Amid a rapidly shifting frontier, we need to both catch up and keep up with the innovation in payments – Deputy Governor Madouros at the BPFI National Payments Conference

• The payments landscape continues to evolve rapidly, and distributed ledger technology (DLT) has the potential to spark further innovation
• Central banks and regulators cannot keep still, we have to evolve in light of continued technology-driven innovation
• The domestic sector needs to take a more strategic, forward-looking approach to payments than we have seen to date

Speaking at the BPFI National Payments Conference, Vasileios Madouros, Deputy Governor, Central Bank of Ireland said (13 March 2025), “I want us to consider not just how we catch up with the frontier of innovation of payments, but how we keep up going into the future.”

Catching up

 “We have experienced a rapid shift from cash to electronic payments.  Internationally, paying by account has evolved into an increasingly effective payment method, as it offers a convenient alternative to cards, strengthening competition, lowering costs for merchants and consumers and improving system-wide resilience. However, Ireland continues to lag behind other jurisdictions in terms of availability and offerings.”

“The NPS has prioritised its development and we have made progress over the past year, but it is also clear that there is substantial further work ahead of us to make pay-by-account functionality broadly available in Ireland - this must be an important near-term priority for both the Central Bank of Ireland and industry.”

Keeping up

Commenting on future innovation Deputy Governor Madouros said “It is clear that the journey of transformation in payments is ongoing. Indeed, we could be at the cusp of another wave of innovation disrupting the landscape. While it is hard to predict the future, it certainly seems plausible that we will see increasing integration of DLT into financial services, including payments.”

“The use of DLT is being explored internationally for its potential to introduce greater efficiency and effectiveness in payments processes. Which then begs the question: how do we best respond to, and prepare for, the ongoing transformation in the payments landscape to achieve optimal public policy outcomes?”

The Central Bank’s role

On the Central Bank’s role DG Madouros said “What is very clear– is that central banks and regulators cannot afford to stand still. The role of central banks and regulators in the payments system is to ensure trust.  Ultimately, we ourselves are on a journey, as we are deepening our understanding of the opportunities and risks of different technologies and innovations while protecting access and choice for those who prefer or depend on cash as a means of payment.”

“Our ultimate aim is to ensure that the benefits of innovation for consumers of financial services are realised and the risks and transitions are managed effectively.  We are exploring the use of new technologies for settlement in central bank money; we are in preparation phase for a Digital Euro; our approach to regulation and supervision has been responsive to the evolution of the payments ecosystem; and, of course, we remain committed to cash as a critical part of the payments ecosystem.”

Industry’s role

Turning to the role of industry DG Madouros continued, “My observation is that the extent to which payments are seen as a strategic priority across the Irish financial system is uneven…..I recognise that the landscape is shifting constantly and rapidly. And that there are many competing priorities. But it is precisely because of this context, that a strategic lens is important. I think a step change is needed in this respect. Because failure to keep pace is a real risk, both for central banks and regulators and the financial system itself.”” DG Madouros elaborated

Concluding

DG Madouros concluded “Digitalisation is one of the most powerful ‘mega-trends’ shaping our society and economy. And payments are the lifeblood of the economy. So innovation in payments – done well and safely – can unlock broader economic benefits. It can improve efficiency, enhance competition, and reduce costs for businesses and households. It can also reduce fragmentation, helping to maximise the benefits of the Single Market for all Europeans.

For those benefits to be realised, our payments landscape needs to keep up to speed with the shifting frontier. That requires taking a strategic lens on the evolution of payments. And it also relies on an effective partnership between the public and private sectors. I look forward to continued engagement with many of you here today to grasp those opportunities in the years ahead and ensure that the financial system meets the needs of consumers and the economy.”