Electronic Money: The European Regulatory Approach

Abstract

Electronic money has yet to become as familiar to consumers as cash, cheques and credit and debit cards, but may yet have the potential to be the greatest revolution in payment systems since the development of money itself. Financial services practices and new technology are coming together to change the way in which we conduct our everyday life. The potentially universal acceptance of electronic or "e-money" for commercial transactions may have wide-ranging effects in our lives - not least, for consumers: for electronic money could serve as the tool which finally eases the pervasive consumer apprehension regarding online transactions. This chapter deals with the recently passed European Directive regulating Electronic Money Institutions (the "E-Money Directive"), which has granted legal recognition to electronic money, and has also provided an authorising foundation to financial institutions eager to deploy this payment method. Economists, regulators, government institutions and businesses are now gearing themselves up for the possibilities of electronic money in everyday life.

Keywords: electronic commerce, electronic money

JEL Classification: K10, K39