FROM THE OFFICE OF PUBLIC AFFAIRS

The Department of the Treasury announced today the release ofa report by the Deputies of the G-10 finance ministers andcentral bank governors that outlines a broad consensus of theirWorking Party on Electronic Money regarding key considerationsthat should help guide national approaches to emerging electronicmoney technologies.

The Working Party on Electronic Money was formed after the G-7Heads of State and Government, at the 1996 summit meeting inLyon, Frances, called for a cooperative study of the implicationsof recent technological advances in retail electronic payments.In particular, they sought ways to ensure that the benefits ofelectronic money are fully realized. The report also includes asurvey of the approaches to electronic money issues in each ofthe G-10 countries.

ARepresentatives of the G-10 countries have endorsed a commonset of considerations for new consumer electronic moneyproducts,@ said Lawrence Summers, Deputy Secretary of theTreasury. AOur report emphasizes the issues that providers,users, and policy makers should take into account in assessingthe benefits and the risks of these new forms of electronicpayments.

The Working Party, headed by Tim Geithner of the U.S.Treasury, brought together representatives from financeministries, central banks, and law enforcement authorities. Thefour key considerations they identified address national andcross-border challenges in the implementation and use ofelectronic money by consumers and providers and for governmentsin the development of national policies.

o Transparency

o Financial integrity

o Technical security

o Vulnerability to criminal activity

These consideration emerged from the WorkingParty’s review of multi-purpose prepaid cards and prepaidmechanisms for use over open computer networks.

The broad objectives of the Working Party were toaddress three policy areas: consumer protection, law enforcement,and supervision. The review found that most countries arereviewing the application of existing law to new electronic moneyissues in all three areas, given the early stage of developmentof these new products. Many governments are weighing the degreeto which market incentives can be used to achieve public policyobjectives.

AAuthorities in many countries view the application of newregulations as premature, choosing instead to assess the impactof market discipline on the ways in which providers manage theirfinancial and operational risks, Summers said. The report alsonoted that countries may need to consider how best to designnational policies to minimize impediments to the cross border useof electronic money products.

The report concluded that the Working Party provided a usefulforum in bringing together the perspectives of diverseauthorities within the G-10 countries, and that a similar effortmight be useful in the future if circumstances warrant. However,it is not necessary at this time to establish new formalinternational structures to coordinate a policy response toelectronic money.

The U.S. delegation to the G-10 Working Party includedofficials from the Federal Reserve Board --Jeff Marquardt andHeidi Richards --and from the Office of the Comptroller of theCurrency --Jim Kamahachi and Dan Nolle.