Rehn: Payments need resilience amid power politics

For almost 20 years, the Payments Forum has discussed the transformation of payments.

What once appeared as fragmentation is now seen as resilience, as efficiency alone is no longer sufficient.

Payments require resilience, autonomy, and alternatives in the current environment.

The geopolitical landscape is fundamentally reshaping decisions and structures, a shift clearly visible in payment systems.

This connection between economics and politics became evident during the first term of the current US President, marked by trade disputes and technological confrontation.

Payment systems have become instruments of policy through sanctions, used to exert influence on governments, companies, and citizens.

Europe's security environment faced a new crisis with Russia's war against Ukraine, accompanied by attacks on critical infrastructure like cyber threats and severed undersea cables, spreading uncertainty throughout society's structures.

The development of payments over the past two decades has been a success, making transactions faster and easier, yet this concentration now creates vulnerabilities, as critical functions rely on a limited number of global systems and providers.

The Bank of Finland holds a statutory role in ensuring the reliability of payment systems, which inherently includes operational resilience.

Alternatives in payments are no longer just about consumer choice; they are vital for society's ability to function under all circumstances.

Given the broad range of threats, a single solution is insufficient, necessitating both increased alternatives and strengthened operational resilience of existing systems, alongside robust contingency arrangements.

The Finnish Financial Supervisory Authority recently noted good progress in the rollout of instant payment services by banks.

The Eurosystem, including the Bank of Finland, has supported account-to-account instant payments, particularly at the point of sale.

The digital euro is a key Eurosystem project aimed at strengthening European payment autonomy.

It is envisioned not only as a new payment method but also as an electronic contingency arrangement for payment infrastructure, enhancing operational resilience across Europe.

The digital euro is designed to function for online, in-store, and person-to-person transfers, and crucially, in offline situations.

Legislative negotiations are ongoing, with broad agreement that the digital euro would significantly improve Europe's ability to respond to payment disruptions.

Piloting is set to begin next autumn, with the Bank of Finland participating.