PRESS RELEASE 13 November 2009
CONSULTATION ON OPTIONS FOR THE FUTURE REGULATION OF ELECTRONIC MONEY
The Commission has published today a consultation paper that considers options for the future regulation of electronic money (“e-money”) in Jersey.
There is currently no specific regulatory regime in Jersey covering the issuing of e‑money (although persons who issue e-money are subject to Jersey’s anti-money laundering/countering the financing of terrorism legislation).
The current absence of a specific regulatory regime is considered by the Commission to potentially pose risks both to the reputation of the Island and to consumers. It may also act as a disincentive to the development of e-money products. The four options considered in the consultation paper, and on which respondents’ views are sought, are as follows:
- Option 1 is to implement a regulatory regime based on the European Union (“EU”) approach. Regulation would be both prudential (setting minimum financial resource requirements) and cover conduct of business (the setting of minimum standards when dealing with consumers). The prudential regime would broadly follow that in a new Directive on e-money issuers currently being finalised by the EU. The conduct of business regime would broadly follow that in the EU’s Payment Services Directive (Directive 2007/64/EC).
- Option 2 is to implement a bespoke regulatory model which, in terms of regulatory requirements, would fall between those of Options 1 and 3.
- Option 3 is to extend the existing regulatory regime for money service businesses to e-money issuers.
- Option 4 is to do nothing and maintain the status quo.
Although the Commission is not currently aware of any significant level of e-money business activity in Jersey, there is a global trend towards the increased development and use of e-money products. The Commission expects the marketplace in Jersey to follow this trend in due course. For this reason, and others set out in the consultation paper, the Commission is of the view that there is a need to address the potential risks that the reputation of the Island and consumers may be exposed to because of the current absence of a specific regulatory regime for e-money issuers. The Commission’s view is that Option 1 would be the most appropriate way to achieve this.
There are a number of reasons for this. These include the fact that, firstly, Option 1 is modelled on an EU regime that is based on extensive experience of the development of e-money within Europe and detailed dialogue with numerous stakeholders in the e‑money market. It could therefore be regarded as comprehensively ‘market-tested’ Secondly, because Option 1 is modelled on the EU regime – and should therefore be able to be regarded by the EU as “substantially equivalent” - it is possible that it might provide Jersey e-money issuers with a greater likelihood of being able to expand their operations into Europe, should they so wish, than under any of the other options. Thirdly, of the four options considered, Option 1 should mitigate to the greatest extent the potential risks that the reputation of the Island and consumers may be exposed to because of the current absence of a specific regulatory regime for e-money issuers.
A copy of the consultation paper can be downloaded from the Commission’s Website by clicking here.
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For further information please contact: -
Andrew Le Brun - Director, International & Policy
Tel: + 44 (0) 1534 822065
Fax: + 44 (0) 1534 822001
Notes to Editors:
E-money is defined in European Directive 2000/46/EC on the taking up, pursuit of and prudential supervision of the business of electronic money institutions. The Directive defines e-money as monetary value as represented by a claim on an issuer which is: