DNB Payments Strategy 2018-2021 - De Nederlandsche Bank
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DNB Payments Strategy
2018-2021
→DNB Payments Strategy 2018-2021 Content
Key trends and priorities
→
New laws
and regulations
Technological Social developments
innovations
Bank
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1 Promoting a
robust electronic 2 We work on
a well-functioning 3 DNB encourages
innovations that
payment system cash payment lead to a secure,
infrastructure chain reliable and efficient
payment system
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Foreword
Key trends and developments
Technological innovations as the key driver
New laws and regulations
Social developments
Objectives and roles
Key priorities for the years ahead
1 Promoting a robust electronic payment system infrastructure
2 We work on a well-functioning cash payment chain
3 DNB encourages innovations that lead to a secure, reliable and efficient
payment system
DNB strives to achieve transparency
Glossary
List of abbreviations
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The Dutch payment and securities expectations to the public at large. Since institutions to strengthen the payment
system (“the payment system”) is most of our work takes place behind the system’s defences against cyberattacks.
secure, reliable and efficient. We scenes, our objectives and achievements We will pay particular attention to
endeavour to keep it this way and are not always clear to the public. This the increased importance of central
make improvements where possible. Strategy document will help provide counterparties (CCPs) and the related
Technological innovations, new clarification and broaden the support for concentration risks, and we prepare for
legislation and regulations, and and effectiveness of our work. our new role as the resolution authority
social developments are changing for CCPs. Last but not least, we will
our area of operations, bringing new Current developments in the payment continue to promote optimisation of
challenges. system require incisive and new the cash chain. While the use of cash
priorities. For example, the rise of new is declining, the cash payment system
We seek to safeguard financial stability payment instruments and market must continue to function smoothly.
and thus contribute to sustainable parties demands a more chain-oriented
prosperity in the Netherlands. It is perspective. That is why we need to It is hard to say what the payments
part of our statutory remit to promote gather more knowledge about the landscape will look like in three years’
the smooth operation of the payment operation and risks of innovations and time, as it is in a constant state of flux.
system, and this document describes gain a better understanding of the We therefore intend to further elaborate
how we intend to put this task into payment chain parties and their mutual our strategy over the next few years.
practice in the next few years. It is interdependencies. Cyber resilience
the basis for our internal direction for is also high on the payment system
the 2018-2021 period, and at the same agenda. We are working together with
Job Swank
time serves to explain our plans and the financial core infrastructure (FCI) Executive director of The Nederlandsche Bank
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The payment system is constantly settled using online transfers or direct payment processing service providers challenges in the form of privacy issues.
changing, and developments debits, and special apps and QR codes have also launched a new system for Data on interbank funds transfers
are accelerating. Many changes allow consumers to pay using their instant payments processing. At the such as TARGET2 are also becoming
are prompted by technological smartphone. This trend is driven by same time, the Eurosystem is working increasingly available, enabling us
innovations, new legislation ease of use, speed and security, and we on the TARGET Instant Payment to gain insight into the transactions
and regulations and social expect it to continue during the next Settlement (TIPS) system, which will between financial institutions.
developments. few years. We foresee the following facilitate the processing of instant
developments: payments between European banks and Cyber risks: due to their increasing
Technological innovations as is expected to become operational in dependence on digital systems, the
the key driver Instant payments: from mid-2019 November 2018. payment infrastructure as well as
Society is changing rapidly due to onwards, it will be possible to make payment system institutions are
technological innovations, and so is 24/7 instant electronic payments, with Increasing data availability: due to increasingly vulnerable to cyberattacks.
