Common Position (EC) No 8/2000 of 29 November 1999 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to adopting a Directive of the European Parliament and of the Council on the taking-up, pursuit of and prudential supervision of the business of electronic money institutions
Date: 1999-11-29
Institutions: Council of the European Union
Subjects: banking, credit institution, electronic money, financial institution, management audit, right of establishment

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I

(Information)

COUNCIL

COMMON POSITION (EC) No 8/2000

adopted by the Council on 29 November 1999

with a view to adopting a Directive 2000/(cid:133)/EC of the European Parliament and of the Council of
(cid:133) on the taking-up, pursuit of and prudential supervision of the business of electronic money
institutions

(2000/C 26/01)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular the first and third sentences of
Article 47(2) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of
Committee (2),

the Economic and Social

Having regard to the opinion of the European Central Bank (3),

Acting in accordance with the procedure laid down in Article
251 of the Treaty (4),

Whereas:

(1)

(2)

credit institutions within the meaning of Article 1, first
(b) of Council Directive 77/780/EEC (5), are
indent,
limited in the scope of their activities;

is necessary

it
specific
characteristics of these institutions and to provide the
and
appropriate measures necessary to coordinate

account of

to take

the

(1) OJ C 317, 15.10.1998, p. 7.
(2) OJ C 101, 12.4.1999, p. 64.
(3) OJ C 189, 6.7.1999, p. 7.
(4) Opinion of the European Parliament of 15 April 1999 (OJ C 219,
30.7.1999, p. 415), Council common position of 29 November
1999 and Decision of the Parliament of (cid:133) (not yet published in
the Official Journal).

(5) First Council Directive 77/780/EEC of 12 December 1977 on the
coordination of the laws, regulations and administrative provisions
the business of credit
relating to the taking-up and pursuit of
institutions (OJ L 322, 17.12.1977, p. 30). Directive as
last
amended
and Council Directive
1999/(cid:133)/EC (OJ L (cid:133)).

Parliament

European

by

States’

and
harmonise Member
administrative provisions
relating to the taking-up,
pursuit and prudential supervision of the business of
electronic money institutions;

regulations

laws,

(3)

(4)

for the purposes of this Directive, electronic money can
be considered an electronic surrogate for coins and
banknotes which is stored on an electronic device such
as a chip card or computer memory and which is
generally intended for the purpose of effecting electronic
payments of limited amounts;

the approach adopted is appropriate to achieve only the
to
essential harmonisation necessary and sufficient
secure the mutual
recognition of authorisation and
prudential supervision of electronic money institutions,
making possible
licence
recognised throughout the Community and designed to
the
ensure bearer confidence and the application of
principle of home Member State prudential supervision;

the granting of a single

(5) within the wider context of

it

commerce

to provide

is desirable

the rapidly evolving
a
electronic
regulatory framework that assists electronic money in
delivering its full potential benefits and that avoids
hampering
particular;
therefore, this Directive introduces a technology-neutral
prudential
legal
supervision of electronic money institutions
to the
extent necessary for ensuring their sound and prudent
operation and their financial integrity in particular;

technological

harmonises

framework

innovation

that

the

in

(6)

credit institutions, by virtue of point 5 of the Annex to
Council Directive 89/646/EEC (6), are already allowed to
including
issue and administer means of payment

(6) Second Council Directive 89/646/EEC of 15 December 1989 on
the coordination of laws, regulations and administrative provisions
relating to the taking-up and pursuit of the business of credit
institutions and amending Directive 77/780/EEC (OJ L 386,
30.12.1989, p. 1). Directive as amended by Directive 92/30/EEC
(OJ L 110, 28.4.1992, p. 52).

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electronic money and to carry on such activities
Community-wide subject to mutual recognition and to
the
system
prudential
applying to them in accordance with the European
banking directives;

comprehensive

supervisory

business activities which electronic money institutions
may carry on and, particularly, prudent limitations of
their investments aimed at ensuring that their financial
liabilities related to outstanding electronic money are
backed at all times by sufficiently liquid low-risk assets;

(7)

(8)

(9)

(10)

