Even though the existence of electronic money can be traced back to 1918, when the federal reserve banks of the USA first moved currency via telegraphic means, electronic money is still a relatively new product. In general, two distinct types of electronic money can be distinguished: identified e-money and anonymous e-money (also known as digital cash). Identified electronic money contains information revealing the identity of the person who originally withdrew the money from the bank. Also, in much the same manner as credit cards, identified electronic money enables the bank to track the money as it moves through the economy. Anonymous electronic money works just like real paper cash. Once anonymous electronic money is withdrawn from an account, it can be spent or given away without leaving a transaction trail.
Switzerland has no specific legislation dealing with electronic cash, and institutions that issue electronic money are not considered banks. Therefore, those institutions are not subject to the supervision of the Swiss Banking Commission and the issuing of electronic money is not regulated by law.
Unlike the Swiss approach to date, the EU has recognized that there is a legislative void in relation to the law governing electronic money institutions. A first "Report on the European Monetary Institution on EU Payment Systems" was issued in 1994 and concerned mainly pre-paid cards like Visa Cash. A recent directive of the European Parliament und the European Counsel (Directive 2000/46/EC of September 18 2000 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions) defines a legal framework for non-banking institutions that issue electronic money. This allows a different legal treatment of banks and non-banks, with the non-banks being subject to a less cumbersome supervisory regime. To this end, the initial capital requirement for non-banks is set at just euro1,000,000 ($896,000) compared with euro5,000,000 for banks. Where banks are required to maintain a minimum owned-funds requirement of 8%, the electronic money institutions figure is set at just 2%.
The Swiss legislative body has recently been urged to draft similar regulations on electronic money. It is likely that future Swiss law will at least consider the legal approach of the EU.
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