erkki liikanen : some observations on today ’ s international financial situation on the occasion of the 150th anniversary of the bank of russia remarks by mr erkki liikanen, governor of the bank of finland, on the occasion of the 150th anniversary of the bank of russia, moscow, 18 june 2010. * * * it is a great pleasure for me to bring the greetings of the bank of finland to the 150th anniversary of the bank of russia. our central banks are actually kind of relatives. emperor alexander ii founded the central bank of the russian empire exactly 150 years ago. the bank of finland, for its part, was established by his uncle, alexander i, in 1811. so it is clear that we have many common roots. i will return to these common roots in a moment, but let me first make some observations on today ’ s international financial situation. * * * no country has escaped the effects of the current economic crisis. in many ways this was to be expected : the past decade witnessed unprecedented rise in the volumes of both international trade and financial flows. not even during the first golden age of globalization, in the last decades of the 19th century and the first decade of the 20th, were so many countries trading so much with each other. during the present, second era of globalization, many countries previously largely outside the international division of labour, have been able to enjoy the benefits of international trade and specialization. the other side of the largely beneficial coin of globalization and interdependence is of course the higher vulnerability to other countries ’ economic misfortunes. if a negative shock decreases demand in any large economy, the negative effects ripple through the world economy. in the current crisis, the sudden and very large disruption in the functioning of the global banking system made the problems even worse. after the collapse of lehman brothers in september 2008, one third of the volume of the world trade disappeared almost overnight. the increased integration of the world ’ s financial systems allowed the negative liquidity shock to spread extremely fast. very few countries were immune. while the global scope of the recent crisis is unique, in many ways this crisis has been very similar to the ones before it. it was preceded by an economic boom, accompanied by higher indebtedness, which increased vulnerabilities. asset prices rose, including housing prices. when negative shocks occurred, expectations were revised downwards, and this caused asset prices to drop. banks ’ loan losses increased, and economic recession made

in finland, loan - and investmentbased crowdfunding for business activity will be regulated through the coming crowdfunding act. platforms and networks are also at the heart of blockchain technology. blockchain technology, which drives bitcoin, for example, also facilitates transactions as well as the saving and distribution of information without a trusted third party. the technology can be applied in many different ways. thus there are already plans to store securities, contracts and transactions using blockchain principles. if blockchains are used only for more efficient storage of information and ensuring consistency, the change will not be revolutionary. but if blockchains result in a redefinition of the role of trusted parties, the changes may be potentially very great. bis central bankers ’ speeches digitalisation in the payments market digitalisation in its various forms has already been a theme at previous payments forums. the effects of digitalisation have been powerfully reflected in the payments market in recent years. many new actors, offering their own new payment applications, have appeared. it should be noted, however, that these applications often make use of traditional payment instruments, notably card payments and credit transfers, operating in the background. as a result, changes in the background payment systems, have been quite limited. in the future, the situation may be different if numerous studies under way, for example to exploit blockchain technology, prove to be successful. one essential driver of digitalisation is young people who are accustomed to doing everything via the internet, often on a mobile device. in their view, payments must be convenient and easy for the user and available 24 hours a day. new players entering the market have created operating models that place the user at the centre of payment services. this challenges traditional operators, who must respond to the challenge. perspectives on future payment trends are provided by a payments council electronic booklet published today : how will we pay in the 2020s? [ in finnish only ]. the subject will also be discussed in the panel that ends this payments forum. ease and convenience are the features required of payments in the future. from a monetary authority ’ s perspective, security and reliability should be added to the list. without trust, even the easiest to use payment method will not survive in the market. real - time payment transmission will be an essential element of the digitalisation of payments in the future, as will 24 / 7 availability of services. this is also an area of focus in the eurosystem. the euro