(11)

for

credit

applying

to other

from that

institutions

electronic money

the introduction of a separate prudential supervisory
institutions, which,
regime
supervisory
although calibrated on the prudential
and
regime
Directives 77/780/EEC and 89/646/EEC in particular,
differs
justified and desirable
because the issuance of electronic money does not
constitute in itself, in view of its specific character as an
a
electronic
deposit-taking activity pursuant to Article 3 of Directive
89/646/EEC,
the received funds are immediately
if
exchanged for electronic money;

and banknotes,

surrogate

regime,

coins

for

is

the receipt of funds from the public in exchange for
electronic money, which results in a credit balance left
on account with the issuing institution, constitutes the
receipt of deposits or other repayable funds for the
purpose of Directives 77/780/EEC and 89/646/EEC;

it is necessary for electronic money to be redeemable to
ensure bearer confidence; redeemability does not imply,
in itself,
received in exchange for
electronic money shall be regarded as deposits or other
repayable
of Directives
the
funds
77/780/EEC and 89/646/EEC;

the funds

purpose

that

for

issuance of

regime must be more
cumbersome
less

in order to respond to the specific risks associated with
electronic money this prudential
the
targeted and,
supervisory
than the prudential
accordingly,
supervisory regime
institutions,
notably as regards reduced initial capital requirements
and
Council Directives
89/647/EEC (1), 92/121/EEC (2) and 93/6/EEC (3);

applying to credit

non-application

the

of

however, it is necessary to preserve a level playing field
between electronic money institutions and other credit
to
thus,
issuing electronic money and,
institutions
ensure fair competition among a wider
range of
institutions to the benefit of bearers; this is achieved
since the abovementioned less cumbersome features of
the prudential supervisory regime applying to electronic
money institutions are balanced by provisions that are
than those applying to other credit
more stringent
restrictions on the
institutions, notably as

regards

(1) Council Directive 89/647/EEC of 18 December 1989 on a solvency
ratio for credit institutions (OJ L 386, 30.12.1989, p. 14). Directive
as last amended by Directive 98/33/EC (OJ L 204, 21.7.1998,
p. 29).

(2) Council Directive 92/121/EEC of 21 December 1992 on the
monitoring and control of large exposures of credit institutions (OJ
L 29, 5.2.1993, p. 1). Directive as amended by the 1994 Act of
Accession.

(3) Council Directive 93/6/EEC of 15 March 1993 on the capital
adequacy of investment firms and credit institutions (OJ L 141,
11.6.1993, p. 1). Directive as last amended by Directive 98/33/EC.

(12)

(13)

(14)

(15)

(16)

it

for

and

credit

activities

institutions

pending the harmonisation of prudential supervision of
outsourced
is
appropriate that electronic money institutions have
control
prudent management
sound
procedures; with a view to the possibility of operational
and other ancillary functions related to the issuance of
electronic money being performed by undertakings
which are not subject to prudential supervision it is
essential that electronic money institutions have in place
internal structures which should respond to the financial
and non-financial risks to which they are exposed;

and

the issuance of electronic money may affect the stability
of the financial system and the smooth operation of
payment systems; close cooperation in assessing the
integrity of electronic money schemes is called for;

it
is appropriate to afford competent authorities the
possibility of waiving some or all of the requirements
imposed by
electronic money
institutions which operate only within the territories of
the respective Member States;

this Directive

for

constitutes

this Directive

the most
adoption of
appropriate means of achieving the desired objectives;
this Directive is limited to the minimum necessary to
achieve these objectives and does not go beyond what is
necessary for this purpose;

provision should be made for
this
Directive in the light of experience of developments in
the market and the protection of bearers of electronic
money;

the review of

(17)

the Banking Advisory Committee has been consulted on
the adoption of this Directive,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Scope, definitions and restriction of activities

This Directive

1.
institutions.

shall

apply

to

electronic money

It shall not apply to the institutions referred to in Article

2.
2(2) of Directive 77/780/EEC.

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3.

For the purposes of this Directive:

(a)

(cid:145)electronic money institution(cid:146) shall mean an undertaking or
any other legal person, other than a credit institution as
defined in Article 1, first indent, paragraph (a) of Directive
77/780/EEC which issues means of payment in the form of
electronic money;

(b)

shall mean monetary
(cid:145)electronic money(cid:146)
represented by a claim on the issuer which is:

value

as

(i)

stored on an electronic device;

(ii)

issued on receipt of funds of an amount not less in
value than the monetary value issued;

(iii) accepted as means of payment by undertakings other

than the issuer.

4. Member States shall prohibit persons or undertakings
that are not credit institutions, as defined in Article 1, first
indent of Directive 77/780/EEC, from carrying on the business
of issuing electronic money.

