Shaping Payments Innovation

Ladies and gentlemen, good afternoon Distinguished guests,

It is my great pleasure to address you all today as we conclude the 15th Jubilee Conference on Payments and Market Infrastructures: Shaping Payments Innovation. For the 15th time this conference has provided us with a unique platform to explore challenges and opportunities within the payments and market infrastructures landscape.

Throughout this conference, we have explored various topics of utmost importance to our region and beyond. The agenda encompassed a broad spectrum of subjects, covering the Western Balkans' integration with SEPA, drawing from the experiences of SEPA countries like Romania and application countries such as Georgia, as well as delving into T2 and TIPS, CBDC, Open Banking, and other pertinent areas. Allow me to encapsulate and further expand upon the ideas, discussions, and conclusions we have collectively formulated over the course of the past two days:

During the opening address, Governor Ms. Anita Angeloska Bezhoska highlighted the rapid advancements in technology within the payment industry, leading to the emergence of new payment products, services, and providers. She emphasized that these innovations are built upon three key pillars, as identified by the World Bank in 2022, which were meticulously elaborated with concision and vividness. The overall result of this transformative overhaul in the payments landscape has been a significant rise in digital payments globally. According to the World Bank Findex database, the percentage of adults making or receiving digital payments increased from 44% in 2014 to 64% in 2021. While the number of digital payments per person in North Macedonia may be lower compared to countries listed in the Red Book Statistics, our nation has also experienced a notable shift towards greater payment digitalization. In fact, the number of digital payments per person has more than tripled over the past seven years, with 20 payments in 2016 rising to 70 payments in 2022.

Ms. Inge Van Dijk provided an overview of European payments' future development and highlighted implemented projects within the Eurosystem. She stressed the importance of cooperation in payments amid technological advancements and globalization, emphasizing the need for faster, cheaper, transparent, and inclusive cross-border payments. Ms. Van Dijk discussed the progress achieved through the Committee on Payments and Market Infrastructures and Financial Stability Board initiatives to improve cross-border payments. She also addressed the challenges presented by technology and FinTech companies in the European payments market. Furthermore, she underscored the role of SEPA in harmonizing European payments, supporting innovation, and expressed support for TIPS, the European Payments Initiative, and the Digital Euro.

The topic of Western Balkan integration with SEPA has been a focal point of our discussions. It is essential for our region to align our payment infrastructures with the SEPA framework, enabling smoother cross-border transactions and fostering economic growth. By embracing the principles and standards of SEPA, we can enhance efficiency, reduce costs, and facilitate trade and investments within and beyond our borders. On this topic, Ms. Silvia Di Lillo moderating the discussion on bridging the gap towards SEPA with our distinguished panelists from Albania, Bosnia and Herzegovina, Kosovo, Montenegro and North Macedonia noted that SEPA adherence enables access to tools for digitizing and modernizing payments, promoting financial inclusion. It is a lengthy process requiring an equal amount of political, business, and regulatory efforts. The European Payment Council through its experience and agile setup, is committed to foster an expedite process, allowing for a smooth inclusion procedure once the level playing field has been established, and all criteria fulfilled.

Drawing upon the experiences of SEPA countries and application countries has proven invaluable in our quest for a stronger financial framework. Romania, as a SEPA country, has accumulated valuable knowledge in building the necessary infrastructure and harmonizing payment systems. Likewise, Georgia, as an application country, has embarked on its journey towards SEPA, enriching our understanding of the challenges and opportunities that lie ahead. By learning from their experiences, we can navigate the path towards a robust and integrated financial ecosystem. Summarizing the interesting discussion with our panelist from Romania and Georgia, Ms. Inge Van Dijk stressed that the journey towards joining SEPA is a long and complex trajectory. The attention should be paid to all relevant aspects of SEPA adherence process and it is important to implement it right. Thus, it should not be done in a rush given that it is not a competition, but we should take the time to involve all stakeholders. Despite the differences between countries, a lot can be learned from each other’s experiences

During this conference, we also delved into the transformative potential of emerging technologies. T2 and TIPS have emerged as catalysts for innovation in payment systems. As mentioned by Mr. Fabrizio Dinacci, the Eurosystem’s ambition extends beyond mere market infrastructures, as it aspires to foster a heightened level of cooperation with non-euro central banks within the EEA, thereby promoting a deeper sense of collaboration. TIPS empowers both individuals and businesses to engage in real-time money transfers, operating round the clock, 365 days a year. It is worth noting that the current objective of the ECB is to expand TIPS accessibility to a pan-European level. In regards to T2 project, which went live in March 2023, he stated that the T2-T2S Consolidation (CSLD) project aimed to achieve reduced operational costs, common reference data management, enhanced liquidity management, full migration to the ISO 20022 standard, network-service provider flexibility, multi-currency capability for RTGS services, and common components.

