E-money is defined as any electronically (including magnetically) stored monetary value in the form of a claim on the issuer which is issued on receipt of funds in order to carry out payment transactions and which is also accepted by parties other than the issuer (see section 1a of the Zahlungsdiensteaufsichtsgesetz, the transposition of the E-money directive 2009/110/EC into German law).
In 2003, the Eurosystem published a report entitled "Electronic Money System Security Objectives" (EMSSO) . This uses models to explain e-money schemes and also formulates the relevant security requirements pertaining to e-money schemes from an oversight perspective.
Entities subject to oversight
The Bundesbank's oversight activity is principally directed towards governance authorities for e-money schemes which are headquartered in Germany. Among these is, for example, the GeldKarte: a card-based e-money scheme operated by the "Deutsche Kreditwirtschaft" (The German Banking Industry) which has been overseen by the Bundesbank since the earliest stages of development. In the case of international e-money schemes, the Bundesbank is engaged in exchanging information within the Eurosystem in accordance with the principle that responsibility lies with the national central bank within whose jurisdiction the issuer is domiciled.
In its "Report on Electronic Money" of 1998, the Eurosystem published its security objectives for e-money schemes. These objectives represent an enhancement of the minimum requirements published in the "Report to the EMI Council on Prepaid Cards" back in 1994.
In order to ensure the reliability of e-money schemes both under normal and exceptional circumstances, the Bundesbank's oversight team checks whether all of the relevant e-money schemes meet the minimum requirements. Their checks focus, in particular, on
- ensuring the integrity of the system as a whole,
- evaluating the technical security provisions of the scheme and ensuring the efficiency of the coordination mechanisms connecting individual participants in the scheme.
The Bundesbank monitors developments in the area of e-money and assesses the security of e-money schemes on an ad hoc basis, eg when major technological enhancements are made. To this end, the Bundesbank collaborates, where necessary, with other authorities, such as the German Federal Office for Information Security (Bundesamt für die Sicherheit in der Informationstechnologie or BSI).
- The governance authority is accountable for the overall functioning of the scheme enabling the use of e-money and ensures that all the actors involved comply with the scheme's rules. It is also responsible for ensuring compliance with the applicable oversight standards. See also European Central Bank (2009), Harmonised oversight approach and oversight standards for payment instruments, February 2009.