the Dutch payment system. Many new transfer orders being processed within increasing digitalisation, more and These cyberattacks are becoming
technologies and payment methods five seconds, giving recipients instant more data about consumers and increasingly sophisticated and may have
have emerged or are set to do so, giving access to their money. The Dutch their behaviour is becoming available. different objectives, such as disrupting
the payments landscape a makeover. banks intend to process all payments This includes data on purchases and systems or stealing confidential data
The number of debit card payments at instantly in due course. This requires a payments. Retailers, online platforms, and money. Distributed Denial of
points of sale is on the rise and online new payment infrastructure, which is banks and other payment service Service (DDoS) attacks for example
purchases are increasingly being paid currently being built by the Dutch banks, providers can use this data to develop can render online systems temporarily
using iDEAL and other online payment payment processing service providers individually-targeted services. Besides unavailable by flooding websites with
methods. Invoices are also increasingly and DNB jointly. A number of European new opportunities, this trend also brings huge amounts of data. Any substantial
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breakdown in the payment system can lead to more efficient payment markets, and discernible step in the purchase needed, which are then automatically
have very serious consequences for lower costs and enhanced resilience process but an integrated part of the paid for without requiring additional
financial stability and are unacceptable against cyberattacks and disruptions. services purchased. The consumer action from the consumer. It remains
from a social perspective. Maintaining Several central banks are investigating provides their payment data only once, to be seen whether this is a desirable
and strengthening the cyber resilience the option of issuing a digital variant of and then automatically pays for each development, since the consequences
of crucial systems and institutions in the notes and coins, a central bank digital subsequent service or product acquired. and risks for consumers’ freedom of
payment system is therefore one of the currency (CBDC). For example, a smart refrigerator that choice and privacy must first be charted,
most important challenges. automatically orders groceries when as well as the risks of IoT devices for the
The internet-of-things and focus
Distributed ledger technology and on ease of use: everyday devices and
cryptos: cryptos, such as Bitcoin, are appliances are increasingly connected
only rarely used for making purchases. to the internet and communicating
Yet, the risks and available crypto with each other. Companies are
variants are rapidly increasing. Many increasingly focused on maximum ease
central banks, including DNB, and other of use for their customers, and this
financial institutions are studying the also has implications for the payment
distributed ledger technology (DLT) system. The focus on ease of use and
– the technology underlying cryptos – the advance of the internet-of-things
as a means of effecting interbank (IoT) more often leads to “under
payments or securities administration. water” payments, which means that
The application of DLT could potentially the payment is no longer a separate
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vulnerability of the payment system to
cyberattacks.
New technologies in the cash chain:
new technologies developed for sorting
machine sensors or applied in banknotes
enable the efficiency, security and
sustainability of cash to be improved.
We will continue to explore these in the
years ahead.
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New laws and regulations into collaborative ventures with these Brexit: the United Kingdom plans to
In addition to technological new market entrants. Eventually, the exit the European Union (EU) on 29
developments, the introduction of new payment system should evolve into an March 2019. Negotiations about new
laws and regulations also changes the “Open Banking” system, in which banks working relationships between the UK
payment system. In the coming years, and new entrants together cater for and the EU are in full swing. The final
the following developments in particular the provision of services. In addition to agreement must be ready by November
will have an impact on the system. opportunities, this also brings risks. 2018. Depending on the outcome of
these negotiations, the Brexit may
Payment Services Directive 2: Regulations and guidelines for CCPs: have consequences for Dutch parties
in 2018, the revised European Payment in the wake of the financial crisis, and institutions that are using British
Services Directive (PSD2) will enter into CCPs have become instrumental in the payment service providers or payment
effect. One of the aims of this Directive processing of securities and derivatives infrastructures for their payment and
is to promote competition. PSD2 will transactions. They effectively function in the European market. The Financial securities transactions, as well as
allow non-banking parties such as as shock absorbers, absorbing the Stability Board (FSB) issued supervisory for Dutch payment service providers
FinTech companies access to customers’ consequences of a bank’s failure. This authority guidelines for setting up offering services to British customers.
bank accounts and hence their payment means, however, that counterparty a resolution regime for CCPs in July
data, subject to the customer’s risks are concentrated with CCPs, and 2017 and the European Commission is
permission. FinTech companies can that a CCP’s failure could have serious working on a Regulation regarding the
use this data to offer new services, consequences for financial stability. That recovery and resolution of CCPs. Under
such as digital budget planners. Banks is why new European supervisory rules this Regulation, DNB will become the
in turn are also challenged to develop are being developed for both EU-based designated resolution authority for
and offer new services, or to engage CCPs and non-EU-based CCPs operating Dutch CCPs.
