Professor Philip Lane:

We are in an area with many possible futures, some of which will be technologically driven, relating to what people want and what they find convenient, but there will be also a role for policy. Members may have read that certain cities, such as those in the United States, are insisting that shops accept cash. For shops, cash is increasingly a security risk and insisting that everyone must pay by tapping a card may make sense for an individual shopkeeper but, as the Senator has outlined, it may exclude some people. We have an internal desire for this question to become more of a national one again. Before the crisis, there was some advancement in developing financial literacy and capability at a national, systemic level, but then we all went into crisis-fighting mode and it all fell away. The future of cash and payments and the education needed for everyone to respond and adjust to this world is a societal issue that is broader than our regulatory framework.

It is possible to exaggerate the speed at which cash is disappearing. By and large, across Europe, it is still continuing to grow. However, the nature of basic payments is changing, with people tapping their bank cards more frequently. The role of the Central Bank is to be ready for all of it, responsive and recognise the reality of what people want. Obviously, we have a particular role to play. It is not just currency but also what is in one’s bank account. We will see what happens in the future.

A fundamental point is we are insistent on all entities which have that relationship with the customer being regulated. There is the idea of a Wild West of unregulated FinTech. If these companies are going to deal with customers, they should face the same regulatory protections. We have a good consumer protection framework. It should be available, whether it is a bank, a tech company or a new start-up. What we have seen elsewhere around the world is under-investment in meeting regulatory requirements by some FinTech firms. In Ireland and elsewhere in Europe we have to ensure that, no matter what kind of new entrant arrives, it will deliver for consumers.

We are neutral in the sense of let us see what happens. There is a role for the Legislature in framing what is permitted. Within it, we know what consumer protection and financial stability look like. We are not here to protect the incumbent banks. If they are blown away by new entrants, that will the be reality. What is important is maintaining a stable system which protects consumers.