The Bank of Finland (BOF) has taken the lead in spearheading the development of a Finnish instant payment solution that aligns with European standards. During this year’s fifth Euro and Economy publication event on October 19, Tuomas Välimäki, a member of the Governing Council of the European Central Bank (ECB) and a board member of the Bank of Finland, addressed the active role that the Bank of Finland is playing in fostering the development of innovative payment methods.
The Diminishing Use of Cash
Välimäki acknowledged the diminishing use of cash for transactions in both Finland and Europe, despite the increased circulation of physical cash. In Finland, cash accounts for only a marginal fraction of daily transactions, with less than ten percent of the population considering it as their primary payment mode.
“While recognizing that the digital euro is being planned as an alternative payment method, Välimäki highlighted that it stands as one of the most significant ongoing projects in European payment systems,” stated Välimäki.
Välimäki emphasized the importance of ensuring continued access and convenience for those who still rely on cash for their day-to-day financial activities. He pointed out the European Commission’s initiative, supported by the ECB, to safeguard the role of cash, underscoring the commitment to preserving the option of using euro banknotes and coins. At the same time, Välimäki stressed the need for national regulations that guarantee cash availability and deposit options.
“The digital euro would not only reinforce Europe’s strategic autonomy but also stimulate competition within the eurozone,” explained Välimäki. The introduction of the digital euro could enhance operational security and give merchants better negotiation leverage in payment service pricing.
Advancing Payment Options in Finland
Välimäki emphasized the urgency of advancing alternative payment options in Finland, especially given the digital euro’s current planning phase. He pointed out that across the rest of Europe, mobile phone-based instant payment methods have become commonplace across all banks, underscoring the need for a similar system in Finland.
To drive the adoption of instant payments in the country, the Payment Council established a working group last year, led by the Bank of Finland in collaboration with banks and trade operators. The project’s objective is to formulate a European-compatible express payment solution framework, complete with a rulebook that outlines the operational procedures each participant in the express payment solution commits to.
“The ultimate aim of the instant payment project is to establish a new real-time payment method that offers a uniform experience for customers across all banks,” stated Välimäki. This initiative is anticipated to boost competition and reliability within the payment sector.
The Payment Council will provide regular updates on the progress of the express payment project as it continues to develop.
