EMI Directive
The problem with the EMI Directive was that it did not follow a technology-neutral approach to law and policy formulation. By limiting itself to technologies that existed at the time of its negotiation and drafting (i.e., smartcard technology), the Directive is not future-proof and it appears to be applicable only to electronic transfers of value that involve smartcard technology or technologies of a similar vein, which is a technology that has not proven to be popular. With other methods of transferring value electronically, like account-based systems such as PayPal, gaining popularity and wide use, the EMI Directive seems outdated and ill-equipped to respond to current e-commerce practices and transactions.
In is interesting to note that, in a sense, the lack of flexibility of the EMI Directive is traceable to the drafters’ inability to break free from the concept of money as physical bills and coins (clearly they saw electronic money merely as money in electronic form) as opposed to seeing money within the context of, or as a system for, exchanging values. Instead of legislating about money in electronic form, their efforts would have been more fruitful if they had promulgated laws or rules on electronic systems and processes for transferring or exchanging values. With inherent characteristics of the network environment (connected systems, verifiable transactions, instantaneous exchanges), the concept of dealing with symbols representing values (e.g., electronic money and wallets) appear primitive and unremarkable when one considers that the values themselves can be exchanged without need of or reliance on such symbols, whether they be physical or electronic. Why persist in exchanging ’symbols backed by values’ when values themselves can be exchanged in a connected world?
The EMI Directive is limited in its current incarnation because it is not forward-looking enough. However, the Directive should not be used as a reason to support the position that ‘no regulation’ is the best approach to electronic money. There are benefits to electronic money regulations (even with a limited one like the EMI Directive) such as providing stability to and assurance for electronic payment systems, encouraging consumers to participate, providing the foundation for market development, rationalising and harmonising electronic money transactions with banking and financial laws, leveling the market place for new entrants, etc. The lack of effectiveness of the EMI Directive should not discourage resort to regulation. The proper response is to re-examine and amend the law with a view to making it better and more effective. Failures in regulatory experiments do not mean laissez faire is the only remaining option. Other, more useful alternatives abound.
The relationship of money to value
Money is a means for exchanging values. The key then is to see money in relation to values. The only difference between paper money and electronic money is their form – the first is embodied in a physical material, while the other is in digital format. However, with respect to values that they represent, they are identical. Try replacing the term ‘money’ with the more appropriate term ‘value’. With respect to enabling the transfer of values, is there any difference between ‘paper value’ and ‘electronic value’. They both represent and relate to the same thing.
This post was originally written for a class in Information Technology Law when I was an LLM student at the University of Edinburgh.
Universal Copyright Convention – the forsaken understudy
December 16, 2009 in Commentaries, Intellectual property law | Leave a comment