The topic of Central Bank Digital Currency (CBDC) has also captured our attention. Its potential to transform payments, financial inclusion, and monetary policy cannot be understated

Ms. Anneke Kosse emphasized that interoperability is the key to the success of Central Bank Digital Currencies (CBDCs). It is crucial to ensure that CBDCs are compatible with other payment methods, driving their adoption and enabling cross-border functionality. By extending CBDCs to cross-border payments, we can provide convenient access to other currencies, encourage widespread adoption, and foster innovation. Early-stage knowledge sharing, and international collaboration play a pivotal role in shaping a future for CBDCs that promotes transparency, inclusivity, and innovation in the global financial landscape.

Mr. John Velissarios elaborating on the topic of CBDC stressed that central banks worldwide had extensively researched and actively experimented with CBDC across various applications, including retail, wholesale, and cross-border contexts. The rising popularity of CBDC is a strong indicator that digital currencies will soon become an integral part of our daily lives.

Mr. Max Geerling emphasized the significance of the European Payments Initiative (EPI) acquiring ideal and the potential value it could bring to various market participants. The EPI product aims to be a versatile digital wallet and a unified instant account-to-account payment solution across European countries, all under one brand.

Open Banking has emerged as a transformative force, revolutionizing the way we access and utilize financial services. As we embrace this paradigm shift, it is crucial that we establish robust frameworks, robust data protection mechanisms, and encourage collaboration between market participants. Ms. Sanja Iliev highlighted Commerzbank's Open Banking experience, emphasizing the industry's shift towards personalized customer solutions and the crucial connection between governance and technology in Open Banking.

From Mr. Jan Vermulen’s excellent moderation, we understood that the momentum gathered by Open Banking was very high. Mr. Vermeulen and his esteemed panelists during the panel discussion dedicated on Open Banking that we enjoyed today, have concluded that Open Banking was an innovative step in payment services, and stressed that not all expected benefits have been reaped. While security levels have improved and competition opportunities emerged, market participants faced challenges with the technical implementation of Open Banking and the competition between new fintech players and incumbents only partially took place. Nevertheless, the experience has been interesting, and recent developments suggest the potential for an improved next-level experience in Open Banking and Open Finance.

The increase in FinTech and BigTech, newer payment services and related security risks have motivated the regulators in the EU to assess whether PSD 2 requires amendments to cater for these considerations. And those days PSD3 is expected to propose continuation of the Payment Services Directive framework that regulates electronic payments and the banking system in Europe and the European Economic Area.

By applying the knowledge gained from this conference, we can drive our financial landscape towards greater integration, efficiency, and resilience. The EU integration of the Western Balkans (WB6) region, including alignment with SEPA standards, is crucial for fostering payment system harmonization, cross-border transactions, and economic growth, shaping a more integrated and efficient European financial landscape. With our collective collaboration, we have the power to achieve remarkable results in shaping the future of payments and market infrastructures.

Throughout this conference, we have witnessed the power of knowledge exchange and collaboration. The insights shared, the relationships fostered, and the ideas generated have undoubtedly paved the way for progress in payments and market infrastructures. It is our collective responsibility to ensure that these conversations continue beyond this conference, leading to concrete actions and tangible results.

In closing, I would like to express my sincere gratitude to all the distinguished speakers, experts, and participants who have contributed to the success of this 15th Jubilee Conference on Payments and Market Infrastructures. Your presence and active engagement have made this event truly memorable.

I would also like to extend my deepest appreciation to the organizing committee, consisting of our bank employees and the De Nederlandsche Bank, for their meticulous planning and organisation, resulting in a truly exceptional event.

Thank you all once again, and I wish you safe travels and continued success in your endeavors.