yves mersch : efficient retail payments – key in strengthening the competitiveness and growth potential of the eu speech by mr yves mersch, member of the executive board of the european central bank, at the ecb / bank of italy workshop on “ interchange fees ”, rome, 24 march 2014. * * * ladies and gentlemen, it is a great pleasure for me to be here today to contribute to this discussion on retail payments in the euro area and in europe more broadly. but first of all, i would like to thank the banca d ’ italia for organising this workshop jointly with the ecb, and for hosting it in this beautiful setting. i am also grateful to fabio panetta for opening this event in the morning. payment systems and payment schemes, like this city, don ’ t get built in a day. good things take time. payments are a network industry, and they rely on cooperation between banks and other payment service providers – cooperation that calls for resolve and stamina. today, i would like to talk about retail payments and the ecb ’ s and the eurosystem ’ s role in those payments, and to touch on current developments and future challenges. i ’ d also like to say a few words on interchange fees, the issue of this workshop. why are retail payments important? payments oil the wheels of the single market. they facilitate the “ four freedoms ” – the free movement of people, goods, services and capital. without an efficient electronic payment system, the union would not have been able to develop and grow over the years. and neither should we forget the contribution made by the large - value and retail payment systems to europe ’ s economy at the height of the crisis and in its aftermath. they helped europe ’ s economy to run smoothly. some of you may still remember the times when wages were paid in cash, or the inconvenience of obtaining foreign currencies for trips abroad, the complexities of crossborder payments, not to mention the plans disrupted by unforeseen exchange rate movements. you may even remember how interbank positions were cleared and settled at a physical meeting at the central bank at the end of the business day. efficient, robust, standardised and integrated retail payments and payment systems are essential to make trade easier, to increase competition and innovation, to foster financial integration and to complete the single currency project. they play a key part in strengthening the competitiveness and growth potential of the european union. in 2012 the ecb

slightly less ; ireland, spain and poland would be faced with average duties in excess of 6 per cent. if the existing european tariffs were applied to italy ’ s exports to the uk, in the case of machinery and mechanical engineering products, a sector that accounts for 20 per cent of italian exports to the uk, the effect would be small ( about 2 per cent of the value ). the difference would be greater in the case of agri - food products ( almost 10 per cent ), clothing and footwear ( 8. 2 per cent ), and above all motor vehicles, even though the sector accounts for a much smaller share of exports to the uk ( 12 per cent ) than in other countries ( germany 33 per cent, spain 32 and belgium 26 ). even with a free trade agreement, the uk would have to pay the administrative costs associated with the ‘ rules of origin ’, i. e. certification that goods being exported to the eu - 27 ( and many of the inputs needed to manufacture them ) do not come from countries subject to eu customs duty. differences in regulations and other non - tariff measures could further increase the cost of trade. financial regulation, banks and market infrastructure financial regulation – one of the biggest unknowns of brexit is what shape future financial relations will take, starting with the regulatory aspect. as an eu member state, the uk is part of the single market in financial services in which the single passport applies. thus, a bank authorized in one member state can operate in any other member state ( by establishing branches or through the free provision of services ) under a system of notification and without the need for authorization. prudential controls are conducted by the authorities of the home member state ; the host state is responsible for anti - money - laundering and consumer protection. with brexit the single passport will be withdrawn. british banks will be treated like thirdcountry banks : they will need to obtain a licence in all the member states where they wish to operate and will become subject to supervision by their host country. uk - based banks and economic policymakers and financial regulators view the possibility of losing the single passport with trepidation, fearing that the city will lose part of its role as a financial centre for europe and the world. at present, many non - eu banks ( especially american and asian ones ) have their european legal and operational headquarters in the city, thus gaining access to the european financial market as well as to plentiful professional expertise and specialist