Risks like card tampering or money laundering, can most effectively be reduced by a combination of measures that are administered and implemented rigorously, a task force set up by Group of 10 (G10) central bankers concluded. "Existing security measures to protect electronic money, when implemented correctly, can protect consumers and issuers adequately from fraud," a statement based on a report said.
The central bank experts concluded that an integrated, risk-management approach to security, including independent security assessments, should be an important component of these new products.
The report -- Security of Electronic Money -- forms part of the ongoing efforts of G10 central banks to tackle the implications of electronic money for fraud, and monetary policy.
The task force, which was set up in late 1995, was headed by Israel Sendrovic of the Federal Reserve Bank of New York and made up of G10 computer experts.
The task force primarily examined the so-called smart cards where a computer chip on a plastic card stores value.
"Compared with other forms of payment that are paper-based or rely on plastic cards with magnetic stripes, it is widely accepted that microchip cards are much more difficult to counterfeit or fraudulently alter," the task force said.
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However, the central bank computer experts also warned that as legitimate types of electronic money become widely available, criminal organisations will continually improve their levels of attack, even if the first attempts fail.
The other main form of electronic money is software-based systems where cryptography is used as safeguard to protect data that is transmitted electronically, for example on the Internet.