5.
The business activities of electronic money institutions
other than the issuing of electronic money shall be restricted
to:

(a)

the provision of closely related financial and non-financial
services such as the administering of electronic money by
the performance of operational
ancillary
functions related to its issuance, and the issuing and
administering of other means of payment but excluding
the granting of any form of credit; and

and other

2.
Article 2(5) and (6), Article 3(3)(b), (c) and (d) and (7),
Articles 4, 6, 7(2) and (3), Article 8(2), (3) and (4), Articles 10
and 14 of Directive 77/780/EEC and Articles 4, 6, 10, 12,
18(2), 23 and 24 of Directive 89/646/EEC shall not apply. The
mutual recognition arrangements provided for in Directive
89/646/EEC shall not apply to electronic money institutions’
business activities other than the issuance of electronic money.

The receipt of

funds within the meaning of Article
3.
1(3)(b)(ii) does not constitute a deposit or other repayable
funds according to Article 3 of Directive 89/646/EEC, if the
funds
received are immediately exchanged for electronic
money.

Article 3

Redeemability

1.
A bearer of electronic money may, during the period of
validity, ask the issuer to redeem it in coins and bank notes or
by a transfer to an account free of charges other than those
strictly necessary to carry out that operation.

The contract between the issuer and the bearer shall

2.
clearly state the conditions of redemption.

The contract may stipulate a minimum threshold for

3.
redemption. The threshold may not exceed EUR 10.

(b) the storing of data on the electronic device on behalf of

other undertakings or public institutions.

Article 4

Electronic money institutions shall not have any holdings in
other undertakings except where these undertakings perform
operational or other ancillary functions related to electronic
money issued or distributed by the institution concerned.

Article 2

Application of banking directives

Save where otherwise

expressly provided for, only
1.
references
in Directives 77/780/EEC,
89/646/EEC, 91/308/EEC (1) and 92/30/EEC shall apply to
electronic money institutions.

institutions

to credit

Initial capital and ongoing own funds requirements

1.
Electronic money institutions shall have an initial capital,
as defined in Article 2(1)(1) and (2) of Council Directive
89/299/EEC of 17 April 1989 on the own funds of credit
institutions (2), of not less than EUR 1 million. Notwithstanding
paragraphs 2 and 3, their own funds, as defined in Directive
89/299/EEC, shall not fall below that amount.

2.
Electronic money institutions shall have at all times own
funds which are equal to or above 2 % of the higher of the
current amount or the average of the preceding six months’
total amount of their financial liabilities related to outstanding
electronic money.

(1) Council Directive 91/308/EEC of 10 June 1991 on prevention of
the purpose of money

the use of
system for
the financial
laundering (OJ L 166, 28.6.1991, p. 77).

(2) OJ L 124, 5.5.1989, p. 16. Directive as last amended by Directive

92/30/EEC.

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3. Where an electronic money institution has not completed
a six months’ period of business, including the day it starts up,
it shall have own funds which are equal to or above 2 % of the
higher of the current amount or the six months’ target total
amount of
related to outstanding
liabilities
electronic money. The six months’ target total amount of the
institution’s financial liabilities related to outstanding electronic
money shall be evidenced by its business plan subject to any
adjustment
to that plan having been required by the
competent authorities.

financial

its

Article 5

Limitations of investments

1.
Electronic money institutions shall have investments of
an amount of no less than their financial liabilities related to
outstanding electronic money in the following assets only:

(a) asset items which according to Article 6(1)(a)(1), (2), (3),
(4) and Article 7(1) of Directive 89/647/EEC attract a zero
credit risk weighting and which are sufficiently liquid;

(b) sight deposits held with zone A credit
defined in Directive 89/647/EEC; and

institutions as

(c) debt instruments which are:

(i)

sufficiently liquid;

(ii) not covered by paragraph 1(a);

(iii) recognised by competent authorities as qualifying
items within the meaning of Article 2(12) of Directive
93/6/EEC; and

(iv)

issued by undertakings other than undertakings which
have a qualifying holding, as defined in Article 1 of
Directive 89/646/EEC,
electronic money
institution concerned or which must be included in
those undertakings’ consolidated accounts.

in the

Investments referred to in paragraph 1(b) and (c) may
2.
not exceed 20 times the own funds of the electronic money
institution concerned and shall be subject to limitations which
are at least as stringent as those applying to credit institutions
in accordance with Directive 92/121/EEC.

