[check against delivery]
Guten Morgen meine Damen und Herren.
I am delighted to speak at today’s conference on the future of payments organised by the Bundesbank.
[The strategic nature of payments]
The fact that we are all assembled here, virtually, to talk about payments is in itself remarkable.
Until very recently a conference on payments would not have attracted much attention beyond a small group of specialists. And it would definitely not be at the level we’re having this event at today.
Payments have left the obscurity of back-offices and made it to the political and strategic level.
What’s caused this development?
I’d like to think that it’s because of the Commission’s retail payments strategy. But that would be a slight exaggeration…only a slight one, though.
The truth is that the payments sector finds itself at the heart of transformations in our society and our economy.
First, it is one of the most visible signs of digital transformation. Just a few years ago, who would have imagined paying contactless? Or with a mobile phone?
And this is only the beginning. Brace yourselves for the day when payments are authenticated with your fingerprints or your iris.
The COVID-19 crisis has dramatically accelerated these changes, particularly in payments. The use of contactless payments has increased and the use of cash has decreased. This change is a phenomenon that is here to stay.
Second, payments are increasingly seen as a data goldmine. Payments are attractive for business models based on payments data.
Anyone with access to this data knows an awful lot about our tastes, our wealth, and our habits. This bounty has not escaped the attention of companies, often among the world’s largest, that thrive on data.
These companies are showing more and more interest in payments, some of them are even obtaining payments service providers’ licenses. They will be - in a way they already are - the main competitors of the ‘classic’ payment services providers, the banks.
This is a revolution in payments – and in their regulation and supervision. The need for a level playing field is more important than ever before.
Companies entering the payments market - whoever they are and wherever they come from - need to be subject to the same level of regulation and supervision.
As the saying goes, “same business, same risks, same rules”.
The Commission recognised that evolution a few years ago with its revised payments services directive. It offered a legislative framework for new payment services based on payment accounts data.
This was visionary at the time, and it is both striking – and a source of pride – to see how much this ‘open banking’ framework has since been reproduced around the world.
And there are increasing calls to expand this successful model to other forms of data sharing, beyond payment accounts.
Finally, payments policy is highly relevant in the conversation about the EU’s open strategic autonomy. Whoever controls payment systems increasingly controls our modern, highly digitalised economies.
The cashless payment solutions we use when paying cross border within or outside the EU are not European - especially the cards we pay with when travelling.
There are, of course, many domestic means of payment in Europe. Some of them are relatively recent and modern. They rely on instant payments and mobile phone apps, and are already very popular among younger generations.
But you can’t use them reliably across borders.
That’s our fragmented European reality today.
This must change – and I am hopeful that it will. There are already positive developments in the European payments landscape.
Pan-European projects are in the pipeline, answering the calls of both the ECB and the Commission.
One of them, the European Payments Initiative, went public a few months ago. I know that many people attending this Conference today, particularly our German hosts, have made a lot of effort to support this ambitious project.
The Commission has, from the beginning, given this initiative its political support and welcomed its launch. And the Commission services are, as much as they can, offering support on questions relevant to the development of the project.
I note with interest that only two days ago, two companies involved in payments services decided to join the project. This is the first enlargement of the initiative since its launch and the first one beyond the banking sector.
[The retail payments strategy’s objectives]
The strategic importance of payments and the scale and pace of technological change in the sector led the Commission to propose a dedicated strategy on payments – just before I took up office.
We adopted this strategy on 24 September as part of the digital finance package. It is based on three objectives:
- Putting payments at the top of the EU’s political agenda;
- Sharing our vision for the years to come;
- Presenting an overarching, all-encompassing approach, looking at payments from the perspective of the whole ecosystem and emphasising the importance of the consumer.
In only two months in the job, I’ve noticed significant interest in the field. I’ve already spoken at a few events and it’s been prominent in my discussions with Ministers.
Before I turn to the strategy itself, I would like to thank you, Minister Scholz, for making digital finance and payments a top priority of the German Presidency.
We can already clearly see the results of your hard work, in particular with the progress made so far on our two digital finance proposals, the Digital Operational Resilience Act and the Regulation on Markets in Crypto-Assets.
I would also like to thank you, President Weidmann, not only for hosting this event but also for your and the Bundesbank’s strong support for our strategy and its objectives.
[Our key priorities]
Our strategy is based on three main priorities:
The first is to provide citizens and businesses with diverse, state-of-the-art payment solutions, in a fair, competitive and innovative EU market that relies on safe, efficient and accessible infrastructures.
The second priority is that our citizens and companies can use European means of payments throughout the EU.
The third is improving cross-border payments with non-EU jurisdictions. Payments are global. If we expect our payment solutions to be successful and compete with global players, they need global reach.
