“We should make sure that in an increasingly digital society and with declining use of cash, households will still be able to pay using central bank money,” says Bank of Finland Board Member and member of the Governing Council of the European Central Bank (ECB) Tuomas Välimäki.

Bank of Finland actively promoting development of new forms of payment

Two key themes in the current payment landscape are digitalisation and the move to real-time. Paying is expected to be efficient, convenient, and instant.

The most topical project in the European payment sector is the digital euro. A digital euro would offer a new means of payment with central bank money alongside physical cash. It would strengthen Europe’s strategic autonomy in everyday payments and would foster competition in the euro area.

During the two-year digital euro investigation phase, which ends this month, the Eurosystem has identified many design choices for a digital euro.  In the same way as banknotes, digital euros would be recorded as liabilities on the central bank’s balance sheet. Distribution of digital euros would be handled via banks and payment institutions. “The possible introduction of a digital euro would give consumers the option of paying with central bank money wherever electronic payment is accepted. In practice, consumers would be able to make payment transactions using similar devices to those used for current electronic payments,” adds Välimäki.

The ECB's Governing Council, at its meeting on 18 October 2023, decided to go ahead with the digital euro project. There will now follow a two-year preparation phase, which is a concrete step closer to the Eurosystem being able, if it so decides, to issue a digital euro. Any issuance decision would not be taken by the ECB’s Governing Council until a future date.

The Bank of Finland is also involved in another digital payment project. It is coordinating the creation of a Finnish instant payment solution – launched by the Payments Council – that will be compatible with European standards. The development of an instant payment solution based on credit transfer will bring greater competition and resilience to retail payments and will offer a new payment method under uniform terms and principles.

“The Bank of Finland’s aim is that the range of widely available payment methods should include a mobile instant payment solution that is not dependent on payment card rails,” says Tuomas Välimäki.

Bank of Finland's tasks include facilitating the reliability of the payment and financial system

A significant element in the reliability of the payment and financial system is the financial sector's resilience to cyber threats. The ability of Finland’s financial sector to combat cyber threats is generally good, but preparedness must be constantly improved to deal with the changing threat landscape. The Bank of Finland is working to improve the resilience of the entire payment and financial system.

Preparedness in Finland is extensive and commonplace when it comes to securing the critical functions of society. Whereas businesses make continuity and contingency arrangements to ensure their activities are not disrupted, the preparedness of individual operators can be augmented through mutual coordination and shared contingency solutions. This work involves individual operators, the sector as a whole and collaboration between the participants.

The Eurosystem’s cyber strategy provides a key framework for enabling protection against cyber threats at different levels and with appropriate tools.