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The EMI Directive, which introduces the concept of an 'Electronic Money Institute', must be implemented in national law by April 2002. At the moment, it is still questionable whether the Directive will have a strong impact on innovation and competition. This Background Paper shows there are strong complementarities between payment services and other financial and non-financial services, which may make it unattractive for would-be issuers to enter this market if they cannot exploit such complementarities.

The paper starts by looking at innovation in general, outlining the most important factors that have an impact on the spread of innovative new solutions. Second, it analyses the special features of payments, pointing out that payments are often bundled with other, financial and increasingly non-financial, services to reduce costs and that non-bank players are becoming more important. Third, it raises the question "What is really new about e-money?" The main conclusion is that existing e-money schemes are not an electronic analogue to cash. Rather they are a means of shifting and reducing credit risk in offline transactions. Fourth, the paper looks at current e-money regulation. After summarising the final version of the EMI-Directive, the state of implementation in the member states is outlined. The evidence collected shows that most member states interpret the Directive in a rather restrictive fashion. Finally, the consequences for competition and innovation and possible modifications of the Directive are discussed.

Background Paper No. 3 Electronic Payment Systems Observatory

The report can be downloaded from the ePSO website at:

Additional information

Authors: KRUEGER M, European Commission, Joint Research Centre, Institute for Prospective Technological Studies, Seville (ES)
Bibliographic Reference: EUR 20153 EN (2002), pp.29. Euro: Free of charge
Availability: Available from European Commission, JRC Knowledge Management Unit, Ispra (IT) Tel: +39 033278 9843 or +39 033278 9864 Fax: +39 033278 9623 E-mail:
Record Number: 200214620 / Last updated on: 2002-04-19
Original language: en
Available languages: en