13 December 2019

ECB's De Guindos: Financial innovation for inclusive growth: a European approach

Speech by Luis de Guindos, Vice-President of the ECB, at the conference Financial Integration and Inclusive Development – A View from the Mediterranean Countries, in which he outlines the benefits of financial innovation, but also draws attention to areas where improvement is required.

While Mr Luis de Guindos is convinced that technological progress needs to be fostered and not hindered, he can’t but notice that its benefits have failed to reach all corners of our societies – in particular underprivileged populations and vulnerable groups, for whom financial innovation has not yet made a difference. And while in certain regions mobile money has given millions of customers access to our financial systems, more work is needed to ensure access for the 1.7 billion adults who currently do not have a transaction account.

Furthermore, in stark contrast to other ubiquitous technologies, existing cross-border payments are not always “up to speed” and cost-efficient. In fact, while the global average cost of remittances has decreased, it is still well above the 3% target indicator for sustainable development by 2030.

At the same time, the importance of remittances has grown: they have overtaken foreign direct investment as the largest source of external financing to emerging economies. These facts and figures should not come as a surprise. Yet they caused quite a stir earlier this year, and rightly so, when global stablecoin initiatives made headlines by pledging to address these long-standing issues.

The benefits of financial innovation should be available for all to see and experience. Financial institutions have a window of opportunity to leverage technological advances to deliver innovative payment and financial solutions that meet consumers’ expectations of convenience, affordability, safety and global acceptance.

European stakeholders should join forces or brace themselves for external disruption with potentially far-reaching implications for public policy.

There is strong political momentum to make the financial system more inclusive – starting with access to transaction accounts and cross-border payments. Central banks have an important role to play both individually and collectively in the international community.

The ECB is drawing on this momentum to give new impetus to a European strategy on retail payments that is fit for the global challenges ahead. As a central bank, ECB will continue to monitor how new technologies are changing payment behaviour and project the potential of innovative ways of making payments cheaper, more efficient and more inclusive onto our tasks and activities to the benefit of the European people and beyond.

Full speech on ECB

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