A Guide to Supervising E-Money Issuers

A specialized regulatory window for nonbank e-money issuers (EMIs) is one of four basic regulatory enablers for inclusive digital financial services in emerging markets and developing economies (EMDEs) (Staschen and Meagher 2018). For the purposes of this guide, EMI is defined as any regulated entity—bank and nonbank—that is dedicated to issuing e-money or similar stored-value accounts, even if it trades under a different name such as a limited-purpose bank or payments bank. A special regulatory window for EMIs can be effective only if it is combined with necessary supervisory changes. The role of supervision is threefold: (i) to ensure risks are identified, adequately managed, and mitigated by EMIs; (ii) to enforce compliance with regulatory requirements; and (iii) to create procedures to manage an EMI crisis. Effective supervision helps supervisors identify and manage risks before they reach scale and provides evidence-based input for regulatory changes. The question is: How do we effectively supervise EMIs? This paper aims to (i) provide general guidance to EMDE supervisors who are designing proportional approaches to EMI supervision and (ii) serve as a reference for drafting or improving EMI supervision manuals in a few specific areas.