Resolution Powers Over E-Money Providers

Abstract

E-money has grown dramatically in a number of countries of late, often driven by non-bank providers of e-money, particularly telecommunications companies. Many countries have regulated the issuance of e-money, but in times of trouble there is usually a discrepancy in the treatment of bank and non-bank issuers. When a bank experiences financial distress, legislation normally grants an authority resolution powers to ensure an orderly winding up while limiting systemic disruption and losses to deposit holders. These resolution powers do not usually extend to non-bank e-money providers, notwithstanding the potential disruption the collapse of a large provider could now cause in some countries. This paper proposes three approaches, legislative and non-legislative, to granting resolution powers in respect of e-money providers to limit losses and preserve systemic stability.