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Commission proposes rules on electronic money

In order to facilitate the development of electronic commerce within EU and make it easier for consumers to use electronic money, the European Commission has adopted proposals for a regulatory framework. The proposals define electronic money as monetary value stored on a chip-...
In order to facilitate the development of electronic commerce within EU and make it easier for consumers to use electronic money, the European Commission has adopted proposals for a regulatory framework. The proposals define electronic money as monetary value stored on a chip-card or on computer memory which is accepted as a means of payment by undertakings other than the issuer. They would also harmonise minimum rules for ensuring that institutions issuing electronic money are stable and sound to promote confidence amongst business and consumers.

The proposals would constitute two Directives and would follow-up the Commission Communication of April 1997 on "A European initiative in electronic commerce" and the June 1997 Communication on "Financial Services: enhancing consumer confidence".

The first proposal for a Directive would amend the definition of "credit institution" in order to bring electronic money within the general regulatory regime of the first and second banking Directives. This would allow enterprises issuing electronic money who do not wish to undertake the full range of banking operations to enjoy the benefits of being able to operate throughout the EU on the basis of authorisation in one Member State.

The second proposal would define electronic money in a technology-neutral manner and design also the type of business activities that could be undertaken by electronic money institutions. It would also lay down rules concerning:

- Prior authorisation by competent authorities;
- Initial capital and ongoing own funds requirements;
- Minimum standards of fit and proper management;
- Sound and prudent operation requirements;
- Ongoing supervision;
- Application of the Consolidated Supervision (92/30/EEC) and Money Laundering (91/308/EEC) Directives.

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