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Social developments broader range of financial services and
We observe four social developments hence contributing to financial inclusion.
that are having an impact on the Examples include budget planning apps.
payment system. But the speed of these developments
threatens to exclude certain categories
Sustainability: there are growing of consumers, such as the elderly
concerns about climate change, and and other vulnerable groups. That is
demand for resources such as water, undesirable. So to ensure these groups
energy, food and commodities is are not left behind, it is important that
increasing. Carbon emissions are a cash payments remain possible, while
threat to our environment. Thanks in the accessibility and availability of digital
part to the Paris Climate Agreement payment services is improved at the
deals, calls for a carbon-neutral same time.
energy system are becoming stronger. that goods and services are actually communities is growing, and some of
DNB regards the energy transition Growth of the sharing economy: delivered. these have their own local medium of
as one of the economy’s key long- consumers increasingly take on a role exchange. These trends also contribute
term challenges. We also strive for as seller or provider. The number of Resistance against the established to the increasing diversity in payment
sustainability in the payment system. second-hand online trading platforms order: new means of payment are methods.
is increasing, and so is the number of emerging outside the existing financial
Digital inclusion: the ongoing platforms of private individuals offering infrastructure, partly out of resistance
digitalisation of the payment system services. These trends require easy and against the established order. The
makes payments easier, faster and more secure consumer-to-consumer payment introduction of Bitcoin is a well-known
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efficient for the public, offering them a methods which also guarantee example of this. The number of local
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We seek to safeguard financial Table 1: DNB’s roles in the payment system
stability and thus contribute to
Role Description
sustainable prosperity in the
Netherlands. This is why we Operational Design, issue, checking and destruction of banknotes.
promote a secure, reliable and
efficient payment system. Our Issue, checking and storage of euro coins.
statutory remit includes promoting
Dutch operator of the Eurosystem interbank payment and securities systems TARGET2 and TARGET2-
the smooth operation of the
Securities.
payment system, in the Netherlands
and in the European context. We do Management of banks' eligible assets as collateral for ECB credit.
so independently and together with
Catalyst While in principle we leave the operation of the payment system to the market, we support market
our partners, in the euro area and
parties where possible, providing direction where needed. We promote innovation and bring stakeholders
on a global scale. We play several
together, facilitating and coordinating joint initiatives.
roles in the payment system, as
Oversight Our oversight of payment systems concerns institutions, systems and products relevant to payments in
shown in Table 1.
the Netherlands. Oversight on international payment systems is carried out in collaboration with other
European and international supervisory authorities.
Supervision We supervise market parties recirculating euro banknotes and coins, including banks, casinos and
of cash retailers.
handlers
Other We are responsible for the prudential supervision of banks, electronic money institutions and payment
institutions that play a key role in the payment system.
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▪ Click on the various roles for more information.
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We believe the smooth operation of the available, for example because open
payment system can benefit most from market standards are either lacking or
a European approach, with solutions fail to match specific national needs.
at the European level. For example, we This is why we also play an active
work closely together with other central role in the Dutch market, focusing
banks in the design and development specifically on informing the Dutch
of banknotes. The non-cash payment public, encouraging market parties to
infrastructure is also very internationally devise dedicated payment solutions
oriented. Many payment transactions and developing our own innovations.
are processed across borders, and banks These should of course ultimately fade
and other financial institutions make away once more advanced, European
ample use of international payment methods become available.
systems, CCPs and trading platforms.
We are actively involved in international
consultations and, together with other
central banks and European supervisory
authorities, we are responsible for
oversight on internationally operating
institutions. With regard to the
payments of private individuals,
European solutions are not yet generally
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We formulated a set of multi-year This chapter describes what DNB will Some activities are new, some will The payment system landscape is
key priorities in 2016. For example, focus on during the period 2018-2021 in receive extra attention. The increasing changing extremely rapidly, and it is not
we want to assert our position order to achieve our aims and objectives availability of new technologies and easy to predict what it will look like in
as an influential institution in the regarding a secure, reliable and efficient the entrance of new players demand the next few years, or how we will deal
international landscape, ensure payment system in view of the trends in-depth knowledge of the payment with it. The trends observed prompt
efficient and robust payment and and challenges outlined above. It system’s operation and risks. The several new questions, which we intend
security chains and be a leading and concerns the following three key ongoing fragmentation of payment to elaborate further over the next few
authoritative supervisor. In addition, priorities to which we intend to devote chains and the cyber resilience of the years in our vision on the future of the
we endeavour to be a decisive particular attention in addition to our payment system also require additional payment system.
resolution authority, use the very regular core activities: attention. The growing importance of
best staff in executing our statutory CCPs and the associated concentration
tasks and derive maximum value 1 promoting a robust electronic risks warrant particular focus, and we
payment infrastructure
from our data. These ambitions will also promote a properly operating
serve to underpin the execution of 2 working on a well-functioning cash payment chain in an environment
our payment system tasks. cash payment chain where cash payments are steadily
declining.
