In concrete terms: i)  Consumers can use a smartphone to download not just one payment service, but different payment services of their choice;  ii)  Consumers can switch to a new network or change to a new smartphone without disrupting the continuity of the existing m-payment services; and  iii)  All m-payment service providers are required to comply with common security and data protection measures that are in conformity with international standards. “Hard” infrastructure – market-driven approach 21. The second recommendation of the consultant was about the “hard” infrastructure. The consultant recommended that the HKMA should, based on the agreed standards, encourage and facilitate the market to develop a robust infrastructure to drive its growth. 22. International experience indicates that the hard infrastructure to support NFC mobile payment can be achieved through a market-driven approach or a government-led approach. After careful consideration, we decided to adopt a market-driven approach, for several compelling reasons. i)  First, emerging payment technologies are fast-evolving. Payment service providers are closer to the market and are therefore able to make fast business decisions to develop infrastructure and services that would respond to the market needs in a timely manner. ii)  Second, the success of new retail payment products and services hinges on personal experience of the individual user. Here, again, market players, who know better than anyone else the tastes of their customers, are in a good position to develop payment products and services that truly fit their customers’ needs and therefore have better chance of success.

This would move the euro area closer to the type of financial union we see in federations like the U.S. or Switzerland, where banking sector problems are dealt with at the federal level and have no implications on the finances of the federated units. Of course, this must be accompanied by appropriate incentives for banks to limit moral hazard. Policy conditionality should include restructuring plans in line with EU state-aid rules, and principles for orderly resolution of non-viable institutions and for limiting the use of public money. Second, the commitment to establish a single supervisor is critical insofar as it facilitates direct recapitalisation. But it also has positive effects in its own right. Given appropriate powers, a single supervisor would produce greater transparency in national banking sectors and reduce regulatory capture, thereby increasing investor confidence. In addition, it would support financial integration by “Europeanising” supervisory priorities. For example, some supervisory actions we have seen during the crisis that have caused the single market to fragment, like requiring banks to match domestic assets and liabilities, would no longer be anticipated. In terms of design, this supervisory mechanism should have a clear euro area dimension, while remaining fully compatible with the single market and EU-wide supervisory harmonisation. The ECB stands ready to play a role, provided that there is no contamination between monetary policy and financial stability. Of course, extending the remit of the ECB should come with higher standards of democratic accountability.