4.4 Payment and settlement systems must operate reliably and securely

The payments landscape was in transition in 2020, particularly in response to the COVID-19 pandemic. The payment and settlement systems subject to Bank of Finland oversight have operated reliably and securely during the crisis.

COVID-19 pandemic changed payment behaviour

The COVID-19 pandemic shaped consumer behaviour and the popularity of various payment methods quite strongly. The use of cash continued to decrease at an increasingly rapid pace as card payment gained in popularity.

Contactless card payments (i.e. payments without a PIN) and mobile payments increased. The changes in payment methods also reflected the growing popularity of online shopping.

Payment and settlement systems have operated without significant disruptions during the COVID-19 crisis.

Following the onset of the crisis, authorities have tightened cooperation in the monitoring of systems and have updated regularly their assessment of the current situation, in cooperation with the various financial market participants.

Oversight conducted in cooperation with domestic and international authorities

Oversight refers to the monitoring of payment and settlement systems by central banks, with the purpose of ensuring their reliable and efficient operation both during normal times and in times of crisis.

The Bank of Finland conducted its oversight duties mainly in cooperation with the Eurosystem. As to central counterparties the Bank of Finland participated in international oversight cooperation.

In 2020, the Bank of Finland conducted for the first time an oversight assessment of the central securities depository Euroclear Finland, in accordance with the Central Securities Depositories Regulation (CSDR).

The Bank of Finland's simulator supports oversight

The payment and settlement system simulator developed by the Bank of Finland has long been in use within the Eurosystem and several other countries.

The software is used as an oversight tool for risk analysis, for identifying systemically important counterparties and for assessing ideas for improving systems.

In 2020, the Bank of Finland organised its 18th international seminar for experts in the field of analysis and simulation of payment and settlement systems.

Due to the COVID-19 pandemic, the seminar took place online, but it still attracted a large number of international participants, as usual.

It is essential to prepare for disruptions and crisis situations

Reliable and secure payment and settlement systems are essential for ensuring financial stability and the smooth functioning of society both during normal times and in times of crisis.

Digitalisation has increased the importance of contingency measures for addressing cyber threats.

Authorities contribute to ensuring the reliability of payment systems by cooperating with financial sector entities. The development of functioning contingency measures is an important part of this work. In 2020, the Bank of Finland continued to cooperate closely with other financial sector entities in the planning of contingency measures for payment and settlement systems.

The Payments Council discussed future payment solutions

The Payments Council is a national cooperation body for the development of retail payments. It brings together users and providers of payment services and the relevant authorities.

In 2020, the Payments Council discussed, among other issues, the impacts of the pandemic on payments, the availability of cash services, the promotion of instant payments in Finland as well as studies on the costs of various payment methods.

The Council also discussed the retail payment strategies of the European Central Bank and the European Commission and ongoing European and Nordic initiatives, such as the European Payments Initiative and the P27 initiative.

The Payments Forum, which presents the work of the Payments Council to the general public, had to be cancelled in 2020 due to the pandemic.