Restricted Issue of Electronic Cash

Financial authorities will restrict the issue of prepaid electronic cash by commercial businesses.

“Increase of electronic commerce users due to popular Internet have brought circumstances which can’t be covered by current Banking Act, so a new Electronic Finance Transaction Bill is planed to be submitted in upcoming fall National Assembly,” said an unnamed Ministry of Finance and Commerce official on August 1st.

In this new bill, in order to improve validity of the prepaid electronic cash such as ‘e-coin’ issued by venture IT companies, amounts over certain limit have to meet the approval of financial authorities before issue. Also for certain widely used electronic cash, the authorities for credential will monitor the issuers.

“If a prepaid electronic cash issuer gets bankrupt, payee of this electronic cash is at lost. Therefore businesses which issues more than certain amount should have proper financial credentials,” said a ministry official.

Prepaid electronic cash was amounted up to mere 1 billion won in 1999. Last year, it was amounted up to 140 billion won. With the active electronic commerce transactions it is forecasted to increase greatly.

Joong-Hyun Park sanjuck@donga.com