payments

Resilience, Autonomy and Cooperation in Payments and Clearing Systems

Norbert Gehrke

09 Sep 2025 — 5 min read

The European Central Bank's Legal Conference was held on September 1 & 2, titled "Building Europe's Autonomy: Law, Institutions, Cooperation." It included a panel on "Resilience, autonomy and cooperation in payments and clearing systems," with the following brief:

Enhancing payment and clearing infrastructures and their resilience are cornerstones of European autonomy within a changing geopolitical environment. Projects such as the European Payments Initiative and services such as TIPS aim to enhance retail payment independence but face challenges in adoption and competitiveness. Regulatory proposals like PSD3 and PSR seek to reduce fragmentation and foster innovation, particularly by opening the market to non-bank actors. However, their capacity to deliver full payment sovereignty remains limited. The discussion will also address the resilience of critical infrastructures, including CCPs, in light of legislative measures such as DORA and NIS2 as well as soft law instruments such as TIBER and guidance from the CPMI, which further reflect the EU’s evolving regulatory approach.

The panel was chaired by Piero Cipollone, Member of the Executive Board, European Central Bank, and included the following panelists:

Douglas Arner, Professor, University of Hong Kong
Dessislava Guetcheva-Cheytanova, General Counsel, Bank for International Settlements
Ruth Wandhöfer, NED, Adviser & Visiting Professor, Bayes Business School

Key Takeaways

A New Geopolitical Reality Is Driving the Push for "Strategic Autonomy" in Payments. The discussion has shifted from being purely about technological innovation to being about resilience and sovereignty. A combination of new technologies (like DLT), global trade fragmentation, and geopolitical tensions is compelling Europe to build payment systems that are independent, secure, and can function as an "infrastructure of last resort."
Europe Is Pursuing a Three-Pronged Strategy. The ECB is working simultaneously on three fronts: (1) strengthening the internal retail market with the Digital Euro, (2) modernizing the wholesale market by supporting tokenized assets with central bank liquidity, and (3) improving cross-border payments by interlinking fast payment systems.
Legal and Governance Frameworks Are the Biggest Hurdles, Not Technology. All panelists agreed that while the technology to create better payment systems exists, the primary challenges lie in harmonizing legal and regulatory standards across different jurisdictions. Building trust, agreeing on common rulebooks, and establishing clear governance are the most time-consuming and complex parts of any cross-border initiative.
The Next Frontier for Autonomy Is Tackling the US Dollar's Dominance in Foreign Exchange. While projects like the Digital Euro and interlinked payment systems enhance operational autonomy, true monetary autonomy is limited by the US dollar's deep liquidity in global foreign exchange (Forex) markets. Most international transactions are routed through the dollar, and creating viable alternatives is a major economic and market-structure challenge that technology alone cannot solve.

Detailed Breakdown

1. Geopolitics as the Primary Driver for "Strategic Autonomy"

The panelists emphasized that the motivation behind major payment system projects has fundamentally changed.

Shifting Narrative: The Digital Euro was initially framed as a response to private innovations like Bitcoin and Libra. Now, its primary justification is geopolitical. It is seen as a crucial piece of public infrastructure that ensures the resilience and autonomy of the European monetary system in a fragmented world.
Infrastructure of Last Resort: Ruth Wandhöfer coined this term to describe the new role of a retail Central Bank Digital Currency (CBDC). It acts as a secure, sovereign backup system that guarantees payments can continue even if private or foreign-controlled systems fail or become unavailable.
Global Trend: Professor Douglas Arner noted this is not just a European phenomenon. Jurisdictions worldwide are re-evaluating their payment infrastructures through a geopolitical lens, aiming to reduce dependency on foreign systems and currencies.

2. The ECB's Three-Pronged Strategy for Modernization

Piero Cipollone of the ECB outlined the three key areas of focus for building a more resilient and efficient European payment landscape.

Internal Retail Payments (The Digital Euro): The goal is to create a unified and efficient retail payment market across Europe. The Digital Euro is designed to be a public "rail" upon which private companies can build innovative payment solutions (e.g., wallets, apps). This aims to foster a competitive European fintech ecosystem and provide an alternative to non-European card schemes and digital wallets (like EPI's "Wero" wallet).
Wholesale Payments (Tokenization and DLT): The ECB is exploring how to support the market's move towards issuing and trading assets on Distributed Ledger Technology (DLT). The key is providing central bank liquidity for these new platforms to ensure settlement is safe and efficient. Projects like Pontes and Apia are experiments to figure out the best way to do this, preventing the re-introduction of credit risk that could come from relying on private stablecoins for settlement.
Cross-Border Payments (Interlinking Systems): The ECB supports the G20 agenda to make cross-border payments faster, cheaper, and more transparent. The most promising approach is interlinking the world's 80+ domestic Fast Payment Systems (FPS). This leverages existing infrastructure rather than building something entirely new from scratch.

3. The Primacy of Legal and Governance Challenges

A consensus emerged that technology is the "easy part." The real difficulty lies in aligning rules and building trust between different legal systems.

The Main Barrier: Panelists repeatedly stated that legal, regulatory, and governance differences are the biggest impediments to creating seamless cross-border payment systems. This includes diverging rules on data privacy, AML/CFT, consumer protection, settlement finality, and dispute resolution.
Project Nexus as a Case Study: Dessislava Guetcheva-Cheytanova from the BIS presented Project Nexus as a practical solution. It is a multilateral "bridge" that allows a country's fast payment system to connect once and gain access to all other members. Its innovation lies in its governance:
- It uses a common rulebook that complements, not replaces, domestic rules.
- It standardizes processes for things like payment finality and error rectification.
- This multilateral model is far more scalable and efficient than creating dozens of separate bilateral links.
Trust is Essential: Professor Arner highlighted that for any interlinking to work, jurisdictions must trust each other's supervisory and AML frameworks. This is easier between countries with close political and economic ties (like in ASEAN, which pioneered Nexus) but much harder on a global scale.

4. The Global Context and the Future Challenge of Forex Liquidity

The discussion placed European efforts within a broader global context of competition and systemic change.

Stablecoins and US Dollar Hegemony: Stablecoins were viewed skeptically. Ruth Wandhöfer described them as high-risk instruments used for illicit finance, while also noting that US-dollar-denominated stablecoins reinforce the dollar's global dominance. The recent US "Genius Act" is seen as a deliberate geopolitical move to encourage their use and finance US debt.
The Rise of Fast Payment Systems (FPS): FPS have been transformative for domestic retail payments globally. The next logical step is linking them for cross-border transactions, a path that projects like Nexus are paving.
The Real Barrier to Autonomy: Professor Arner argued that even with perfect cross-border payment systems, true monetary autonomy is limited by the Forex market. Most currency pairs (e.g., Indonesian Rupiah to Nigerian Naira) lack liquidity, forcing transactions to be routed through the highly liquid US dollar. Overcoming this "dollar leg" requires building deep, liquid markets for other currency pairs, a challenge that goes far beyond payment technology and into fundamental market economics.