At the behest of the European Central Bank (ECB), European finance ministers postponed their decision on a new directive intended to promote the growth of e-commerce by regulating institutions issuing electronic money. Finance ministers appeared set to approve the directive but postponed it for further discussion after last-minute objections from the European Central Bank.
In a letter to the Finnish EU presidency, ECB president Wim Duisenberg voiced concern over plans which would exempt issuers of electronic money from some banking supervision if they did not offer other banking services. The ECB fears that as electronic money becomes more prevalent, it will escape the close scrutiny applied to conventional banking activities which could eventually weaken monetary policy.
The proposed directive defines electronic money (or electronic "purses"), which can be used by consumers over the internet, as monetary value stored on a chip card or on a computer memory that is used as a means of payment. The European Commission has stated that a stable framework for regulating electronic money will assist growth in e-commerce and make it easier for consumers to make small payments in euros in other EU countries without having to worry about converting currencies. The ECB's demands for full scale regulation of electronic money could endanger this goal as it would force small internet-only operations to either link with banks or apply for banking licences.
The European Central Bank's intervention over key proposals to regulate electronic money shows that it is looking for a bigger role in financial services regulation, particularly the creation of electronic money.
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