Innovation in retail payments and its impact on central banks’ oversight function

Abstract

Technological advances are having a significant impact on countless aspects of our lives and, in particular, on how we pay for the goods and services we consume. These changes in the payment value chain are affecting the oversight functions of central banks and other authorities entrusted with making certain that new risks that appear are managed appropriately, to ensure that innovation translates into secure efficiency gains. This article focuses on the impact of these innovations on central banks’functions. It first examines recent developments in payment habits in Spain as a consequence of technological innovation and other key factors such as those related to the COVID-19 pandemic. It then describes the impact of innovation on interbank payment processes. Lastly, it analyses the response of the Eurosystem –from an oversight standpoint –and of other authorities to the changes in the payment ecosystem.