Banks and business
Nina Stoyanova:
Speech by Ms Nina Stoyanova, Deputy Governor and Head of the Banking Department of the
Bulgarian National Bank, during the video conference "Banks and Business", organized by the
Capital newspaper, 2 December 2020.
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I would like to welcome you to the video conference on Banking and Business, organized by the
Capital newspaper.
The banking sector is sending off a challenging year. In 2020, we witnessed the unprecedented
pandemic caused by COVID-19, the imposition of measures to prevent its spread, which led to
an economic downturn, as well as to many difficulties facing business and the people we have to
deal with on a daily basis. However, there were also positive events during the year, such as the
inclusion of the Bulgarian lev in Monetary Mechanism II and the establishment of close
cooperation between the Bulgarian National Bank (BNB) and the European Central Bank (ECB)
in the field of banking supervision in July. 2020
Banks in Bulgaria were able to quickly adapt to the new reality resulting from the pandemic and
ensure continuity in the provision of financial services to businesses and citizens. This became
possible due to the high degree of electronicization and digitalization of the banking sector in the
country. The focus of the activity of both the BNB as a regulator and the payment service
providers in 2020 was aimed at increasing the security of electronic payments with an emphasis
on card payment transactions on the Internet and the opening of access to payment accounts
(the so-called "Open banking"). Both processes are expected to be completed by the end of
2020 within the deadlines for the European Union.
The package of digital finance documents published in September 2020 by the European
Commission gives us a look at the future of payment services in the medium term. One of the
important aspects in it should be the forthcoming revision of the Payment Services Directive
(PSD 2) in 2021. A comprehensive assessment of the impact of the in-depth identification of the
customer on the level of payment fraud is to be made. New requirements will be considered to
reduce "social engineering" or "phishing" fraud, including a match requirement between the
payee's name specified in the payment order and that of the account holder. Special emphasis
will be placed on the prevention of fraud in immediate payments.
The possibilities for using the electronic identification and the solutions based on the certification
services for fulfillment of the requirements for in-depth establishment of the client's identity upon
entering the account and initiating payment transactions are to be studied. The observed strong
convergence in the activities of payment institutions and electronic money companies justifies
their inclusion in a single legal framework and the repeal of the Electronic Money Directive. The
scope of the directive may also include hitherto unregulated technical service providers
supporting payment services.
Next, the future architecture of payment services in the European Union will be built on
immediate payments. In this regard, the Commission plans to assess the need for a statutory
obligation to participate in the SEPA scheme of the European Payments Committee for
immediate credit transfer in euros (SCT Inst.). To encourage the use of immediate payments,
consideration is being given to requiring that immediate payment fees be no higher than ordinary
credit transfer fees.
In Bulgaria, Borika AD, in close cooperation with the BNB as an operator of the real-time gross
settlement payment system (RINGS), is in an advanced stage of development of a project for
immediate payments in BGN, based on the requirements of the SEPA scheme for immediate
credit translations (SCT Inst.). The ambition of the company is in 2021 for the payment service
providers in the country to be able to provide their customers with immediate credit transfers in
BGN.
Interconnection and interoperability between the various payment systems providing clearing and
settlement is required to ensure cross-border reachability in the execution of immediate credit
transfers in euro. In July 2020, the ECB announced its decision to introduce measures to ensure
a trans-European scope of immediate payments in euro by the end of 2021. As a result, all
payment service providers that have joined the SCT Inst scheme will be required. and which are
available in TARGET 2, become available either as a participant or as an eligible party (ie through
another payment service provider that is a participant) and in the Instant Payment Service (TIPS)
in TARGET 2. The service provides the possibility of settlement in other currencies and is
expected to make immediate payments in Swedish kroons in 2022 in TIPS.
Part of the package of documents related to digital financial services published by the European
Commission is a proposal for a Regulation on the operational sustainability of digital
technologies, which contains requirements for risk management related to information and
communication technologies in the financial sector, a proposal for a Regulation on
cryptocurrency markets; and a proposal for a Regulation on a Pilot Regulation of Market
Infrastructures Based on Distributed Registry Technology (DLT).
The future development of regulations in the field of payment services is undoubtedly interesting
and dynamic, but no less interesting and dynamic is the development in the current use of
payment services in Bulgaria. The data for 2019 published by the ECB in September 2020,
according to Regulation (EU) No 1409/2013 of the ECB on payment statistics, based on the
information collected by the BNB for another year report a significant growth of payment services
in Bulgaria. In this regard, some indicators can be highlighted, such as an increase in the number
of electronically initiated credit transfers by 17%, an increase in the number of card payments
made by 25% and others. Both the number and value of card payments initiated via the Internet
increased in 2019 compared to 2018 by 17%. A significant increase is observed in electronic
money payments,
The contraction of economic activity due to the pandemic crisis is expected to affect traffic
through the RINGS and TARGET2-BNB systems, which reported a decline in the total number of
processed payments for the second quarter of 2020 compared to the same period in 2019,
respectively by 17 % for RINGS and 28% for TARGET2-BNB. Despite the initial negative effect of
the pandemic in the third quarter of 2020, there is a recovery and increase in the number of
payments made. The increase in payments in the third compared to the second quarter of 2020
was 14% for the number and 20% for the RINGS value and 23% for the number and 31% for the
TARGET2-BNB value, respectively. Both customer and interbank payments grew.
I wish interesting and fruitful work to the participants in the videoconference.