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Draft on e-signatures hits funding snag

Attempts to push through an important law that will affect electronic banking and financial transactions have been stymied by a lack of state finances.
While many in both government and parliament have been trying to push forward a law on electronic signatures, a tight budget for next year has left those working on the legislation admitting it will be shelved, most likely for another 13 months.
"The 2001 budget draft is clear. It tells us that there won't be enough money to begin with this project in 2001 as was originally planned," said Milan Orsáry, head of the Economy Ministry's legislative department, which is drafting the law. "In my opinion, we will start on this in 2002," he added.


Banks such as Slovenská sporiteľňa (pictured above) would benefit from a new law on electronic signatures. However, progress on the law has been held up because funds are unavailable to support a watchdog.
photo: Spectator archives

Attempts to push through an important law that will affect electronic banking and financial transactions have been stymied by a lack of state finances.

While many in both government and parliament have been trying to push forward a law on electronic signatures, a tight budget for next year has left those working on the legislation admitting it will be shelved, most likely for another 13 months.

"The 2001 budget draft is clear. It tells us that there won't be enough money to begin with this project in 2001 as was originally planned," said Milan Orsáry, head of the Economy Ministry's legislative department, which is drafting the law. "In my opinion, we will start on this in 2002," he added.

The law is expected to boost trading and business in Slovakia by allowing 'electronic signatures' - personal computer codes recognised as carrying the weight of hand-written signatures - to be used to verify all kinds of documents, thus speeding communication between institutions, companies, banks and individuals through Internet and e-mail.

The legislation, which has been in preparation at the Ministry of Economy for almost two years, is supported by the European Union, which is pushing its own members to have a similar law effective before June 2001. The EC also insists on Slovakia and other associate nations having legislation on electronic signatures approved and implemented as soon as possible.

Many experts believe, however, that putting the law into practice will be a long, hard and expensive process, and that passing the law would be just the tip of the iceberg, with far more complicated legal work coming afterwards.

"The existence of the law will be only the beginning of several years of implementation, during which many [other] laws will be revised," said František Kaščák, manager with IT consulting firm Ditec.

Companies and banks meanwhile remain optimistic about the future for electronic signatures. According to Pavel Karel, head of the IT department at Tatra Banka, the first certificates for users of electronic signatures could be issued in two years time, despite the current delay.

"Electronic signatures would be of huge importance for us. Whether it's bank statements, transactions or anything else, this legislation would definitely make things faster," said Karel, adding that electronic signatures will, like many recent technological advances, most likely be quickly embraced by Slovaks.

"Thinking about how quickly mobile phones and Internet banking boomed in this country, I feel that this will be accepted too because Slovaks are flexible with these things," Karel said.

"Any problems," he added, "will be more with technical equipment than in a lack of acceptance [of using electronic signatures] by the population".

Under current legislation, electronic signatures are allowed only in business-to-business transactions where a prior contract has been signed between two entities allowing their use.

However, when the law is passed and implemented, electronic signatures will replace written forms of communication, experts say. "This is something that the world is heading towards - less paperwork and faster communication," said Kaščák's colleague, Július Lintner.

Before this happens, though, much will have to be done in terms of regulating the use of signatures by constituting authorities which will issue certificates for electronic signatures, as well as establishing the National Certification Office, a watchdog which will oversee the issuing of such certificates.

The establishment of the authority is a priority in the current legislation. According to a draft of the law, the Economy Ministry proposed that the National Certification Office be under the auspices of the Interior Ministry, with a budget of 30 to 50 million Slovak crowns ($600,000 to $1 million) and about 20 employees. This was supported by the Interior Ministry's security of information office this summer, but Interior Minister Ladislav Pittner later said that his ministry would need between 100 and 150 million crowns and 30 people to run the office - a figure which could not be accommodated in next year's budget.

Supporters of the signatures legislation are, though, split on the importance of the establishment of the National Certification Office before full implementation of the law.

"Without this body, the law on signatures won't be applicable. The best example to learn from is that of the Czech Republic, where the law was recently approved but no certification authority has yet been appointed," said Orsáry. "The law there is absolutely inefficient because there are no conditions created for its application into normal practice," he added.

But Kaščák said that approval of the legislation could be granted and the authority established parallel to its implementation. "We know that there will always be problems with finances, but bear in mind that this will be a long-term process and we have to begin soon. Important parts of the whole project, such as the National Certification Office, can be established after implementation [of the law]," he said.

A law on electronic signatures was approved in the United States in the mid-90s, but it is expected that only sometime between 2005 and 2010 will the basics of what has been implemented there be reached in Slovakia.

"Here it will take five to 10 years to build the fundamentals of the system. People have to learn that this [electronic signatures] can be a part of their every day life, and that it is aimed at replacing hand-written forms of communication," Lintner said. "This legislation cannot be taken lightly. Electronic signatures will be totally on a par with hand-written signatures. No difference at all."

However, Orsáry remained sceptical of the chances of the legislation being given the urgency many businessmen believe it deserves, citing a general ignorance of the use of electronic signatures permeating even to the highest levels of parliament. "With few exceptions, politicians don't really know much about this," he said.

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