On 30 October 2019, the Bank for International Settlements published a speech given by Burkhard Baltz, Deutsche Bundesbank Executive Board Member, entitled “Curtain up for the future of payments: from Bigtechs and Fintechs to smartphones”.

In his speech, Mr Baltz discusses the three aspects that he believes are key to the digitalisation of the payments sector, namely: challenges posed by the rise of fintech and bigtech firms; how smartphones are changing user and payment habits; and stablecoins, in particular “Libra”.

Key points of the speech include:

  • Mr Baltz suggests that the next step for Fintech and Bigtech firms to remove banks from the customer interface aspect of transactions will be to introduce closed payment systems that no longer need established payment instruments to carry out payments. However, these developments are not without their problems, from both the consumer and regulatory perspectives.
  • Consumers’ behaviour is having a transformational impact. The rate of cashless payments is rapidly increasing and mobile payment methods are gaining momentum. As a result of this Mr Baltz urges providers to attach particularly high importance to the issue of security;
  • In relation to Libra, the Deutsche Bundesbank will apply the complete spectrum of existing rules and may adjust the current regulatory framework depending on how Libra is designed. Mr Baltz recognises that Libra has “touched a nerve” in the payments industry by highlighting short comings in cross-border payment transactions, which he admits is costly, slow and has yet to arrive in the digital era.