In 1992, the Bank of Finland embarked on a bold venture, launching Avant, a groundbreaking central bank-issued electronic money system. This innovative project aimed to introduce a digital equivalent of cash, mirroring its ease of use, anonymity, and widespread acceptance.
Phased Rollout
The Avant project was designed to be rolled out in three phases. The initial phase focused on issuing non-reloadable cards, primarily targeting small-value transactions. In the second phase, starting in 1994, reloadable cards were introduced, enabling users to replenish their balances as needed. The final phase, with no explicit timeline, envisioned a widespread adoption of Avant cards, aiming to replace up to 50% of coins and banknotes of small denominations.
Central Bank’s Role
The Bank of Finland played a pivotal role in the early stages of the project, spearheading the implementation and establishing standards for the e-money system. However, the central bank’s involvement was envisioned to gradually diminish as commercial banks, retail merchants, and other stakeholders assumed greater responsibility for the system’s operation and expansion.
Avoiding Fragmentation
The Bank of Finland’s proactive approach aimed to prevent the fragmentation of the market with multiple incompatible systems, which could lead to inefficiencies and a lack of standardization. By focusing on a handful of initial use cases and then stepping back, the central bank facilitated the growth of the e-money system in a coordinated and sustainable manner.
International Collaboration
Prior to launching Avant, the Bank of Finland engaged in discussions with other central banks worldwide, discovering that it was the only institution at the time pursuing the issuance of electronic money. This early collaboration underscored the Bank of Finland’s leadership and vision in the realm of digital currencies.
Brand Launch and First Transaction
In December 1992, the Avant project officially commenced with the launch of the smart card. The brand name “Avant” was chosen to represent the card’s forward-thinking nature and its potential to revolutionize the payment landscape. The launch event culminated in a memorable moment when board member Harri Holkeri made the first phone call using an Avant card, symbolizing the advent of digital cash in Finland.
Avant’s Legacy
While Avant did not reach full-scale implementation, it left an indelible mark on the evolution of electronic money. The project’s principles, design considerations, and potential benefits continue to inform the development of central bank digital currencies (CBDCs) worldwide.
Avant’s Vision
The Avant project demonstrated the Bank of Finland’s foresight and willingness to embrace technological innovation. It laid the groundwork for future developments in digital currencies and paved the way for a more efficient, secure, and user-friendly payment system.
Amidst the economic challenges, the Bank of Finland sought alternative distribution channels for Avant. Recognizing the widespread presence of convenience stores, the central bank partnered with a leading chain to establish a nationwide network of Avant card sales and reloading locations. This strategic move enabled easy access to the new payment instrument, fostering user adoption.
The initial rollout of non-reloadable Avant cards was successful, with 125,000 units sold in the first year alone. Building on this momentum, reloadable cards were introduced in 1994, expanding the card’s versatility and appeal. By 1995, Avant’s acceptance expanded significantly, gaining traction among telephone companies, municipal parking and transport services, and select retailers. Many of these partners also offered card reloading services, further enhancing convenience for users. The cumulative number of outstanding cards reached a notable milestone that year, surpassing 500,000.
The growing adoption of Avant demonstrated the public’s willingness to embrace digital cash. The card’s ease of use, anonymity, and widespread acceptance resonated with consumers, particularly for small-value transactions. The Bank of Finland’s proactive approach and commitment to innovation paved the way for a successful pilot phase of the project.