3.
For the purpose of hedging market risks arising from the
issuance of electronic money and from the investments
referred to in paragraph 1, electronic money institutions may

use sufficiently liquid interest rate and foreign-exchange-related
off balance-sheet items in the form of exchange-traded (i.e. not
OTC) derivative instruments to which Annex II to Directive
89/647/EEC does not apply. The use of derivative instruments
according to the first sentence is permissible only if the full
to the extent
elimination of market risks is intended and,
possible, achieved.

impose appropriate limitations on
4. Member States shall
the market, risks electronic money institutions may incur from
the investments referred to in paragraph 1.

For the purpose of applying paragraph 1, assets shall be

5.
valued at the lower of cost or market value.

If the value of the assets referred to in paragraph 1 falls
6.
below the amount of financial liabilities related to outstanding
electronic money, the competent authorities shall ensure that
the electronic money institution in question takes appropriate
measures to remedy that situation promptly. To this end, and
for a temporary period only, the competent authorities may
allow the institution’s financial liabilities related to outstanding
electronic money to be backed by assets other than those
referred to in paragraph 1 up to an amount not exceeding the
lower of 5 % of these liabilities or the institution’s total amount
of own funds.

Article 6

Verification of specific requirements by the competent
authorities

The competent authorities shall ensure that the calculations
justifying compliance with Articles 4 and 5 are made, not less
than twice each year, either by electronic money institutions
themselves, which
any
component data required, to the competent authorities, or by
competent authorities, using data supplied by the electronic
money institutions.

communicate

them,

shall

and

Article 7

Sound and prudent operation

Electronic money institutions shall have sound and prudent
management, administrative and accounting procedures and
adequate internal control mechanisms. These should respond
to the financial and non-financial risks to which the institution
is exposed including technical and procedural risks as well as
risks connected to its cooperation with any undertaking
performing operational or other ancillary functions related to
its business activities.

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Article 8

Waiver

Article 9

Grandfathering

1. Member States may allow their competent authorities to
waive the application of some or all of the provisions of this
Directive and the application of Directives 77/780/EEC and
89/646/EEC to electronic money institutions in cases where
either:

(a)

the total business activities of
the type referred to in
Article 1(3)(a) of this Directive of the institution generate a
total amount of financial liabilities related to outstanding
electronic money that normally does not exceed EUR 5
million and never exceeds EUR 6 million; or

(b) the electronic money issued by the institution is accepted
as a means of payment only by any subsidiaries of the
institution which perform operational or other ancillary
functions related to electronic money issued or distributed
by the institution, any parent undertaking of the institution
or any other subsidiaries of that parent undertaking; or

(c) electronic money issued by the institution is accepted as
payment only by a limited number of undertakings, which
can be clearly distinguished by:

(i)

their location in the same premises or other limited
local area; or

(ii)

their close financial or business relationship with the
issuing institution, such as a common marketing or
distribution scheme.

The underlying contractual arrangements must provide that
the electronic storage device at the disposal of bearers for the
purpose of making payments is subject to a maximum storage
amount of not more than EUR 150.

Electronic money institutions subject to this Directive which
commenced their activity in accordance with the
have
provisions in force in the Member State in which they have
their head office before the date of entry into force of the
provisions adopted in implementation of this Directive or the
date referred to in Article 10(1), whichever date is earlier, shall
be presumed to be authorised. The Member States shall oblige
such electronic money institutions
relevant
information to the competent authorities in order to allow
them to assess within six months from the date of entry into
this
force of
Directive, whether
the
requirements pursuant to this Directive, which measures need
to be taken in order to ensure compliance, or whether a
withdrawal of authorisation is appropriate. If compliance is not
ensured within six months from the date referred to in Article
10(1), the electronic money institution shall not benefit from
mutual recognition after that time.

the provisions adopted in implementation of
comply with
institutions

to submit all

the

Article 10

Implementation

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive not later than (cid:133) (*). They shall immediately inform
the Commission thereof.

When Member States adopt these measures, they shall contain
a reference to this Directive or shall be accompanied by such
reference on the occasion of
their official publication. The
methods of making such a reference shall be laid down by the
Member States.

2. Member States shall communicate to the Commission the
text of the main provisions of national law, which they adopt
in the field covered by this Directive.

Article 11

Review

Not later than (cid:133) (**) the Commission shall present a report to
the European Parliament and the Council on the application of
this Directive, in particular on:

2.
An electronic money institution for which a waiver has
been granted under paragraph 1 shall not benefit from the
mutual recognition arrangements provided for in Directive
89/646/EEC.

