Directive 2000/46/EC of the European Parliament and of the Council of 18 September 2000 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions
Date: 2000-09-18
Institutions: Council of the European Union, European Parliament
Subjects: banking, electronic money, financial institution, financial legislation, issuing of currency, management audit

27.10.2000

EN

Official Journal of the European Communities

L 275/39

DIRECTIVE 2000/46/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 18 September 2000

on the taking up, pursuit of and prudential supervision of the business of electronic money
institutions

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

ensure bearer confidence and the application of the prin-
ciple of home Member State prudential supervision.

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 the Economic and Social
Committee (2),

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)

(3)

(4)

Credit institutions within the meaning of Article 1, point
1, first subparagraph (b) of Directive 2000/12/EC (5) are
limited in the scope of their activities.

It is necessary to take account of the specific characteris-
tics of these institutions and to provide the appropriate
measures necessary
and harmonise
Member States'
regulations and administrative
provisions relating to the taking up, pursuit and pruden-
tial supervision of
the business of electronic money
institutions.

to coordinate

laws,

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 gener-
ally intended for the purpose of effecting electronic
payments of limited amounts.

The approach adopted is appropriate to achieve only the
essential harmonisation necessary and sufficient
to
secure the mutual
recognition of authorisation and
prudential supervision of electronic money institutions,
making possible the granting of a single licence recog-
the Community and designed to
nised throughout

(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), confirmed on 27 October 1999, Council
Common Position of 29 November 1999 (OJ C 26, 28.1.2000, p.
1) and Decision of the European Parliament of 11 April 2000 (not
yet published in the Official Journal). Decision of the Council of 16
June 2000.

(5) Directive 2000/12/EC of

the European Parliament and of

the
Council of 20 March 2000 relating to the taking up and pursuit of
the business of credit
institutions (OJ L 126, 26.5.2000, p. 1).
Directive as last amended by Directive 2000/28/EC (see page 37 of
this Official Journal).

(5) Within the wider context of the rapidly evolving elec-
tronic commerce it is desirable to provide a regulatory
framework that assists electronic money in delivering its
full potential benefits and that avoids hampering techno-
logical innovation in particular. Therefore, this Directive
framework that
introduces a technology-neutral
supervision of electronic
harmonises
money institutions to the extent necessary for ensuring
their sound and prudent operation and their financial
integrity in particular.

the prudential

legal

(6)

(7)

(8)

(9)

Credit institutions, by virtue of point 5 of Annex I to
Directive 2000/12/EC, are already allowed to issue and
administer means of payment
including electronic
money and to carry on such activities Community-wide
subject to mutual recognition and to the comprehensive
prudential
supervisory system applying to them in
accordance with the European banking Directives.

for

electronic money

The introduction of a separate prudential supervisory
regime
institutions, which,
although calibrated on the prudential supervisory regime
applying to other credit institutions and Directive 2000/
12/EC except Title V, Chapters 2 and 3 thereof in partic-
ular, differs from that regime, is justified and desirable
because the issuance of electronic money does not
constitute in itself, in view of its specific character as an
electronic surrogate for coins and banknotes, a deposit-
taking activity pursuant to Article 3 of Directive 2000/
12/EC, if the received funds are immediately exchanged
for electronic money.

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 Directive 2000/12/EC.

It is necessary for electronic money to be redeemable to
ensure bearer confidence. Redeemability does not imply,
in itself, that the funds received in exchange for elec-
tronic money shall be regarded as deposits or other
repayable funds for the purpose of Directive 2000/
12/EC.

(10)

Redeemability should always be understood to be at par
value.

L 275/40

EN

Official Journal of the European Communities

27.10.2000

(11)

In order to respond to the specific risks associated with
the issuance of electronic money this prudential super-
visory regime must be more targeted and, accordingly,
less cumbersome than the prudential supervisory regime
applying to credit
regards
reduced initial capital requirements and the non-applica-
tion of Directive 93/6/EEC (1) and Title V, Chapter 2,
Sections II and III of Directive 2000/12/EC.

institutions, notably as

(17)

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

the review of

(18)

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

thus,

cumbersome

(12) However, it is necessary to preserve a level playing field
between electronic money institutions and other credit
institutions
to
issuing electronic money and,
ensure fair competition among a wider range of institu-
tions to the benefit of bearers. This is achieved since the
abovementioned less
the
prudential supervisory regime applying to electronic
money institutions are balanced by provisions that are
more stringent than those applying to other credit insti-
tutions, notably as regards restrictions on the business
activities which electronic money institutions may carry
on and, particularly, prudent limitations of their invest-
ments aimed at ensuring that their financial
liabilities
related to outstanding electronic money are backed at all
times by sufficiently liquid low risk assets.

features of

(13)

(14)

(15)

Pending the harmonisation of prudential supervision of
outsourced activities for credit institutions it is appro-
priate that electronic money institutions have sound and
prudent management and control procedures. With a
view to the possibility of operational and other ancilliary
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.

The issuance of electronic money may affect the stability
of the financial system and the smooth operation of
payments 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 this Directive for electronic money institu-
tions which operate only within the territories of the
respective Member States.

(16) Adoption of this Directive constitutes the most appro-
priate 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 neces-
sary for this purpose.

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Scope, definitions and restriction of activities

This Directive shall apply to electronic money institu-

1.
tions.

It shall not apply to the institutions referred to in Article

2.
2(3) of Directive 2000/12/EC.

