How does the FCA define electronic money?

The definition provided by the FCA for electronic money emphasizes that it represents an electronically stored monetary value that is issued when funds are received. This underlines the core function of electronic money as a digital representation of funds that can be used for transactions in a manner similar to traditional money, but in a digital format.

This definition is important because it clarifies that electronic money is not merely digital versions of physical currency or investment assets but rather a distinct form of value that facilitates electronic transactions. It captures the essence of how electronic money functions and how it is created, which involves receiving funds from the customer and issuing an equivalent electronic value in return.

The other options do not accurately address this definition: converting physical currency into digital form does not encompass the broader utility and creation mechanism of electronic money. Similarly, funds held in secure bank accounts pertain to traditional banking rather than the concept of electronic money itself. Lastly, investment assets managed via online platforms represent investments rather than a means of facilitating everyday monetary transactions, which is central to the definition of electronic money.