3 stimulating innovation
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Promoting a robust
electronic payment
system infrastructure
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A secure, reliable and efficient That is why we will pay particular Implementation and elaboration of Strengthening our cyber intelligence:
payment system demands a robust attention to: the TIBER-NL framework: together we must at all times have an up-to-
underlying electronic payment ▪ cyber resilience with the financial core infrastructure date overview of cyberthreats against
infrastructure. Robust means solid ▪ CCPs (FCI) institutions we have developed individual institutions and the financial
and dependable for users, secure ▪ the stability of electronic payment a security testing framework, TIBER. sector as a whole. That is why, from a
and resilient against external chains This involves ethical hackers testing payment system perspective, we will
attacks. Robustness is increasingly ▪ the operation of the payments institutions’ security systems using make available our expertise in this area
important now that infrastructures infrastructure cyberattacks. Cyberthreats are not for the benefit of prudential supervision.
and institutions are increasingly confined to national borders, however, We will also continue to be involved
interconnected and cyber risks and Strengthening resilience against which is why DNB, the ECB and in public and private cyber intelligence
concentration risks are growing. cyber risks other national central banks in the networks, to build up a strong network
We endeavour to strengthen the Eurosystem are working together to of allies to deploy in times of crisis.
resilience of individual institutions in develop a European framework, TIBER-
the payment system and the sector as EU, with the Dutch TIBER-NL serving as
a whole against cyber risks. National a blueprint.
and international cooperation with the
private and public sectors is crucial in
this respect. Effectively, this means we
will focus on the following:
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Increasing attention to CCPs when the resolution authority must
The increasingly important role of CCPs take over. Consequently, resolution
and the related concentration risks plans must be drawn up for each CCP,
requires specific attention. In the years and resolution instruments must be
ahead, we will therefore focus on the determined. Our preparations to this
following activities: end are well under way.
Preparations for CCP resolution: Impact on international laws and
compared to banks, little has as yet regulations: by advising government
been arranged for the situation in and legislative bodies we have an
which a CCP threatens to fail. However, impact on the regulations under
this is going to change. Based on development by the European
international agreements and future Commission regarding the supervision
European regulations, a national and resolution of CCPs. Given the cross-
resolution authority for CCPs will be set border nature of these institutions
up in the Netherlands to safeguard the we would welcome supervision at a
continuation of the critical functions of European level as well as a European
Dutch CCPs in the event of failure. This resolution regime.
demands close cooperation with the
supervisory authority, for example to
gauge the situation of an institution in
trouble and to determine the moment
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Stability of electronic payment supervision at all. Specialist parties effectiveness, and information about Operating from a chain perspective:
chains including IT companies, mobile telecom payment transactions could become we need to have an overview of the
Electronic payment chains consist providers and other non-bank payment fragmented, hampering transaction main parties in payment chains given
of an increasing number of parties service providers increasingly take monitoring, fraud prevention and their ongoing fragmentation, as each
that are interdependent but do not over specific tasks in the chain. As a detection. The parties in the chain in chain is as strong as its weakest link.
always have the same interests and result, payment chains are becoming turn are dependent on other critical This is why we want to identify and
may be under the supervision of more and more complex, which infrastructures, such as internet, monitor these parties and their mutual
various authorities or even under no could lead to a reduction of cost telecom or cloud services. In other interdependencies, changes and risks. We
words, effective chain management is also want to gain an insight into the risks
essential. The interdependence between arising from instant payments and ensure
parties becomes more important with appropriate measures are taken as soon
the introduction of instant payments, as the chain’s robustness threatens
since incidents at a single institution to come into jeopardy. Each year, we
or in a single system could easily affect organise sector-wide crisis exercises. It
other parts of the institution or even is our intention to involve other critical
the entire payment chain. The role of infrastructures, such as telecoms and
large new online platforms or how they electricity, more closely in the future. We
will affect oversight of the payment also plan to engage in dialogue with new
chains is not yet clear. players, and as soon as these develop
into significant links in the chain we will
We therefore intend to focus our actions invite them to join the National Forum
on the following in the years to come: on the Payment System (NFPS).
