This policy setting allows you to specify an encryption type for Office Open XML files. If you enable this policy setting, ...

This policy setting allows you to specify an encryption type for Office Open XML files.
      
If you enable this policy setting, you can specify the type of encryption that Office applications will use to encrypt password-protected files in the Office Open XML file formats used by Excel, PowerPoint, and Word. The chosen encryption type must have a corresponding cryptographic service provider (CSP) installed on the computer that encrypts the file.  See the HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Cryptography\Defaults\Provider\ registry key for a list of CSPs installed on the local computer. Specify the encryption type to use by entering it in the provided text box in the following form:

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For example: Microsoft Enhanced Cryptographic Provider v1.0,RC4,128

If you disable or do not configure this policy setting, the default CSP will be used. On computers that run Windows Vista, the default cryptographic service provider (CSP) is Microsoft Enhanced RSA and AES Cryptographic Provider, AES-128, 128-bit. On computers that run Windows XP, the default CSP is Microsoft Enhanced RSA and AES Cryptographic Provider (Prototype), AES-128, 128-bit.

Note: This policy setting will not take effect unless the registry key  
HKEY_CURRENT_USER\Software\Microsoft\Office\14.0\\Security\Crypto\CompatMode is set to 0. By default the CompatMode resgistry key is set to 1.