(cid:151) the measures to protect the bearers of electronic money,
including the possible need to introduce a guarantee
scheme,

3. Member States shall require that all electronic money
institutions to which the application of
this Directive and
Directive 77/780/EEC and 89/646/EEC has been waived report
periodically on their activities including the total amount of
financial liabilities related to electronic money.

(cid:151) capital requirements,

(cid:151) waivers, and

(*) 18 months after the date of entry into force of this Directive.
(**) 54 months after the date of entry into force of this Directive.

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(cid:151) the possible need to prohibit interest being paid on funds

received in exchange for electronic money,

Article 13

This Directive is addressed to the Member States.

accompanied where appropriate by a proposal for its revision.

Article 12

Entry into force

This Directive shall enter
publication in the Official Journal of the European Communities.

into force on the day of

its

Done at Brussels, (cid:133)

For the European Parliament

For the Council

(cid:133)

The President

(cid:133)

The President

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STATEMENT OF THE COUNCIL’S REASONS

I.

INTRODUCTION

1. On 22 September 1998, the Commission forwarded to the Council a proposal for a Directive on
the taking-up, pursuit and prudential supervision of the business of electronic money institutions
based on Article 47(2) of the EC Treaty, in particular the first and third sentences thereof.

The European Parliament gave its opinion on the first reading of the proposal on 15 April 1999.
The Economic and Social Committee gave its opinion on 27 January 1999 and the European
Central Bank gave its opinion on 18 January 1999.

2. On 29 November 1999, the Council adopted its common position pursuant to Article 251 of the

Treaty.

II. OBJECTIVE

The Directive introduces a special supervisory regime for issuers of electronic money. This regime is
based on the existing prudential supervisory regime applicable to credit institutions, but differs from
that in order to respond to the specific risks associated with the issuance of electronic money. The
aim is to introduce a technology-neutral legal framework that harmonises the prudential supervision
of electronic money institutions so as to ensure their sound and prudent operation and their financial
integrity. At the same time it aims to provide a regulatory framework that enables electronic money
to deliver its full potential benefits and that will not hamper technological innovation.

III. ANALYSIS OF THE COMMON POSITION

The common position follows the main approach of the Commission proposal. Like the Commission
proposal, the common position aims at striking a balance between the need to make provision for the
financial integrity of electronic money institutions and the protection of consumers as well as the
need to ensure that the development of electronic money schemes is not hampered by excessive
regulation. The balance in the common position is achieved by introducing a more restrictive legal
framework than that proposed by the Commission on certain issues while introducing a more flexible
framework on other points.

The changes in the common position as compared to each Article of the Commission proposal are set
out below. Amendment 1 proposed by the European Parliament, replacing the term (cid:145)user(cid:146) by (cid:145)bearer(cid:146)
in the entire text, is included in the common position.

Article 1 (Article 1 of the Commission proposal)

Paragraph 3(a) includes Amendment 14 proposed by the European Parliament. It further makes it
clear that the Directive applies only to issuers of electronic money.

Paragraph 3(b) aims at making the legal nature of the definition of electronic money more precise by
adding that electronic money constitutes a claim on the issuer. The examples of the forms that
electronic money may take have been deleted from the first indent as unnecessary in the enacting
terms of the Directive and have been included in recital 3. A new paragraph (ii) has been added
stipulating that the bearer must always pay in full for the electronic money received. It will thus not
be possible to issue electronic money for a higher amount than that paid in exchange. Point (iii) ((ii)
in the Commission proposal) has been kept as proposed by the Commission, except that the term
(cid:145)issuer(cid:146) has been chosen to cover (cid:145)the issuer(cid:146) and (cid:145)the issuing institution(cid:146). Points (iii) and (iv) in the
Commission proposal have been deleted as superfluous in the enacting terms of the Directive; the
explanation that electronic money is intended to serve as a surrogate for coins and banknotes and is
generated for the purpose of effecting electronic transfers of limited amounts is set out in recital 3.