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Pricing the payments infrastructure: central banks’ interbank funds transfer due to the volatility and anonymity
the increasing fragmentation of the systems are still exclusively accessible to of transactions, the question arises
chain raises the question of which costs traditional banks and financial market whether cryptos should be regulated
are actually involved and who must infrastructures. It remains to be seen in order to safeguard the dependability
foot the bill (paying for payments). whether these new non-bank payment and security of the payment system.
The payment infrastructure, which is service providers should be able to gain We intend to look into this further,
essential to the payment system, is access to these central bank systems, also in view of the excessive energy
presently available at a relatively low both from a competitive perspective consumption of some cryptos.
price. Under PSD2, non-bank parties and for financial stability reasons.
could be able to gain free access to this Accordingly, we first want to study the Call for new or different types of
infrastructure, enabling them to offer risks of linking up payment institutions supervision: in the light of increasing
innovative services. We want to study to the TARGET2 central bank system. fragmentation of the payment chain,
the pricing of the payment system growing cyber risks and ongoing
more closely, including the question Cryptos: cryptos are not money. They counterparty concentration risks at
of how the providers of the underlying are generated by private, unregulated non-Dutch-based CCPs, we must assess
infrastructure remain willing to keep parties and do not have any legal or whether our current supervision still
investing in its robustness. intrinsic value. They are not generally suffices. Do we still have adequate
accepted as a medium of exchange, powers? Do we approach supervision
Access to interbank funds transfer and due to the instability of their price, sufficiently from a chain-oriented
systems: although non-bank parties neither do they serve as an accounting perspective? In the coming years,
are playing an increasingly important unit or store of value. In view to we intend to formulate a vision with
role in the payment system, most of the the increasing risks for consumers respect to these important questions.
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Consequences of the Brexit: the United DNB as operator of payments
Kingdom leaving the European Union infrastructures
can have significant consequences for The systems operated by the
Dutch consumers, businesses, financial Eurosystem’s central banks, such
institutions and payment infrastructures as TARGET2, TARGET2-Securities,
who purchase services from or provide TIPS and the European Collateral
services to British parties. All parties Management System (ECMS) currently
involved should therefore prepare in under development, together form the
good time. We want to have a clear backbone of the electronic payment
overview of the potential risks of the system of the Netherlands and Europe,
Brexit for the Dutch payment system and as such they should be robust. That
and will take the necessary measures to is why we will continue to focus on their
minimise these. availability and security.
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We work on a
well-functioning
cash payment chain
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cash payment chain
To ensure an effectively functioning Cash must remain available, those cases where consumers cannot Safeguarding the reliability and
cash payment chain in the next few reliable, accessible and simply turn to another provider who security of cash: we will continue our
years we will focus explicitly on: affordable does accept cash. Innovations such as efforts to ensure that users maintain
▪ the availability, reliability, While we support the retailers’ and the “smart vaults” used by retailers may confidence in the euro banknotes, for
accessibility and affordability of cash banks’ wish to encourage electronic contribute to better acceptance. Thanks example by working together with
▪ sustainability in the cash payment payments, we do not seek to achieve to these vaults, cash payments are the market on applications to prevent
chain a cashless society as long as there is a credited to the retailers account within robberies and ATM ram raids and by
▪ the future of cash money in the long need for making cash payments. We one day (or even instantly, in the future) developing innovative security features
term believe it is important that cash money after depositing the banknotes they for banknotes.
remains available, reliable, accessible receive into the vault. For retailers, this
and affordable and will focus on the makes cash payments almost equal to
following aspects in the next few years: debit card payments in terms of security
and processing speed.
