of a digital euro. instant payments are a major technological innovation. they allow the release of funds that are locked in the financial system, making them immediately available to consumers and businesses. today, the clearing and settlement of payment instructions takes a few days according to the payment instrument in use. for example, cheques 2 / 5 bis - central bankers'speeches and cards take up to 3 days, single euro payments area ( sepa ) credit transfers 1 day and for cross - border payments the time taken is even longer. this offers opportunities for banks and fintechs to develop new solutions at physical points of sale or in ecommerce transactions. at the same time, instant payment solutions should comply with customer and data protection, anti - fraud, anti - money laundering and sanctions legislations. the deployment of instant payments has been rather slow so far : from november 2017, when the sepa instant credit transfer scheme was launched, till the second quarter of 2023, instant payments reached about 15 % of total volume of credit transfers in the eu. this is a challenge we have been addressing in the eurosystem's retail payments strategy and in our deliberations with the european legislator. the latter intends to make instant payments available to all holders of a bank account in the european union ( eu ) and in parallel make them affordable, such that the price charged for instant payments does not exceed the price charged for traditional credit transfers. although cyprus banks do not yet offer instant payments, certain electronic money institutions and payment institutions that are regulated by the central bank of cyprus are eligible to offer this service to their clients. without a doubt, consumers'demand for innovative payments poses a number of challenges. for instance, non - european bigtechs provide front - end solutions to customers, such as stablecoins and applications for making payments, which challenge our strategic autonomy. this is because of the increase in the risk of financial transactions being based on technologies and infrastructures owned and managed outside the eu, with limited powers of intervention or protection by european authorities. bigtechs also pose a challenge to our competitive edge, because the information contained in digital transactions can be monetised by private, non - european companies, thereby posing a threat to privacy, while also exploiting it for commercial use. another challenge lies in safeguarding in the digital era the availability and usability of banknotes and coins that are currently the only kind of central bank money available to the public. it is against this backdrop that the euros

constantinos herodotou : technology - enabled financial services opportunities and challenges in the payments landscape speech by mr constantinos herodotou, governor of the central bank of cyprus, at the association of cyprus electronic money & payment institutions, nicosia, 28 september 2023. * * * ladies and gentlemen, it is a pleasure to speak to you today and i wish to thank the association of cyprus electronic money & payment institutions for the invitation. the co - existence of traditional banks and innovative fintech companies is transforming the financial sector landscape. this co - existence represents a dynamic interplay of collaboration and interdependence, fostering a complex, yet promising future for our financial ecosystem. the market in which traditional banks and fintechs operate, is also characterised by competition as fintechs gain market share in payment services. this also enables them to cross - sell other services, such as currency exchange, stocktrading, insurance and commodities. in this symbiotic relationship, banks and fintechs stand to benefit by capitalising on each other's strengths, in their efforts to deliver high - quality services to their customers. there are significant advantages in combining the network and regulatory expertise of traditional banks with the agile and innovative operating models of fintechs. however, innovation comes with challenges and risks. as such, the central bank of cyprus has a dual role to play : it encourages innovation and the opportunities that are created by digitalisation. in parallel, it is its duty to maintain a watchful eye on new and untested technologies in our local market, in order to ensure that no undesired risks are introduced, which may penetrate through the local financial sector due to the interdependence i just referred to. and this leads me to my next point, which is the innovation hub initiative that i recently introduced at the central bank of cyprus. through the establishment of the innovation hub, the central bank of cyprus embarks on an ongoing and constructive dialogue with innovative firms, fostering the implementation of novel ideas and the adoption of pioneering technologies. our aim is to simplify the process for innovative firms to understand and navigate their regulatory obligations within the financial system. the innovation hub aims to offer prompt responses and non - binding guidance to interested firms. the audience here today is an important representation of the local fintech community, and as such the central bank of cyprus extends an open invitation to all of you to engage with us through the innovation hub, in order to build