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Amendment 15, amending Article 1(3)(b), proposed by the European Parliament contains several
features which are to some extent included in the common position but drafted differently. The
amendment to (b)(ii) concerning subsidiaries, proposed by the European Parliament has been included
in Article 8 relating to the waiver, see below. The proposed (b) (iiia) is not included in the common
position since the Council did not find it appropriate to include provisions relating to charges in the
definition of electronic money. The terms (cid:145)competent authorities(cid:146) (ba) and (cid:145)own funds(cid:146) (bb) are defined
in the Second Banking Directive, Directive 89/646/EEC, which applies to electronic money institutions
and therefore the common position does not include these amendments, although Article 5(1) of the
common position does refer to the Own Funds Directive, Directive 89/299/EEC, see below.

In order to align the text with that of the Second Banking Directive (89/646/EEC) a new provision has
been introduced in paragraph 4 stipulating that only credit institutions as defined in the first indent of
Article 1 of the First Banking Directive (77/780/EEC), in other words electronic money institutions
and credit institutions in the traditional sense, may issue electronic money.

Paragraph 5 essentially follows the Commission proposal (paragraph 4 of the Commission proposal).
The reference in (a) to point 5 of the Annex to the Second Banking Directive has been deleted in
order to avoid confusion. Instead it is clearly stated that electronic money institutions must not grant
any form of credit, in order to avoid electronic money being issued on credit without any actual
exchange of funds. This prohibition does not mean that an electronic money institution cannot invest
in debt instruments. The investment provisions in Article 5 are not affected. Point (b) has been
redrafted to make the intention behind this provision clearer.

Article 2 (Article 2 of the Commission proposal)

Paragraph 1 includes Amendment 16 proposed by the European Parliament and paragraph 3 of the
Commission proposal has in consequence been deleted, as proposed by the European Parliament in
Amendment 17.

In the second sentence of paragraph 2 the explicit reference to specific articles in the Second Banking
Directive has been replaced by a reference to the mutual recognition arrangements provided for in
that Directive, since the freedom of establishment and the freedom to provide services are rights based
on the Treaty.

As in the Commission proposal, paragraph 3 makes it clear that funds received in exchange for
electronic money are not deposits in the sense of Article 3 of the Second Banking Directive. The
drafting has been amended to take into account the introduction of provisions on redeemability. The
reference in (a) of the Commission proposal to a surrogate for coins and banknotes is now set out in
recital 3 and the content of (b) of the Commission proposal is covered by the prohibition against the
granting of credit in Article 1(5) of the common position. The amendment to Article 2(4) proposed
by the European Parliament, Amendment 18, is included in Article 3 of the common position, see
below.

Article 3 (new)

Since the substance of Amendments 18 and 19 overlaps, the Council has chosen to merge the two
amendments and include them in the new Article 3 in order to set out all provisions relating to
redeemability in one article. The wording corresponds closely to that of Amendment 19 with two
exceptions:

(cid:151) the cost element of Amendment 18 has been included in the new Article 3, and

(cid:151) in order to allow a certain flexibility regarding the manner in which electronic money is redeemed

in practice, the issuer may also redeem the money by a transfer to an account.

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Article 4 (Article 3 of the Commission proposal)

The common position sets out all amounts in EUR, not in ECU and thus includes Amendment 20
proposed by the European Parliament. In referring to the Own Funds Directive, the common position
includes a part of Amendment 15 proposed by the European Parliament.

The minimum initial capital is set at EUR 1 million in (1). This amount represents a balance between
the need to ensure that electronic money institutions have sufficient own funds to ensure their
financial stability and the need to foster the development of electronic money schemes by avoiding
excessive requirements for the setting up of new schemes.

The rest of Article 4 is unchanged compared to Article 3 of the Commission proposal.

Article 5 (Article 4 of the Commission proposal)

Article 5 includes Amendments 21 and 22 proposed by the European Parliament.

The Article further contains some technical drafting changes aimed at making the text clearer: point
(b) has been divided into two subpoints and references to the Solvency Ratio Directive, Directive
89/647/EEC, and to the Second Banking Directive, Directive 89/646/EEC, have been introduced in
order to make the text more precise. Furthermore, the text has been redrafted to take account of the
in other
wording of Article 1(5) which limits the holdings of electronic money institutions
undertakings.

Article 6 (Article 5 of the Commission proposal)

Article 6 has been redrafted in line with Article 3(7) of the Solvency Ratio Directive, to allow the
competent authorities greater flexibility when verifying compliance with Articles 4 and 5.

