Electronic money

Phoebe Queen foibey at gmail.com
Mon Dec 1 22:04:50 GMT 2014

I think for that to happen there'd have to be an electronic currency backed
by a sovereign state, and I don't believe such a thing exists.

What does exist are various cryptographic token systems being exchanged as
units of de facto commodity value in lieu of state currency. The exchange
markets for them are naturally quite unstable - there's nothing material
they're reliably exchangeable for in a large enough scale to stabilise
their value (compared with eg USD which is first tied down by the need for
half a billion people to pay their taxes in it, and secondly in the sense
that it's the default global currency for valuing oil and many other goods).

PS: I think there are many sovereign currencies which aren't liabilities on
the issuer, through a variety of other money creation mechanisms.

On 1 Dec 2014 21:41, "Francis Davey" <fjmd1a at gmail.com> wrote:

> Apologies if this seems like a very stupid question (or series of
> questions) but this list struck me as being the best place to ask it.
> I'm doing some writing/teaching about legal aspects of money and payment
> systems on the internet (as a more general part of e-commerce). I'm trying
> to get my head around what systems of "electronic money" there are out
> there. Most of what I read is too sales-oriented for me to tell what is
> actually going on.
> Specifically I am interested in knowing if there are any systems of open
> circulation "electronic money" that don't involve smart cards or similar
> physical tokens.
> By "electronic money" I mean specifically money that is a liability on the
> issuer. I.e. there is an issuer and if you present your "copy" of the
> electronic money the issuer must present (or will present) you with some
> currency issued (say) by a sovereign state.
> By "open circulation", I mean one that allows parties to transfer the
> money between them without reference to the issuer or some other central
> body.
> Mondex was, as I understand it, an example of such a form of open
> circulation electronic money but relied on a physical token to make sure
> there was no double spending (forgive me if I have misunderstood this
> point).
> NB: please no criticism of whether it actually achieved these goals :-).
> Clearly cryptocurrencies openly circulate but they aren't "electronic
> money" (*) because they don't represent a liability on anyone.
> Are there any examples of such things, or are all "electronic money"
> systems essentially reliant on smart cards or references back to an issuer?
> Ultimately I am trying to work out whether there is anything new (from a
> legal perspective).
> (*) There's a directive on "electronic money" and being a liability on the
> issuer is an essential (though not only) part of being electronic money.
> Bitcoin is not "electronic money" in that sense and so doesn't fall within
> all the regulatory rules of the same.
> --
> Francis Davey
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