Electronic Money, and a Description Term Paper

Pages: 8 (3263 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper

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[. . .] The requirement for narrowing down on banks that are able and ready to donate the payment link and insure the trading partners are able of coming up to their requests has been a hurdle to the even more fast spread of EDI. With acceptance from both sides of digital money, there could be further accumulations of time and money and further instigation of just in time generation. Added up to this, open mindedness by large corporations would instigate and also subsidize the application of digital money in vendor function, just as demand of corporate subsidized the rapid implementation of cell phones. (Bonorris, 44)

Wall Street Journal article (Lipin, 14) portrayed the credit card business as a "saturated market." Not particularly a payment implies, but an assurance of late payment, credit card also makes a substitution for the application of cash. Debit cards have been prevalent all through many years. They make a representation of honest payment since the amount of the purchase is transferred from an account that belongs to the customer. Despite the existence of 40 million debit cards in application, the compared amount of purchases made with them is small. Also ATMs, currently enabling the application of cash by turning it easily and readily within reach, may help in abstaining from cash. ATMs which disseminate "scrip" able to be spent at the retailer in which the ATM is situated are coming into application. (Emshwiller, 8)

These gadgets have a wide recognition among retailers as another resort of turning it viable for customers to spend while being much affordable and less viable for criminals than cash ATMs. In a context smart cards are an extensiveness of the prepayment cards. In semblance to the prepayment cards, they can save value for future application, but they also are comprehensive of an internal microchip-based processing ability. Smart cards have had little application in the United States, but are more frequent in Europe. (Violino, 25) Dearth of consumer acceptance has mitigated the prevalence of debit cards and may also decelerate growth in electronic payment ways. The difficulty might partially have been the name "debit card." To set off this, MasterCard is labeling its debit card a "cash card" and Visa calling it "check card. (Lipin, 14) Yet other hurdle is that for many customers there is no gross advantage to debit cards.

There is prevalent news that central banks would be at loss over the monetary totals, and, for still more badly, that digital money would change foreign exchange rates, disengage money supplies, and instigate an overall financial crisis (Tanaka, 51). Like the check of a traveler, a digital balance of money is a floating claim on a private bank or other financial institution that is not associated to any specified amount (White, 4). A balance of digital money on a smart card or computer hard drive is an attire of credit due to the fact that the balance is the responsibility of the user.

An incentive of the institution to issuance of digital money is the free of interest or low interest debit financing that the glaring digital money balance gives. Prevalent application of digital money could influence central banks in such areas as monetary policy, banking supervision, supervision of the payment system, and the equilibrium of the system of finance. The chief concern of central bankers in the current days is the safety of digital money (Bank of International settlements, (BIS, 5). A violation of security counterfeiting of a digital money product that is widely applicable could strongly disrupt the equilibrium of the financial system. Digital money products, designed to be a substitute of the central bank currency, could chiefly be in place of the whole of the stock of central bank currency.

Central bank currency is a constitute in all money totals, henceforth, a change in demand for central bank currency that is in circulation, traveler's checks in the reach of the public, and demand deposits. (Board of Governors (BoG) of the Federal Reserve System, 3) Other monetary totals, such as M2 or M3, could also be influential due to the fact that central bank currency has less consideration in these totals, they would be less influenced. (Board of Governors (BoG) of the Federal Reserve System, 4) The amount of the stock of central bank currency that is in circulation, the amount of request for deposit, and the comparative consideration, i.e., the currency of the central bank to deposit rations are signals of the potential influence of a replacement of central bank currency on the small definition of stock of money, M1.

A variety of measures are existent which able the risks that are present in applying these products to be manipulated. Any how, there is no single security step or variety of steps that can be said to give a guarantee of complete safety. It is the combination of steps altogether with the enthusiasm with which they are carried out and administered that will serve to mitigate risks most prominently. (Security of electric money, 3) The innumerous electronic money products are still at a comparatively primitive phase in their evolution. Donors of products in innumerous pilot projects and early nation wide carrying out pinpoint that the potential existence for saved value cards and their network counterparts to give significant competence advantages by mitigating cash handling expenses and enhance speed and easiness for consumers in forwarding small value payments. It is any how, vague, how spontaneously these regulations in pinpointing risks such as loss, fraud, insolvency, and concerns of privacy more than carrying out all inclusive new steps particularly targeted at electronic money, and government policies on consumer protection and electronic money are still developing as this technology makes a continuance to evolve.

As regards the law enforcement problems, coming forth electronic money systems are currently of the focal point of low value consumer transactions, which may give less fear to law enforcement rulers. It is a primitive stage to pinpoint whether or not over the course of time these products will develop in such a way as to become approximately attractive for money laundering tax evasion, crimes in other finances or more prone to fraud and counterfeiting. Up to date, G-119 countries have overall not witnessed the requirement to evolve against crime laws particularly in direction to the electronic money. Continuance of monitoring, as well as debate and cooperation with enhancers of electronic money, will be needed. (Group of Ten - Electric money - Consumer Protection, law enforcement, supervisory and cross border issues)

Up to the level traditional banks and other regulated financial institutions are playing a chief part in the release of electronic money, existence of vigilant and regulatory approaches are being taken up as needed. So as to accumulate non-traditional releasers, some countries are of the consideration of a more particular vigilant framework particularly for electronic money releasers. Some have a view of the market as giving vehement increments for electronic money releasers to save themselves against operational and risks of finance. Incentives in markets are observed as being applicable in instigating donors to pinpoint consumer saving and law enforcement aspects as well. Existent users can to their level best make careful preferences about the comparative advantages of electric money products if their attributes, costs, and dangers are complacently obvious. Applicable revelations for consumers could be comprehensive of information about important user privileges, appropriate information on the releaser and its indebtedness towards consumers, applicability of any deposit insurance or other assurances and intentions as regards viability of any personal data.. (Bonorris, 44)

The oneness of the financial system of any electronic money releaser would lie chiefly on appropriate liquidity, capital and internal manipulations. Liquidity should be relevant to assure that releasers can come up to demands for funds, investment policies should be relevant to assure the solvency of the electronic money plan, management should make establishment of risk management policies and steps and internal manipulations persistent with saving the financial oneness of the plan. The technical safety steps bear important meaning for the financial and operational adherence of an electronic money plan. (Group of Ten - Electric money - Consumer Protection, law enforcement, supervisory and cross border issues)

Conclusion

These steps should be ascertained in an all inclusive way with the chief goal of saving against cheating or counterfeiting aggressions that could endanger the overall oneness of the electronic money plan. The fabrication of electronic money plans can influence most significantly the dangers of criminal application of and aggression on electronic money. Resultantly, realistic assessment should be in conductance of the prone nature of particular products of these dangers. As and when more experience with electronic money is achieved, governments may have a wish to undertake a semblance of the approach to making a review of the electronic money evolutions in the future if circumstances require.

References

Bank of International settlements, (BIS). Security of Digital Money. Basel, 1996, 1-11… [END OF PREVIEW]

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Electronic Money, and a Description.  (2003, November 25).  Retrieved February 23, 2019, from https://www.essaytown.com/subjects/paper/electronic-money-description/3530933

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"Electronic Money, and a Description."  25 November 2003.  Web.  23 February 2019. <https://www.essaytown.com/subjects/paper/electronic-money-description/3530933>.

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"Electronic Money, and a Description."  Essaytown.com.  November 25, 2003.  Accessed February 23, 2019.
https://www.essaytown.com/subjects/paper/electronic-money-description/3530933.