The Treasury Department has launched two initiatives, one domestic and one international, the first steps toward government regulation of electronic money and other forms of electronic payment on the Internet.
Treasury Secretary Robert Rubin today urged bankers and government officials to "put aside our ideological views with respect to regulation and take an intensely practical approach to finding the right balance" between government, the private sector, and market forces in addressing "difficult issues" raised by electronic money.
The move, though preliminary, is the first significant step by the federal government to regulate electronic commerce, which has become increasingly important for companies and consumers alike as they move with increasing speed toward a world of virtual financial transactions.
"A true revolution has begun. It is far from over. It will not be reversed," Rubin said in a speech today as part of a two-day Treasury Department conference, "Toward Electronic Money and Banking: The Role of Government." Scheduled participants included Alan Greenspan, chairman of the Federal Reserve Board, and John Reed, chairman of Citicorp.
Rubin, a former Wall Street securities specialist, welcomed the advent of electronic money, including credit cards, smart cards, debit cards, electronic benefits transfer, Internet commerce, and other forms of electronic payment. He called for cooperation "so that we can minimize impediments to growth" while protecting consumers and aiding law enforcement.
Greenspan's agency will be represented on a "consumer payments task force" that Rubin announced, as will the Federal Deposit Insurance Corporation, Federal Trade Commission, and the Treasury Department. The international initiative draws in members of G-7, which includes government leaders of the major industrial nations in Europe, North America, and Asia.
"Electronic modes of payment are international and all these issues are going to have to be considered in an international context," Rubin said.
On the domestic side, Rubin gave a laundry list of consumer and law enforcement issues that need to be addressed: antitrust, disclosure of information to consumers, security, the financial soundness of issuers of electronic cash, counterfeiting, money laundering, civil fraud, computer hackers, and balancing law enforcement concerns with consumer privacy.
"Finally, electronic money should increase, rather than decrease, access to financial services and the mainstream economy for those in the inner cities or poor rural areas," Rubin concluded.