Article 7 (Article 6 of the Commission proposal)

The common position has retained only the first paragraph of the Commission proposal. The Council
considers that Article 7, as drafted in the common position, is sufficient to allow supervision of all
such institutions. This
to other
undertakings since explicit reference is made to the financial and non-financial risks to which the
electronic money institution is exposed, including technical and procedural risks. Paragraphs (2) and
(3) of the Commission proposal have, consequently, been deleted.

institutions which have delegated certain functions

includes

Article 8 (Article 7 of the Commission proposal)

The common position retains the waiver proposed by the Commission but with changes to its scope
and form,
the
Directives.

to allow Member States a larger degree of

flexibility in the implementation of

Member States have the option, set out in paragraph 1, of waiving the application of some or all of
the provisions of this Directive and the application of the First and Second Banking Directives. This
will allow Member States that wish to avail themselves of this option, full flexibility to take account of
the specific nature of each scheme, which is of particular importance in view of the scope of Article
8, see below. This option does not affect the nature of the institutions concerned. They remain (cid:145)credit
institutions(cid:146) as defined in the first
the First Banking Directive, and the
indent of Article 1 of
competence of the monetary authorities to impose minimum reserve requirements is not affected.

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The common position sets out three categories of institutions to which the waiver can be applied:

1. As in the Commission proposal, small institutions may benefit from the waiver. However, the
common position limits this possibility more narrowly than in the Commission proposal,
restricting it to institutions whose total financial liabilities relating to outstanding electronic money
do not normally exceed EUR 5 million and never exceed EUR 6 million, (1)(a).

2. An institution that forms part of a group may benefit from the waiver, only if other members of
the same group accept the electronic money issued by it, (1)(b). The common position thus takes
account of Amendment 15 proposed by the European Parliament. It also strikes a balance between
the Commission proposal, where institutions issuing electronic money for use within the same
group are in all cases fully included in the scope of the Directive, and the European Parliament
proposal where such institutions are excluded.

3.

Institutions that issue electronic money with a limited purpose may also benefit,
(1)(c). The
common position defines this as electronic money which is accepted as payment by only a limited
number of undertakings in the same local premises or in a limited local area (e.g. a university
campus) or undertakings which have close financial or business relations with the issuing
institution (e.g. a retail chain with independent members but with a common marketing or
distribution scheme).

As in the Commission proposal, certain restrictions are imposed upon institutions which benefit from
the waiver: a maximum storage amount set at EUR 150 per card and the stipulation that these
institutions shall not benefit from the mutual recognition arrangements provided in the Second
Banking Directive, Directive 89/646/EEC. In addition the common position in (3) requires that the
institutions shall report periodically on their activities.

The common position has not retained paragraph 2 of the Commission proposal and thus includes
Amendment 23 proposed by the European Parliament.

Article 9 (Article 8 of the Commission proposal)

In comparison with the Commission proposal,
the common position introduces more specific
deadlines concerning the grandfathering clause. It also stipulates that if an institution does not comply
with the Directive within a limited period, it cannot benefit from mutual recognition arrangements.

Article 10

The common position sets the date for implementation 18 months after the entry into force of the
Directive. The Directive enters into force on the day of its publication.

Article 11

the rapid development within the sector,

the
In view of
Commission shall present a report on the application of the Directive not later than three years after
its implementation. The report shall in particular cover a number of issues that have been identified as
being of special concern.

the common position stipulates that

Recitals

The recitals have been adapted following the changes made to the Commission proposal.

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The common position includes Amendments 2 and 10 proposed by the European Parliament.

Amendments 3, 4, 5, 6, 7, 8, 9, 11, 12 and 13 proposed by the European Parliament, relating for the
most part to the question of interoperability, have not been included in the common position since
they do not serve to explain the enacting terms of the Directive (see point 10 of the interinstitutional
Agreement on common guidelines for the quality of drafting of Community legislation (1)). The
Council
that Amendments 3, 8, 12 and 13 are not compatible with the
Commission’s right of initiative, either according to the Treaty in the case of Amendments 3, 12 and
13, or according to derived Community law in the case of Amendment 8.

further considers

IV. CONCLUSION

The Council considers that all the amendments made to the Commission proposal are fully in line
with the objectives of the proposed Directive. The aim has been to ensure the financial integrity of
electronic money institutions without stifling developments in the field of electronic money and thus
to help to cultivate an environment which fosters the development of this new means of payment.
The common position includes the substance of the amendments to the enacting terms of the
Directive proposed by the European Parliament and the related changes to the recitals.

(1) OJ C 73, 17.3.1999, p. 1.