General acceptance of cash: while
it is still possible to pay in cash at Availability of deposit and withdrawal
most points of sale, its acceptance is points: we will continue to stimulate
declining based on cost and security initiatives that ensure the availability
considerations. To prevent vulnerable of sufficient and secure cash deposit
groups in society from being excluded, and withdrawal points for retailers and
we will continue to promote the general customers.
acceptance of cash – particularly in
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Reducing the cost of cash: with the Sustainability in the cash Local recirculation and energy neutral by retailers using their cash proceeds
decline in the use of cash, there is rising payment chain cash centre: in the coming years, we from sales. As a result, banknotes and
pressure to reduce the associated cost. In its efforts to make the cash payment will stimulate market initiatives that coins can be deposited and withdrawn
DNB supports initiatives that boost the chain more sustainable, we will focus on will result in further local recirculation. in the very same place. This reduces the
efficiency of the cash payment chain, the following areas: Examples include the cash recycling amount of transportation necessary,
in a number of cases through active machines that will be installed in stores, and therefore the CO₂ emissions. In
involvement in its development. For Extending the life cycle of banknotes and in-store cash machines which 2022, we will transfer our activities
example, we welcome the plans of the and improving sustainability: we (under certain conditions) can be filled relating to the issue and handling of
major Dutch banks in the Netherlands would like to destroy as few banknotes
to bring their ATMs together in a as possible while they are still fit for
joint network run by Cash Service use. We will therefore introduce new
Netherlands (Geldservice Nederland technologies in our sorting machines,
– GSN). As a result, all ATMs will be and will in cooperation with the ECB
identical and will be able to be more conduct new studies into the use of
efficiently managed. coatings on banknotes that can extend
their life cycle. This will contribute
to lowering costs and the ecological
footprint. Furthermore, we want to
ensure banknotes are made of 100%
sustainable cotton by 2019.
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banknotes from Amsterdam to Zeist. We will seek to focus attention on
The new Cash Centre will be housed these areas in the coming years. This
in an energy-neutral building and will will also involve examining what this
be designed in such a way that it can entails for the role of public money
also accommodate changes in the cash (issued by central banks) versus private
payment chain in the future. money (issued by commercial parties),
and what the implications would be of
The future of cash money in the a ‘cashless’ society in which people are
long term no longer able to obtain their money
If the use of cash money continues from the bank, such as in times of crisis
to decline then the question arises of or concerns about the banks. We will
whether it is necessary to continue to consider these questions in the light of
maintain a cash infrastructure. This the fact that cash is used much more
leads to fundamental questions about often in other countries in the euro area
the importance of cash money in all than it is in the Netherlands.
its roles: as legal tender, as a means
of payment that guarantees privacy,
as a fallback option should electronic
payment fail, as a means of payment
specifically for vulnerable groups, and
as a means of budget management.
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DNB encourages
innovations that lead
to a secure, reliable and
efficient payment system
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to a secure, reliable and efficient payment system
Innovations in the payment system Working on innovations the application of nanotechnology as a exchange thoughts about barriers and
can lead to lower costs and greater We work on innovations, by initiating security feature in banknotes. wishes regarding existing and new
convenience, which is beneficial to them ourselves, by stimulating payment methods. A specific area
society. However, innovations also bring initiatives in the market, by advising Facilitating instant payments in of attention in this respect is digital
with them risks, such as operational legislative bodies, and by bringing the Netherlands: cooperation and inclusion, as we want everyone to be
disruptions and a possible violation together parties if the necessary standardisation are essential for the able to continue to make payments
of privacy. We have developed an cooperation fails to get off the ground. success of new infrastructures and the easily, securely and efficiently.
assessment framework to review We also contribute to European bodies payment system. A good example of Digitalisation must not result in certain
innovations in a structured manner if further European harmonisation or this is the Dutch banks’ development consumers being left behind and
and to determine whether or not to coordination is required. For the coming of a new payment infrastructure, under potentially excluded from the payment
stimulate them. We will discuss any years we have formulated the following the auspices of the Dutch Payments system. Maintaining traditional payment
undesirable risks with market parties. specific priorities for innovation: Association. DNB plays a facilitating role methods is one of the solutions, but
We will devote particular attention in in this respect, by ensuring the finality of digitalisation also offers opportunities.
