The Central Bank of Iceland is working to develop a domestic payment system for Iceland.
As more and more transactions become electronic, interest has grown in an independent payment system for Icelandic commerce. Cyberattacks or other disruptions to service in the several foreign payment systems on which so many Icelandic businesses currently rely could cause serious disruption to economic life in Iceland. By working towards a secure and independent solution, the Central Bank of Iceland hopes to make the Icelandic economy more resilient to risk in the future.
The Central Bank of Iceland has begun taking initial steps at the request of Iceland’s National Security Council, in line with steps taken recently by other European nations. The Central Bank plans to publish a report on the matter in the coming months, in which possible ways forward will be considered.
The Central Bank’s recent report on financial cybersecurity indicated the real possibility of long-term disruption to the payment system following a cyberattack on a foreign payment system. According to the Central Bank, other means of payment need to be provided to ensure that necessities can still be purchased in the event of such an attack. In addition to a domestic payment system, the Central Bank has also called for the creation of preparedness plans in the event of such a disruption.
The need for a secure, domestic payment system is especially pressing in Iceland, where fewer and fewer transactions take place with cash. In the past two years, the use of cash in purchases has declined by some 25%, although it is still used by some 40% of the population, especially for gifts and personal payments. In the event of an electronic payment disruption, the Central Bank has stated, there are still enough cash reserves to address such an event.