Extract Chapter III.2 from 1997 Annual Report of the EMI. Ed
At present, electronic money is not a widespread phenomenon. However, the possibility that its development could be more pronounced in the long run cannot be ruled out. Since the publication of the "Report to the Council of the EMI on Prepaid Cards" in May 1994, not only has the number of multi-purpose prepaid card projects greatly increased, but the use of electronic money for payments via computer networks (so-called network money) has also started to develop.
In 1997 the EMI therefore carried out a further study on the impact on EU economies of the emergence of electronic money. It took particular account of new market developments and conducted a thorough analysis of their implications for monetary policy. The results of the study provided the basis for the "Opinion of the EMI Council on the issuance of electronic money" of 2 March 1998, which was transmitted to the Commission, the text of which is reproduced in Box 3 below.
Opinion of the EMI Council on the issuance of electronic money 1
1. The opinion was adopted by a large majority of EMI Council members, with the exception of Denmark, Sweden, the United Kingdom and Luxembourg.
2. The EMI's 1994 "Report to the Council of the EMI on Prepaid cards" (p. 8) foresaw the possibility of allowing some non-fully fledged credit institutions to issue multi-purpose prepaid cards under specific conditions in exceptional circumstances (e.g. in the case of schemes already in operation before the policy conclusions of the report were drawn up).
3. The details of such a redeemability requirement have yet to be specified. (To avoid burdensome procedures, one may, for example, consider imposing a fee or a threshold on minimum amounts before redemption can be demanded by the holder of the electronic money instrument. In addition, logistical difficulties could possibly be overcome by allowing for redemption via bank deposits.)
4. The EMI Council also acknowledges the fact that national definitions of "credit institution" differ across Member States and that in some countries issuers of electronic money currently exist which do not fulfil the respective national definition of a credit institution.
5. As noted above, an exception was already foreseen in the EMI's 1994 report on prepaid cards. The exception was a permanent grandfathering clause for schemes which had already been established at that point in time. It would be necessary to examine whether such a permanent grandfathering clause could be maintained in a revised version of the First Banking Co-ordination Directive for such schemes, e.g. if their nature would make the application of the ensuing banking legislation less sensible.
HTML Editor's note: Taken from the 1997 Annual report of the EMI, located at http://www.ecb.int/emi/pub/pdf/ar97/en_ar97.pdf
© European Monetary Institute, 1998
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This version, and the related 1994 report, located at http://www.iang.org/money/