Yield Prohibition on Electronic Money Funds: Legal Framework, Economic Implications And International Comparisons

Abstract

This study examines the legal framework governing the safeguarding of user funds by electronic money institutions and analyzes the economic, legal, and operational implications of the strict prohibition on yield generation in Türkiye. As electronic-money-based payment systems continue to expand, the requirement to hold user funds solely for security purposes and without any financial return creates significant cost pressures on institutions and limits the development of sustainable and innovative financial models. The study evaluates the obligation to block funds at the central bank, the inability to generate returns on these balances, and the requirement that institutions refrain from obtaining any financial benefit from safeguarded funds. It also reviews international approaches by analyzing the practices in the European Union, the United Kingdom, and the United States, showing that these jurisdictions generally adopt more flexible and balanced models compared to Türkiye. While acknowledging the importance of maintaining strong consumer protection through strict safeguarding rules, the study argues that controlled and limited return-generation mechanisms can be implemented without compromising fund security. Based on this evaluation, the study proposes policy options aimed at strengthening regulatory clarity and enabling electronic money institutions to build more sustainable business models in the evolving digital finance ecosystem.