01 / 12 / 2020 shaping the future – challenges in the european payments market | deutsche bundesbank shaping the future – challenges in the european payments market speech at the virtual conference “ future of payments in europe ” 27. 11. 2020 | virtual event | jens weidmann 1 introduction 2 opportunities and risks of retail cbdcs 2. 1 potential beneﬁts 2. 2 curbing the risks 3 other innovative payment solutions 3. 1 instant payments 3. 2 cross - border payments 3. 3 token - based solutions 4 concluding remarks 1 introduction ladies and gentlemen, it is my pleasure to welcome you all to our virtual conference on the “ future of payments in europe ”. more and more, the topic has moved towards the top of the agenda of policymakers, central bankers and private market participants alike. and seeing all the esteemed speakers and participants, i am sure this conference will make a valuable contribution to this debate. so what does the future hold in store for us? along with utopian or dystopian visions, science ﬁction sometimes offers fascinating glimpses of what everyday life in the future might look like. one of the https : / / www. bundesbank. de / en / press / speeches / shaping - the - future - challenges - in - the - european - payments - market - 851850 1 / 9 01 / 12 / 2020 gshaping g pthe future – challengesyin they european payments marketg | deutsche bundesbank most popular american books in the 19th century was edward bellamy ’ s “ looking backward ”. [ 1 ] in this story, the protagonist falls asleep one night in 1887 and miraculously wakes up in the year 2000. he ﬁnds himself in a “ workers ’ paradise ” where people can retire at the age of 45 and the government controls the means of production. this utopia is technologically advanced and [UNK], featuring electronic entertainment, large shopping centres with a fast delivery system, and “ credit cards ”. yes, you heard right : money no longer exists in bellamy ’ s vision of the year 2000. instead, those cards grant people a just share of the goods produced in this ( socialist ) economy. ironically, bellamy may well have been the ﬁrst to use the term “ credit card ”. jumping back to reality, we have long grown accustomed to paying with “ plastic ” or cards. physical money still exists, but cashless forms of payment are readily available and on the rise. now, many observers see us

code, computers and networks. but when non - specialists actually ask for digital solutions, they frequently fail because they oversimplify the job of it specialists. for example, they fail to accurately specify the goal and the desired properties of an application. partly because they don ’ t speak the right language and regard the actual solutions as a black box ; partly because they simply don ’ t bother. unfortunately, incoherent concepts at the outset frequently lead to dirty fixes and workarounds, both of which turn out to be costly and inconvenient in the long run. and, frustratingly for itexperts, it makes them look incompetent in the end. also, co - workers are often not sufficiently aware of the various other challenges which it departments face in their day - to - day work. just think of the need to make a software application stable, secure and efficient, to make it adaptable to changes of purpose or to changes in the “ outside world ", and to make it useable for the “ dumbest assumable user ". these are regular trade - offs. they require strategic decisions. but in this regard, top management needs to understand the trade - offs first. this leads to another, overarching issue : scarce resources. top management is often reluctant to allocate sufficient resources to an it project. this is quite a common finding in our supervisory inspections. that puts long - lasting solutions out of reach. while this may often be due to “ short termism ” ( as it projects often pay out only in the mid - or long term ), it can also be caused by underestimating their value. 2 / 6 bis central bankers'speeches let me now turn to a second bias of top management, namely underrating it and cyber risks. nowadays, a large majority of households and enterprises will have experienced cyberattacks for themselves. but even though awareness of potential threats has risen in previous years, it is still the case that, far too often, incidents are interpreted as a stroke of fate, as mere bad luck. to be fair, having reliable defence mechanisms is indeed challenging for many applications and larger it systems because threats constantly evolve. and so does technology, opening up new loopholes all the time – just take the weaknesses in computer processors which came to light just recently. still, the likelihood of a successful cyberattack can be significantly reduced by measures that are well - known – at least in it