Federal Reserve Governor Ferguson Testifies on E Money and Payments

(June 5, 1998)  The House Finance Subcommittee held a hearing Thursday on new methods of making financial purchases.  Roger Ferguson of the Federal Reserve System testified that the Fed does not anticipate that either emerging forms of electronic money or electronic commerce will impact its ability to carry out its responsibilities with respect to the clearing and settlement of payments, or monetary policy.

The hearing was conducted by the  Subcommittee on Finance and Hazardous Materials, of the House Commerce Committee.  It was chaired by Rep. Michael Oxley (R-OH).  The main witness was Roger W. Ferguson, Jr., a member of the Board of Governors of the Federal Reserve System.

Related Page: HTML Copy of Governor Ferguson's Prepared Testimony.

Ferguson testified on a range of developments in electronic commerce and payments.   Highlights of his testimony included the following.

Rep. Thomas Manton (D-NY) questioned Ferguson about FDIC deposit insurance and stored value cards.  Rep. Rick White (R-WA) discussed encryption and security in Internet transactions with Ferguson.

Rep. Billy Tauzin (R-LA) said in his openning remarks that:

"We are now entering a world where Internet currency is as real as the dollar bill, and where financial transactions, both here in America, and globally now, where banks are bypassed, and new forms of payments for services and goods are being devised, pose for us enormous and difficult questions of making sure that consumers and online service providers working in a world where there is some confidence and security and protection for privacy rights."

Tauzin also speculated in his questioning of Governor Ferguson that a "cashless society" would not only advance efficiency, but would also makes illegal activities more difficult.  According to Tauzin, most transactions in illegal drugs, prostitution and gambling are in cash.  If you create an electronic trail, you eliminate the evils, suggested Tauzin.

The Subcommittee also heard from a second panel of witnesses comprised of the following:

The Congressmen who participated in all or part of the hearing included Subcommittee Chairman Michael Oxley (R-OH), Ranking Minority Member Thomas Manton (D-NY), Billy Tauzin (R-LA), Steve Largent (R-OK), Rick White (R-WA), Barbara Cubin (R-WY), James Rogan (R-CA), Edward Markey (D-MA), Ralph Hall (D-TX), Thomas Sawyer (D-OH), and Diana DeGete (D-CO).