the coming years to the following: Developing new technologies for the settled instant payments. Take, for example, new technologies
▪ working on innovations banknote design: we are currently in intended for vulnerable groups, so that
▪ expanding knowledge the process of developing technically Facilitating discussion: the success they can also continue to easily make
▪ protection of payment data and reliable and intuitive security features, of innovations depends on adoption secure and efficient payments.
privacy which help the consumer and can also by users. That is why DNB fosters
be relatively easily checked by retailers. discussion about innovations within
We conduct research into, for example, the NFPS, so users and providers can
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Expanding knowledge field of payment systems. This work maintain a critical stance towards credit. Moreover, in the event of a crisis,
More knowledge is required to supervise will continue in the coming years, and CBDC, in view of the uncertainties and CBDC may exacerbate a bank run. Our
the payment chains and to guarantee will include ongoing research based risks attached. CBDC would for example research will also focus on the potential
the security, reliability and efficiency of on transaction data obtained from initially compete with bank deposits, application of CBDC to financial market
the payment system. Effectively, this systems it operates, such as identifying raising the cost of bank funding and transactions and will be conducted in
means we will focus on the following: interdependence between the various undermining banks’ capacity to extend cooperation with other central banks.
parties in the payment chain. In
More intensive contact with the doing so, DNB will use new research
market: we wish to seek even more techniques, such as machine learning.
contact with market parties, to stay
in touch with their developments and Studies into DLT and CBDC: based
to be able to anticipate technological on experimental research conducted
developments in the payment system. in recent years, in the coming period
Our approach will include organising we will study whether blockchain
expert and thematic sessions with and and DLT can contribute to improving
for the market parties. Being able to the robustness and efficiency of the
effectively anticipate technological payment system. We will also continue
developments also requires relevant our research into CBDC. When it
expertise from DNB. becomes permanently available
and widely accessible, CBDC could
Analysis of granular payments data: supplement the role of cash, or partly
DNB conducts scientific research in the take over this role. We do, however,
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Analysis of banknote data: we fulfil a Protection of payment data and Regulation. Cooperation with parties
pioneering role in the use of banknote privacy in the NFPS is also being sought in the
data and strive to extend this role area of payment data security. Privacy
further in the coming years. We will Cooperation: due to increasing protection and payment data security
achieve this, for example by gaining digitalisation, the IoT, and the arrival are essential for sustaining confidence in
access to and analysing banknote of PSD2, the security and protection of the payment system.
data from our sorting machines, other personal data is becoming increasingly
central banks and commercial sorters important. As a supervisory authority, Electronic identification: the Generic
in the Netherlands. These data enable we monitor adequate data protection Digital Infrastructure Act (Wet Generieke
us to monitor the price, life-cycle by financial institutions to ensure sound Digitale Infrastructuur – Wet GDI) will
characteristics, security features and and ethical business operations. In this enter into force in 2018. This Act
logistical movements of banknotes, respect, PSD2 is a key development, is intended to standardise digital
in order to more effectively manage as it facilitates access to payment government services for citizens and
the quality and efficiency of the cash data by third parties. As a supervisory businesses. We will conduct research
payment chain. authority we cooperate with the Dutch into the potential role of electronic
Data Protection Authority to ensure identification in relation to the payment
compliance with the requirements of system.
PSD2 concerning access to and the
security of personal data. In addition,
the Dutch Data Protection Authority
also monitors compliance with the
European General Data Protection
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→ DNB strives to achieve transparency
Confidence is essential for an Ignorance can result in unsafe use of together with other parties in the NFPS,
effectively functioning payment payment methods, thus increasing we will publish information about the
system: confidence in the the risk of incidents. Furthermore, the consequences of PSD2.
availability of systems, the security lack of knowledge about correct and
of payment methods, the integrity responsible use of payment methods Dialogue: since most of our work takes
of payment service providers and can be a barrier for digital inclusion. place behind the scenes, our actions
the security of payment data. That is why, irrespective of the above- and intended objectives are not always
Confidence is also determined by mentioned priority areas, in the coming clear to the public. Public demand for
perception and knowledge. The years we will devote more attention accountability has also increased in
idea that a payment method is not to external communication, in the recent years. We will therefore regularly
secure, or a failure to understand following manner: discuss our vision, objectives and
how a payment method works can priorities with relevant parties and make
damage public confidence, even if Information about new payment adjustments where necessary.
