need for households to retain the ability to pay with central bank money in an increasingly digital society is of paramount importance, states Tuomas Välimäki, a member of both the Board of Finland’s Central Bank (Suomen Pankki) and the European Central Bank’s Council (EKP).
Actively spearheading the development of new payment methods, Suomen Pankki has identified two prevailing themes shaping the future of transactions: the harnessing of digital technology and the move towards real-time settlements.
Consumers now anticipate payments that are efficient, user-friendly, and instantaneous.
Currently, the European payment landscape is buzzing with discussions about the digital euro, envisioned as an adjunct to cash. This digital counterpart not only bolsters Europe’s strategic independence in daily transactions but also stimulates competition within the eurozone.
Throughout its two-year exploratory phase, which concludes this month, the euro system has made significant determinations regarding the digital euro’s features. Resembling physical banknotes, the digital euro would represent a liability of the central bank to the public, and its distribution would be facilitated via banks and payment institutions. “The adoption of the digital euro would grant consumers the ability to pay with central bank money anywhere electronic payments are possible. In essence, consumers could execute transactions similarly to current electronic payments,” elaborates Välimäki.
The council of the European Central Bank, in its meeting on 18th October 2023, resolved to advance the digital euro project. Now entering a two-year preparatory phase, this move is a tangible step closer to a scenario where the euro system could, if desired, introduce digital euros into circulation. However, a final decision on its issuance remains a matter for the future.
Parallel to this, under the aegis of the payment council, Suomen Pankki is steering the birth of a Finnish mobile instant payment solution, compatible at the European level. The evolution of instant transfers based on account balances aims to intensify retail payment competition, ensuring operational reliability, and offering an equitable payment method abiding by uniform principles and terms.
“A goal of Suomen Pankki is to incorporate a mobile instant payment solution that operates independently of payment cards into commonly used payment methods,” states Välimäki.
Ensuring the trustworthiness of the payment and financial system is within Suomen Pankki’s purview. A crucial aspect of this trust is the resilience of the financial sector against cyber threats. While the sector’s current defense against cyber threats stands commendably, ongoing enhancements are essential to counter evolving risks. Suomen Pankki is committed to fortifying the entire payment and financial system’s resilience.
In Finland, preparations for the continuity of society’s critical functions are comprehensive and routine. Businesses frequently strategize for continuity and preparedness to safeguard operations. This individual preparedness is further bolstered by mutual coordination and shared precautionary measures, encompassing single entities, entire industries, and inter-agency cooperation.
The euro system’s cyber strategy serves as a pivotal framework, equipping defenses against cyber threats across various levels with appropriate tools.
HT
