## E-Money: Prudential Supervision, Oversight, and User Protection

_Departmental Papers, December 14, 2021_

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**Canonical URL:** [E-Money: Prudential Supervision, Oversight, and User Protection](https://www.imf.org/en/publications/departmental-papers-policy-papers/issues/2021/12/13/e-money-prudential-supervision-oversight-and-user-protection-464868)

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## Bibliographic details
- Authors: Marc C Dobler, Jose M Garrido, Dirk Jan Grolleman, Tanai Khiaonarong, Jan Nolte
- Published: December 14, 2021
- Series: Departmental Papers
- DOI: https://doi.org/10.5089/9781513593401.087

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### Summary
- Discusses evolving prudential frameworks for nonbank issuers of electronic money (EMIs).
- Notes jurisdictional variation: some jurisdictions apply a light-touch approach to regulating EMIs; others apply more stringent requirements to protect electronic money (e-money) users as the sector grows in importance.
- Aims to build on previous IMF staff contributions and draw policy conclusions for strengthening e-money regulatory regimes, particularly in jurisdictions where issuers, individually or collectively, have grown to a size to which they are of macro-financial importance.
- Structure of the paper:
  - Chapter 2: background on development of e-money, its economic benefits, and potential risks.
  - Chapter 3: prudential supervision of EMIs.
  - Chapter 4: oversight of EMIs from a payments system perspective.
  - Chapter 5: potential additional measures for user protection and contingency arrangements for EMI failure.
  - Last chapter: policy recommendations for policymakers, especially in emerging market economies and developing countries where EMIs have reached a scale that could have a significant economic impact if they were to fail.

### Development, Benefits, and Risks (Chapter 2 — background)
- Findings on the sector’s evolution:
  - E-money has developed into an important component of payment systems in many jurisdictions.
  - Economic benefits and potential risks are central considerations for regulatory design and supervisory approaches.

### Prudential Supervision of EMIs (Chapter 3)
- Core supervisory focus areas discussed:
  - Appropriate prudential frameworks for nonbank EMIs.
  - The balance between light-touch regulation and more stringent requirements, depending on issuer size and systemic importance.
- Emphasis on jurisdictions where EMIs are of macro-financial importance and may warrant stronger prudential measures.

### Oversight from a Payments System Perspective (Chapter 4)
- Oversight considerations include:
  - Integration of EMIs into the broader payments system oversight framework.
  - Risks to payment system stability stemming from EMI operations and failures.
  - Need for coordination between prudential supervisors and payment system overseers.

### User Protection and Contingency Arrangements (Chapter 5)
- Potential measures for user protection:
  - Additional safeguards beyond prudential requirements to protect e-money users.
  - Contingency arrangements for EMI failure to mitigate economic impact on users and the payments system.

### Policy Recommendations (Final chapter)
- Target audience: policymakers, especially in emerging market economies and developing countries where EMIs have reached significant scale.
- Objective: Strengthen e-money regulatory regimes to address prudential, oversight, and user-protection challenges as EMIs grow in systemic importance.

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_Source: https://www.imf.org/en/publications/departmental-papers-policy-papers/issues/2021/12/13/e-money-prudential-supervision-oversight-and-user-protection-464868_