# resolved or sufficient related evidentiary requirements.

_Dematerialization of securities._ Electronic distribution systems for Treasury securities not only provide a convenient way of increasing citizens’ access to these securities, they also enable the issuer to save on the costs of issuing paper securities and to pass these savings on to investors. A large share of these savings come from reduced printing costs, provided that securities sold electronically are dematerialized. In the United States dematerialization is occurring gradually, with some paper nonmarketable securities still being sold until investors get used to paperless securities. In other countries—especially emerging markets, where leapfrogging is more likely—dematerialization of securities can happen more quickly, resulting in larger savings. But in both cases it is crucial to build the legal framework for dematerialization of securities and the electronic systems to facilitate immobilization, dematerialization, and virtual delivery of these securities.

_Authentication infrastructure._ The TreasuryDirect system, in its efforts to achieve simplicity, convenience, and security, uses various technologies and infrastructure to authenticate and secure information. In this context Pay.gov, which enables the system to link to various databases to verify investor data, is of special importance. Its database contains detailed information that allows for realtime authentication after checking against at least five other databases to verify identity. This infrastructure makes TreasuryDirect more convenient for its users—allowing them to, for example, open accounts without physically visiting a branch. In countries lacking such infrastructure, convenience will likely take a backseat to security concerns. The extent to which such reduced convenience affects the system’s success in reaching its target customers will depend on the customers’ standards for convenience.

_Payments and settlements infrastructure._ The existence of the ACH system is one reason TreasuryDirect can be run without large participation by commercial banks. The ACH system automatically debits and credits investor accounts regardless of which bank they use. Participants need only produce evidence of a bank account and be authenticated by Pay.gov—a feature that greatly expedites transactions. But many emerging markets do not have a well-organized ACH at the retail level to facilitate settlement and clearance of payments associated with retail purchases of government securities. Although some ACH and authentication infrastructure may be difficult to replicate, in many emerging markets the more pressing constraints involve vested interests in the banking community. (A companion case study on the Philippines illustrates this problem.) The availability of such infrastructure gives TreasuryDirect flexibility to rely less on banks.

_E-security._ When building electronic distribution systems for government securities, e-security is often overlooked in favor of cutting costs and increasing convenience. Yet there are grounds for strengthening such mechanisms, because building trust among investors is crucial to the success of these systems. Experience in emerging markets indicates that this issue is especially important to consider during the design phase—because when a government makes securities available over such channels, it is critical that digital assets, funds, and associated messages be secure.

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