The U.S. government is about to lift export restrictions on the use of strong cryptography for financial transactions, a Clinton administration official said Wednesday.

Ira C. Magaziner, an adviser on electronic commerce issues to the White House, said he expects an announcement today by the Commerce Department on a further liberalization of its controversial encryption export policy.

Under the new policy, there would be no limits on financial encryption systems. They would not have to involve a method of key escrow or key recovery. Those are measures the government had sought to ensure access to decryption keys-those needed to decipher coded messages-for law-enforcement or national-security purposes.

"We will still promote key recovery," Mr. Magaziner told a meeting of the Smart Card Forum. "But we are trying to balance two legitimate purposes" while showing support for Internet commerce.

William A. Reinsch, Undersecretary of the Bureau of Export Administration of the Department of Commerce, is expected to announce the change at a forum sponsored by the American Bankers Association.

"The banking industry and the Clinton Administration have been working for the past two years to produce a set of export control regulations that would clearly recognize banks' need to deploy strong cryptography worldwide," said American Bankers Association federal representative Kawika Daguio. "We have been working to put that understanding into a policy that is favorable to banks and their partners."

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