Treasury eyes online bond sales
Looking to cash in on the increase in Net financial services, the Treasury Department is proposing to sell U.S. savings bonds online.
"The growth of electronic commerce and the World Wide Web have led to a flourishing of financial service providers and new payment methods," the proposal states. "However, the Bureau of the Public Debt has been unable to take full advantage of these developments in the sale of U.S. savings bonds because of apparent restrictions in existing regulations."
The plan is open to public comment until June 1, and would change current regulations to authorize the Bureau of the Public Debt to sell bonds to online consumers who pay by credit card.
In addition, the proposal would expand the range of who could apply to be an "issuing agent." Alongside banking institutions, organizations that offer payroll savings plans and Net-based financial services could be appointed as agents to sell bonds.
Issuing agents would be responsible for remitting the credit card payments to the Treasury Department, thus bearing the risk of default payments.
At first, however, only the bureau would sell bonds online. Part of its plan also seeks to implement the use of digital signatures or certificates, which allow people to insure their identity using public-key encryption.
Traditional script signatures in electronic format also will be accepted as the seal of a contract to buy a bond under the proposal. If approved, the Treasury Department's plan would make electronic contracts regarding the sales of bonds valid, which is still murky under current contract law.
State and federal legislation is pending to set up standards for digital certificates that use encryption and electronic contracts, but the Treasury said its rules would not supersede those efforts if they are passed.
"These sales will utilize the latest in technology, including the issuance of digital certificates to credit card holders and the use the Secure Electronic Transactions protocol, which may hamper the initial availability of bonds sold in this fashion, but which will help insure the security for the government and purchasers," the proposed rule states.
"Given the rapidly changing nature of technology, its narrow initial use by the Bureau of the Public Debt, and a desire to avoid even the appearance of encroaching upon the right of states to pursue their own legislative approaches," the proposal continues.
Public comments on the plan are being accepted by email at "Savbonds@bdp.treas.gov," but senders must include their full name and postal address.