fabio panetta : at the edge of tomorrow - preparing the future of european retail payments introductory remarks by mr fabio panetta, member of the executive board of the european central bank, at the 14th payment forum of suomen pankki − finlands bank, helsinki, 19 may 2021. * * * thank you for inviting me to speak at this fourteenth edition of the payments forum organised by suomen pankki – finlands bank. finland is often seen as a forerunner in the development of retail payments, certainly when it comes to digitalisation and its effects. and i am pleased that despite the ongoing pandemic, we have come together as stakeholders of the payments ecosystem. today, i would like to discuss how we can promote digital, european, instant retail payment solutions that can be used by everyone, everywhere. digital digitalisation has indisputably come a long way in reshaping the european retail payments landscape. 1 so it is natural for digitalisation to be one of the starting points of our retail payments strategy. 2 simply put, digitalisation is changing the way we pay. we are increasingly paying online and with cards. the pandemic has further accelerated this trend. 3 in facing these developments, europe is not optimally positioned, not least because of the “ waitand - see ” attitude that has in some cases prevailed in the past. this has made europe overly dependent on a few foreign providers for card and online payments, resulting in a high degree of market concentration. 4 european to increase choice, resilience and competitiveness, the european payments ecosystem must proactively stimulate competition, including by developing innovative, europe - grown payment solutions and technologies. for this reason, a key priority of our retail payments strategy is the development of a european payment solution for the point of interaction. 5 the ecb welcomed the launch of the european payments initiative6 as its objectives meet our public interest criteria : pan - european reach and customer experience, convenience and cost efficiency, safety and efficiency, european brand and governance, and global acceptance as a longer - term goal. we remain open to other market initiatives, provided they meet these requirements. instant another key priority of our retail payments strategy is the full deployment of instant payments. here, too, the industry has a decisive role to play, facilitated or guided by the authorities. on the operational side, the eurosystem has taken steps to ensure the pan - european reach of instant payments by the end of 2021 through our target instant payments

, which will reach 88 % of gdp in 2011 in both the euro area and the united kingdom, 100 % of gdp in the united states and 200 % of gdp in japan. these developments are the consequence of sizeable fiscal stimulus measures and of interventions in support of financial institutions in many advanced countries, but also of the sharp contraction in economic activity. in the euro area, adverse fiscal developments are a cause of particular concern in several countries, generally those that did not exploit more buoyant economic times to firmly consolidate their public finances. in the united states, too, some states ( e. g. arizona and california ) have adopted a less prudent approach to the management of their public finances than others. there is no doubt that fiscal policies have been put on a path that is not sustainable. indeed, as simulations for the euro area show, without a very ambitious fiscal adjustment effort, the debt ratio is projected to continue rising in the next decades. with an annual structural deficit reduction of only 0. 5 % of gdp, it will take the euro area 20 years or more to return to the pre - crisis debt - to - gdp level. substantially stronger consolidation efforts are warranted to bring the debt ratio down to a more prudent level of below 60 % of gdp and to prepare for the rising budgetary costs of the ageing population. the challenges are particularly large for countries with relatively high government deficit and debt levels, as well as a rapidly ageing society, and even more so for those that face relatively high interest rates and low potential growth. outside the euro area, bringing the public debt ratio back to safer regions appears even harder for the united kingdom, the united states and japan. given their high budget deficits and the high and rising debt levels, they must undertake very strong consolidation efforts to manage a reversal of the rising trend in public debt ratios. growing fiscal imbalances, if not promptly corrected, are a cause of concern for several reasons. let me focus on the three most important ones. first, high levels of government budget deficits and debt may push up inflation expectations and place an additional burden on the monetary policy of central banks and their task of maintaining price stability. second, large fiscal imbalances may drive up ( real ) medium and longer - term interest rates, with adverse consequences for private investment. given the large debt financing needs of many advanced countries, this constitutes a serious risk for the recovery. moreover, rising interest expenditure on government debt reduces the