Tómas Brynjólfsson, Deputy Governor for Financial Stability at the Central Bank of Iceland, spoke about new payment infrastructure in Iceland at the Money Live Nordic Banking conference in Copenhagen. He highlighted the importance of new payment solutions as a means of enhancing economic security and payment system resilience.
Tómas stressed that strengthening strategic autonomy in payments in a digital world does not entail retreating from international cooperation. For a small country like Iceland, such cooperation is fundamental to security and prosperity, but at the same time, domestic resilience and pre-emptive preparedness for severe disruptions is vital.
For a small, highly digital economy – such as Iceland – payment sovereignty does not mean self-sufficiency. It means combining international shelter with domestic resilience and ensuring, to the extent possible, that neither becomes a single point of failure.
In his address, Tómas specified that the Central Bank of Iceland’s policy on payment intermediation was based on three fundamental principles. The first entails having more than one payment solution and channels available. The Central Bank has recently signed an agreement with the European Central Bank concerning Iceland’s participation in the Eurosystem’s TARGET Instant Payment System (TIPS), which is an important element in enhancing the resilience and efficiency of payments in Iceland. In addition, the Bank is in the final stages of preparing a tender for infrastructure that will make it simpler for banks and payment service providers to offer payments for goods and services via account-to-account transfers. This increases the number of available payment channels. Participation in TIPS and diversification of payment options not only bolsters financial system resilience, it also strengthens the system’s competitiveness vis-à-vis rapid technological advances in the field. The second principle is that international integration and domestic capacity support one another, and third, it is the role of central banks to provide robust shared infrastructure while entrusting banks and payment service providers with innovation in customer service.