so far unlikely – if the bulk of payments are made using digital wallets rather than bank deposits and are denominated in private digital currency with weak links to sovereign currency, monetary sovereignty could be weakened. in a digital world, consumers must have the possibility to pay with sovereign money. in china, for example, within a decade payments have shifted from cash to mobile payments, which are controlled by two large private technology firms. the planned introduction of a public digital currency can be seen as a means of managing the risks of this digital transition, in order to maintain trust in payments. state backing is essential for there to be trust in payments and money. money held in bank deposits can be seen as a form of private digital currency, but it is widely used because people trust that they can readily convert their deposits into central bank money. in the euro area, these deposits are also insured by guarantee schemes up to an amount of €100, 000, effectively making them public money. private digital currencies would not necessarily allow the same kind of convertibility and are unlikely to have the same state backing. without a monetary and regulatory anchor, the stability of payment systems would essentially depend on the safety of private money issuers. people are clearly aware of these risks. a recent survey by the official monetary and financial institutions forum shows that central banks enjoy a higher level of trust than commercial banks, credit card companies and technology firms, including as potential issuers of digital currency. 2. initiatives to strengthen european payments so what are the implications for european payments? first, we must ensure that how we pay, and the systems that support our payments, continue to modernise along with the people who use them – european consumers, in other words. here at the ecb, it is our duty to ensure that people have access to riskless, low - cost means of payment, as well as state - of - the - art payment services that reflect our changing economy. and second, given our size and influence, in europe we have a responsibility to ensure that our citizens have choice and cannot be excluded from the payments ecosystem due to the unilateral actions of others. we need to ensure that european payments are fit for a global digital economy so that, in the face of changing risks, we can preserve the autonomy of european payments. the eurosystem has already reacted to technological change by launching innovative back - end payment solutions with a pan - european reach, such as the target instant payment settlement ( tips

ecb ’ s new payments survey, cash remains the most common way of making small retail payments, with cash payments accounting for 73 % of all physical retail payments in 2019. but almost half of consumers said they prefer to pay digitally, and this has increased further during the pandemic. this trend is unlikely to be reversed once the pandemic is over. a survey conducted by a consulting firm in 17 european countries shows that a vast majority of consumers expect to continue to use digital services as often as they do now or even more often. in other words, the pandemic has served as a catalyst, accelerating the transition towards a digital new normal. the second major trend is the competition to dominate payments on a global scale. payments are subject to strong network effects : the more users a payment system has, the more attractive it becomes to new users. scale matters - this limits the field and inevitably leads to just a few service providers dominating the payments market. europe has fallen behind in this competition. the lack of payments integration in europe means that foreign providers have taken the lead. this is not necessarily a concern, as long as foreign firms are accountable and subject to appropriate regulation and oversight, in accordance with the principle of same business, same risk, same regulation. but the evolving global context and rapid technological progress are changing the nature of the risks that we are exposed to. we are seeing an increase in protectionist policies, as sanctions and even exclusion from payment systems in recent years have shown. this presents new risks of payment disruption – especially for jurisdictions that are overdependent on dominant system providers. europe had a taste of the potential risks in the summer of 2018 : outages at international card providers left millions of europeans temporarily unable to pay for goods and services. european payments are also being affected by technology firms driving the digital transformation of global payments. these firms ’ well - established user networks give them a unique advantage in the payments industry. more than a quarter of the world ’ s population are active users of facebook, which could give its libra project a global footprint from the outset. and it is not unlikely that other large technology firms enter the playing field, too. this has great potential to drive competition, improve payment solutions and support financial inclusion. but it could also magnify a host of issues, ranging from abuse of market power to ownership of critical data. it could also make it more difficult to combat illicit activities and ensure operational resilience. and more importantly – but