Let me say a bit more on some of these priorities and on the key initiatives to achieve them.
[On instruments, markets and infrastructures]
There is one flagship initiative at the centre of the retail payments strategy. That is instant payments.
People send and receive messages within seconds to and from the other end of the world. They buy with two or three clicks. And they increasingly expect the products they buy online to be shipped immediately.
That means merchants have to be one hundred per cent certain that they have received a payment.
Instant payments give this certainty.
It is the same certainty given by cards because of the payment guarantee they offer the merchant. That’s why instant payments can be a powerful tool to compete with global cards, contributing to the EU’s open strategic autonomy.
We will work with the market to make instant payments the new normal – and take legislative action if necessary. We are currently assessing the state of play to see if EU legislation is necessary to accelerate the uptake of instant payments.
In this context, I want to give credit to the efforts of the ECB to remove some of the barriers to the take-up of instant payments by facilitating, the ability of banks to receive instant payments, through the ECB’s TIPS infrastructure. This will no doubt be an important factor when fully in place, by the end of next year.
But there are also challenges presented by instant payments.
We need to think about consumer protection, the fight against fraud, anti-money laundering and the enforcement of sanctions, to name but a few.
Let me also say a few words on cash. Although its prominence is decreasing, accelerated by COVID, cash is still by far the most common means of payments in the EU.
This is a fact that we fully respect. I know that Germany is still a very cash dominated society, even if things are changing during COVID.
Cash needs to be available, accessible and accepted. This is fundamental to avoid financial exclusion.
Just a word about financial exclusion. One of my priorities during my mandate will be financial literacy – which I believe can help address financial exclusion.
The cost of financial illiteracy is high, and it is paid disproportionally by the most vulnerable groups.
One third of EU households are financially fragile – meaning they would not be able to face an unexpected expense in normal times, let alone during a pandemic.
And a 2014 survey found that about half of EU adults did not sufficiently understand basic financial concepts.
Education is of course a member state competence. But I believe the Commission can complement national efforts.
A financially literate consumer is at the heart of my vision for financial services. Knowledge is power.
Our payments strategy is, rightly, focused on the consumer – and the consumer wants choice – including cash.
Next year, the Commission will analyse the situation of cash acceptance and availability. The ECB is also conducting relevant work in this area. We will then decide if we need to take legislative action to guarantee that cash is accessible and accepted. Some countries that are highly digitalised, like Sweden, have enacted such rules.
Cash brings me naturally to the digital euro.
As cash is decreasing in use there is a concern, shared by authorities like the Commission and central banks around the world, that in future there might only be private money available – instead of central bank money, of which cash is the archetype.
Some central banks, like the Chinese central bank, are already quite advanced in analysing challenges and options around central bank digital currencies. We are grateful to the ECB for having launched reflections on a possible digital euro, first with its report and now its public consultation.
This is the right way to proceed in my view. There are a number of key challenges and risks which we need to thoroughly consider before making any decision in this matter.
At this stage there are more questions than answers.
Would a digital euro complement or substitute cash?
Is there a risk of crowding out private payments solutions?
If so - how should this risk be mitigated? What would the role of the private sector be?
An in-depth reflection is on-going. The Commission is closely involved and following the discussions on the digital euro with the ECB and Member States.
[Other important initiatives]
Before concluding, I would like to mention briefly again the revised payments services directive. We will launch a review of the directive next year, including an assessment of its scope, with a view to concluding it in 2022.
We are also looking in detail into the issue of access to payments infrastructures, taking competition, internal market and digital considerations into account. This exercise should be concluded next year.
Speaking about the revised payments directive, I want to mention the issue of strong customer authentication, or SCA, which helps protect consumers when shopping online.
We are a few weeks away from the planned full introduction of SCA, which was already delayed by 16 months. I know that it is difficult, especially during COVID times, for some companies to make the necessary adjustments. I have recently written to all Member States asking for their assessment of the situation and their feedback. I am hopeful that we will collectively meet this important challenge.
Ladies and Gentlemen,
There is real momentum about payments at the moment. They have become strategically, even globally important.
I hope that the Commission’s payments strategy represents a valuable contribution to Europe’s debate to build up its capabilities in the payments arena.
I ask you, as Governments, central banks, financial institutions, payment service providers, FinTech companies, card payment providers, business, consumers – to work closely with us.
We are counting on you to help us bring European solutions to this global issue.
Thank you very much for your attention.
 Demertzis, M., M. Domínguez-Jiménez and A. Lusardi (2020) ‘The financial fragility of European households in the time of COVID-19’, Policy Contribution 2020/15, Bruegel
 Klapper, L. Lusardi, A. van Oudheusden, P., 2015 Financial Literacy Around the World: Insights From The Standard & Poor’s Ratings Services Global Financial Literacy Survey.