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HKMA Chief Discusses E-Money Development

by Mary Swire, for, Hong Kong

30 August 2007

Writing on Thursday in his Viewpoint column, Hong Kong Monetary Authority chief executive, Joseph Yam called for a review on how Hong Kong's electronic money system should develop, suggesting that it has the potential to be the most efficient in the world.

Mr Yam observed that there are many lessons to be learned from the Octopus system and the failure of add-value transactions through EPS. He added that the need for separation of the management of the platform and the issue of stored-value cards is an important issue to be considered and debated.

The HKMA chief stated that:

"The community obviously also wants a card that is reliable and offers adequate protection of their financial interests. They probably do not mind choosing between different stored-value cards, if offered a choice, to suit their own preferences. But they probably would not like, having chosen a card, to be forced to shop at certain locations, or travel only on certain buses, because only they had debiting facilities for that card."

"Similarly, providers of goods and services would obviously prefer to install just one card reader rather than several. In other words, there should ideally be just one common platform for a number of stored-value cards, both for the convenience of users and the efficiency of the system."

One possible way forward for the development of the system would be to introduce competition into the card-issuing part of the business, while allowing the current single and common platform to develop and possibly expand into an essential piece of the infrastructure of the retail payment system, Yam suggested.

"I have no pre-conceived idea on the ownership and management of the common platform, provided that there are adequate checks and balances, transparently observed and monitored, to protect the public interest."

"While I am sure there will be many useful opinions expressed about various matters arising from the failure of EPS uploading of Octopus-card balances, perhaps this is also a good opportunity to consider whether to take a bold step forward," he concluded.

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