3.

For the purposes of this Directive:

(a) ‘electronic money institution’ shall mean an undertaking or
any other legal person, other than a credit institution as
defined in Article 1, point 1,
first subparagraph (a) of
Directive 2000/12/EC which issues means of payment in
the form of electronic money;

(b) ‘electronic money’ shall mean monetary value as repre-

sented by a claim on the issuer which is:

(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, point 1,
first subparagraph of Directive 2000/12/EC, 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 and other ancillary func-
tions related to its issuance, and the issuing and adminis-
tering of other means of payment but excluding the
granting of any form of credit; and

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

other undertakings or public institutions.

(1) Council Directive 93/6/EEC of 15 March 1993 on the capital
adequacy of
institutions (OJ L 141,
firms and credit
11.6.1993, p. 1). Directive as last amended by Directive 98/33/EC
(OJ L 204, 21.7.1998, p. 29).

investment

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.

27.10.2000

EN

Official Journal of the European Communities

L 275/41

Article 2

Application of Banking Directives

Save where otherwise expressly provided for, only refer-
1.
ences to credit institutions in Directive 91/308/EEC (1) and
Directive 2000/12/EC except Title V, Chapter 2 thereof shall
apply to electronic money institutions.

Articles 5, 11, 13, 19, 20(7), 51 and 59 of Directive
2.
2000/12/EC shall not apply. The mutual recognition arrange-
ments provided for in Directive 2000/12/EC shall not apply to
electronic money institutions' business activities other than the
issuance of electronic money.

The receipt of

3.
funds within the meaning of Article
1(3)(b)(ii) does not constitute a deposit or other repayable
funds according to Article 3 of Directive 2000/12/EC, if the
received are immediately exchanged for electronic
funds
money.

Article 3

Redeemability

A bearer of electronic money may, during the period of
1.
validity, ask the issuer to redeem it at par value 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.

Article 4

Initial capital and ongoing own funds requirements

1.
Electronic money institutions shall have an initial capital,
as defined in Article 34(2), subparagraphs (1) and (2) of
than EUR 1 million.
Directive 2000/12/EC, of not
their own funds, as
Notwithstanding paragraphs 2 and 3,
defined in Directive 2000/12/EC, shall not
fall below that
amount.

less

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.

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 its financial liabilities related to outstanding elec-

tronic 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.

Article 5

Limitations of investments

Electronic money institutions shall have investments of
1.
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 43(1)(a) (1), (2), (3)
and (4) and Article 44(1) of Directive 2000/12/EC attract a
zero credit risk weighting and which are sufficiently liquid;

(b) sight deposits held with Zone A credit
defined in Directive 2000/12/EC; 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 2000/12/EC, in the electronic money institu-
tion concerned or which must be included in those
undertakings' consolidated accounts.

2.
Investments referred to in paragraph 1(b) and (c) may not
exceed 20 times the own funds of the electronic money institu-
tion concerned and shall be subject to limitations which are at
least as stringent as those applying to credit institutions in
accordance with Title V, Chapter 2, Section III of Directive
2000/12/EC.

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 suffi-
ciently liquid interest-rate and foreign-exchange-related off
balance-sheet items in the form of exchange-traded (i.e. not
OTC) derivative instruments where they are subject to daily
margin requirements or foreign exchange contracts with an
original maturity of 14 calendar days or less. The use of
derivative instruments according to the first sentence is permis-
sible only if the full elimination of market risks is intended and,
to the extent possible, achieved.

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

(1) Council Directive 91/308/EEC of 10 June 1991 on prevention of
the use of the financial system for the purpose of money launder-
ing (OJ L 166, 28.6.1991, p. 77).

For the purpose of applying paragraph 1, assets shall be

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

L 275/42

EN

Official Journal of the European Communities

27.10.2000

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 shall communicate them, and any compo-
nent data required,
to the competent authorities, or by
competent authorities, using data supplied by the electronic
money institutions.

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.

Article 8

Waiver

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 Directive 2000/12/EC to elec-
tronic 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 elec-
tronic 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.

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
2000/12/EC.

3. Member States shall require that all electronic money
this Directive and
institutions to which the application of
Directive 2000/12/EC has been waived report periodically on
their activities including the total amount of financial liabilities
related to electronic money.

Article 9

Grandfathering

Electronic money institutions subject to this Directive which
have commenced their activity in accordance with the provi-
sions 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 elec-
tronic money institutions to submit all relevant information to
the competent authorities in order to allow them to assess
within six months from the date of entry into force of the
this Directive,
provisions adopted in implementation of
whether
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.

comply with the

institutions

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 27 April 2002. 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.

27.10.2000

EN

Official Journal of the European Communities

L 275/43

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

accompanied where appropriate by a proposal for its revision.

Article 12

Entry into force

This Directive shall enter into force on the day of its publica-
tion in the Official Journal of the European Communities.

Not later than 27 April 2005 the Commission shall present a
report to the European Parliament and the Council on the
application of this Directive,

in particular on:

— the measures to protect the bearers of electronic money,
including the possible need to introduce a guarantee
scheme,

— capital requirements,
— waivers, and
— the possible need to prohibit interest being paid on funds

received in exchange for electronic money,

This Directive is addressed to the Member States.

Article 13

Done at Brussels, 18 September 2000.

For the European Parliament

For the Council

The President

N. FONTAINE

The President

H. VÉDRINE