No subject

Ian G iang at
Fri Oct 23 10:28:44 PDT 2009

<gold-silver-crypto at
 >, Cryptography <cryptography at>
Subject: Re: EU Directive makes it easier to print e-money

The eMoney directive (1994) was originally written at the desire of
the banks to clobber Digicash and the like.  The Bundesbank led the
charge by more or less writing it so that "emoney is reserved for
banks (or approximations)."  There was stiff opposition from Britain,
Netherlands and one other (Denmark?), and the compromise that
Bundesbank agreed to was that an institution could be "not a bank" in
name but the barriers were preserved.  IOW, an elephant, with huge
inputs in capital, huge outputs in pollution and no value to the

This was all justified on "monetary policy" which I showed to be just
marketing blather in an old paper here:
In which I more or less predicted it would fail and issuance would be
done in USA.

Then, in late 1990s, the reality was reaching even the EU in that the
original concept was a failure so the committee proceeded to rewrite
it.  That's all it needs, right?  Of course, they had no actual
experience in eMoney, they were a bunch of bureaucrats learning by
watching what was happening in the press.  Still with the banks behind
them, and the impending euro to make them nervous, they essentially
enjoyed a market-learning process in a committee, and predictably came
out with the camel of 2000.

This camel of course failed, and as the Paypal, webmoney and e-gold
models showed themselves, they slowly came to the realisation that
their camel had to be downsized.  Now they have a shetland pony.  It's
nice and tight, definately cute, and probably doesn't eat more than is
needed.  There is probably a niche for them in the shetlands.

It's actually almost doable, on paper, but would you want to take that
risk?  Why would you want to?  The total equation is still
impractical, and you are better off issuing eMoney (both inside and
outside their definition) somewhere else.


On 23/10/2009 15:24, R.A. Hettinga wrote:
> <>
> Original URL:
> EU Directive makes it easier to print e-money
> Out with the old
> Posted in Financial News, 22nd October 2009 14:59 GMT
> The E-Money Directive has failed to help establish a market for
> virtual
> currency and will be replaced with a set of less onerous regulations.
> The replacement E-Money Directive will come into force at the end of
> this month.
> The European Council and European Parliament published the replacement
> Directive in the Official Journal of the European Union on 10th
> October.
> It will come into force 20 days after publication and must be
> transposed
> into national law by the EU's 27 member states by the end of April
> 2011.
> The Council said that it hoped that the new Directive would address
> the
> failures of the old one.
> "Its adoption follows an assessment by the Commission of [the old
> Directive] which shows that electronic money is still far from
> delivering the benefits that were expected when that directive was
> adopted eight years ago," said the Council when it announced the new
> law
> earlier this year. "The number of newcomers to the market has been
> relatively low, and in most member states e-money is not yet
> considered
> a credible alternative to cash."
> Jacob Ghanty, an expert in finance law at Pinsent Masons, the law firm
> behind OUT-LAW.COM, said that the new version of the Directive lowers
> some of the barriers preventing companies from offering e-money
> services.
> "There was some criticism of the prudential regime of the Directive,
> which means the amount of money you have to hold to offer services,"
> he
> said. "People who looked at it realised that to be an issuer you were
> required to hold a lot of capital, which was quite onerous."
> "That will now dropped from 1 million to 125,000, which is a big
> dip,"
> said Ghanty.
> He said that it will align the requirements relating to e-money to the
> requirements that payment institutions will have to meet under the
> Payment Services Directive, which comes into force on 1st November.
> "It
> will align it with the Payment Services Directive requirements,
> which is
> sensible because they are related concepts."
> Ghanty said that the new E-money Directive also clears up some
> confusion
> about what e-money actually is. "There were criticisms that under the
> old Directive the definition of what e-money is was broad and vague,
> and
> that that made it difficult to determine what was and was not e-
> money,"
> he said.
> "The new one actually simplifies the definition which makes it clearer
> and also makes it more capable of coping with technology advances in
> the
> future," he said.
> The old definition of e-money employed by the EU law actually excluded
> many kinds of services that service providers might have thought did
> count as e-money.
> "Quite often a client would ask 'does it amount to e-money under the
> Directive' and we were able to conclude more often than not that it
> didn't amount to e-money, and this was not the intention of the
> Directive," said Ghanty. "I think the new definition will clearly
> capture the things the Directive was intended to catch."

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