there is no objective lack of security. methods and regulations: in
the coming years we will provide
further information to businesses
and consumers about new payment
methods and services and new payment
system regulations. This is to assuage
unnecessary concerns and, where
necessary, to warn the public about
security and privacy issues. For example,
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→ Glossary
Central Bank Digital Currency (CBDC) Central Securities Depository (CSD) transactions without the need to rely on and of the systems for processing
– Digitally transferable central bank – The party functioning as a central a central authority to maintain a golden payments and securities transactions.
money, denominated in an official depository and realising the actual copy of the ledger.
currency. transfer of securities between owners. FinTech companies – Companies
Electronic – Refers to electronic developing and offering financial
Cash payments – Payments in Cyber resilience – An institution’s transactions, the electronic payment services based on innovative technology.
banknotes and coins. resilience against cyberthreats. This chain and the electronic payment
involves the capacity to anticipate infrastructure, i.e. transactions and Geldservice Nederland (GSN) – The
Catalyst – In its role as a catalyst, and absorb disruptions following a the payment chain and infrastructure cash service provider for a number of
DNB supports the market and market cyberattack, as well as the capacity to needed to effect non-cash transactions. major banks in the Netherlands. It is
parties in finding innovative, secure quickly respond to threats and recover responsible for sorting and distributing
and efficient solutions, for example by from them. Eurosystem Collateral Management cash money and for replenishing and
promoting innovation and stimulating System (ECMS) – The future single maintaining the banks’ ATMs.
debate, bringing stakeholders together Digital inclusion – Having access to European system for management of
and coordinating joint initiatives. digital payment services as well as collateral placed with central banks. Interbank payments – Funds transfers
the skills and knowledge to use these between banks and other financial
Central Counterparty (CCP) – The services. Financial core infrastructure (FCI) – institutions. Funds transfers between
party responsible for administering, The institutions responsible for the key consumers and businesses are referred
netting and guaranteeing (clearing) Distributed Ledger Technology (DLT) components of processing payments to as retail payments.
securities and/or derivatives – Refers to the use of established and securities transactions, such as
transactions. procedures and protocols to execute providers and users of trading platforms
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Machine learning – A technology Payment infrastructure – All systems TARGET2 – The Eurosystem’s platform
whereby computers have the ability to needed to process and settle payments for real-time processing of interbank
learn independently (i.e. progressively and securities transactions, e.g. trading euro payments.
improve performance on a specific platforms, banks, payment processing
task) from data and use it to make service providers, cash transportation TARGET2 Securities (T2S) – The
predictions. companies, cash handlers, central European platform for processing euro-
counterparties, central securities denominated securities transactions.
National Forum on the Payment depositories and central banks.
System (NFPS) – Platform chaired by
DNB, through which payment service QR code – A code that can be scanned
providers and users meet to discuss using a smartphone, directing the user
ways of improving the efficiency of the to a specific website.
payment system.
Resolution – Resolving a financial
Online platform – An internet platform institution in trouble in a careful and
bringing together demand and supply, controlled manner.
such as online trading platforms.
Settlement – The transaction process
Payment chain – The chain of parties of debiting funds from the payer’s
needed to realise payments, from the account and crediting the payee’s
payer who initiates a payment up to its account.
settlement and, in the case of banknotes
and coins, their storage or destruction.
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→ List of abbreviations
CCP Central Counterparty
CBDC Central Bank Digital Currency
CLS Continuous Linked Settlement System
CSD Central Securities Depository
DDoS Distributed Denial of Service
DLT Distributed Ledger Technology
DNB De Nederlandsche Bank
ECB European Central Bank
ECMS Eurosystem Collateral Management System
FCI Financial Core Infrastructure
GSN Cash Service Netherlands (Geldservice Nederland)
IoT Internet-of-Things
NFPS National Forum on the Payment System (Maatschappelijk Overleg Betalingsverkeer – MOB)
PSD Payment Services Directive
QR code Quick Response code
SWIFT Society for Worldwide Interbank Financial Telecommunication
TARGET Trans-European Automated Real-Time Gross Settlement Express Transfer
TIPS TARGET Instant Payment Settlement
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