Surveys on Electronic Money

This paper investigates the views of electronic money operators and innovators on the possibilities and implications of e-money, especially with respect to replacing central bank money as well as technical issues regarding e-money, its implications for the financial industry and central banking. This has been done using surveys of major e-money innovators and operators, based on the assumption that these operators and innovators are likely to shape the future framework for e-money schemes. It seems that innovators and operators are quite confident about the future of e-money – despite problems and obstacles surrounding current testing – and that central banks’ monopoly of the issuance of money as a medium of exchange will no longer be unchallenged.

Introduction: As a financial innovation, electronic money (e-money) has captured the attention of central banks, financial regulators, law enforcement agencies, financial practitioners and academics alike. The US Department of the Treasury (1996) included e-money and electronic payment systems for retail transactions on the list of the ten most important issues for those significantly concerned with financial services. As e-money schemes emerge around the world, central banks are actively publishing articles on e-money issues (BIS, 1996A; 1996B, 1998; ECB, 1998) and trying to enunciate the policy implications. The emergence of e-money has been discussed not only by central bankers but also by financial and non-financial institutions, including law enforcement agents, especially with regard to the implications and possibilities. Some of the specific concerns for public policy authorities are consumer protection, financial system stability, monetary policy and the seigniorage implications of e-money development (eg BIS, 1996B).

Author: Yuksel Gormez, Forrest Capie

Source: Research Discussion Papers, Bank of Finland

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