A member of the Federal Trade Commission added her voice Thursday to those of banking regulators who favor a hands-off approach to the development of new forms of electronic money and commerce.

Speaking at an American Electronics Association conference, Christine Varney said "government should go slow in regulating on-line commerce in the absence of an identifiable market failure."

She suggested the FTC, which has jurisdiction over consumer protection and antitrust issues, would step in only when the market failed to regulate itself. Like officials of federal banking agencies who have expressed similar attitudes, she said she does not foresee a need for near-term intervention.

But Ms. Varney added that the FTC is actively engaged in law enforcement on the "cyberfront." She said the agency was investigating more than 20 cases of Internet fraud, including a Ponzi scheme that bilked cybersurfers of $4.2 million.

Ms. Varney also said the commission was studying how privacy requirements in the United States differ from those in the European Union, which recently came out with restrictive guidelines on corporations' gathering and handling of personal data.

She said multinational incompatibilities might pose greater obstacles to global on-line commerce than security and safety issues.

Rep. Michael Castle, chairman of the House Domestic and International Monetary Policy Subcommittee, reiterated his view that market forces should shape the landscape of electronic commerce.

The Delaware Republican, who has led several hearings on the theme of "the future of money," said his panel has "no desire to regulate or legislate. If the market can self-regulate then it should."

While underlining that Congress is "not stepping in too soon," he cautioned, "We should go slowly, but not too slowly that we make losses."

He said he is concerned about the implications of technology on banking across state and country boundaries, and on taxation and privacy issues.

He added that the new technology could offer a solution to providing a payment system for the "unbanked," such as recipients of welfare benefits.

Any legislative action would change existing laws rather than create new ones, Rep. Castle said.

Also speaking at the electronics association session on emerging payment technologies, Citicorp official Gerald O'Driscoll said he was concerned that commercial banks will continue to face more of a regulatory burden than innovative nonbank competitors.

If statutory capital requirements, reserve requirements, deposit insurance costs, and other bank-specific provisions were not eased, commercial banks would become the "odd man out" in the developing payment system, said Mr. O'Driscoll, the No. 2 U.S. banking company's director of policy analysis.

To level the playing field, he said, banks should be subject to minimal regulation.

Mr. O'Driscoll said that while remaining concerned about the safety and soundness of the banking system, regulators and legislators should be rethinking the regulatory and legislative framework and its effects on banks.

Mr. Coplan writes for the Medill News Service.

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