Wednesday, April 16, 2003

What is electronic money in the Netherlands?

A very peculiar thing has happened over here in the Netherlands. De Nederlandsche Bank, the Dutch central bank/supervisor, has given a second interpretative ruling on what should be understood with the term electronic money. The full details and Dutch text can be found at the website of DNB and the website of 1.1a2, Association for Electronic Money Institutions in the Netherlands.

To summarize the current situation in the Netherlands:

1-the supervision law of July 1, 2002 says that electronic money is moneyvalue on an electronic device,

2-De Nederlandsche Bank has further clarified the definition of electronic money in a ruling of January 9, 2003 that stated that the electronic money could reside on a device that is in the hands of the user or that resides 'at a distance' in a so called account-based system where there is a central account administration with balances due that are registered on name and/or number,

3-De Nederlandsche Bank yesterday stated (without further technical explanation, except for a reference to European discussions) that it is of the opinion that the pre-paid phone balances of mobile operators are not to considered to be electronic money under the definition in the law. Consequently mobile operators are not electronic money institutions.

Legally, most e-money watchers in the Netherlands are now all dazzled by this second ruling. It is clear that De Nederlandsche Bank for some reason wants to exempt the mobile operators from the supervision law. Yet, both the process and content of this decision are quite hard to follow. Why hasn't been there a formal consultation with market players, just as the FSA is currently doing? Should prospective e-money operators in the Netherlands only have to buy an antenna and a mobile network to be exempted of e-money rules or does the ruling simply means we're now going back to the pre-2002 regime where all e-money issuers needed to be full credit-institutions?

Of course this issue will not end here and now, given the European and local situation. So we may undoubtedly expect more interesting rulings. Personally, this latest ruling has brought back memories of a 70s tv-series, more specifically the voice over at the end of each episode:

Confused ?

You won't be after next weeks episode of ......