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section heading icon     overview

This guide considers currencies and payment in the digital environment.

It covers -

Issues looks at the big picture: the core functions of any money system and concerns about operation in a digital environment. It highlights reports from the OECD, Bank of International Settlements, Australian and overseas central banks, and other bodies. It also identifies government agencies, Australian web bankers, academic centres generating significant studies of electronic money and its use

Frameworks considers Australian and other legislation, reports and industry studies about online payments, contracts and other matters

Retail highlights work on the implications for savings and retail lending institutions

Wholesale considers corporate banking

Credit Cards explores the credit card industry in Australian and overseas

Intermediaries considers the evolution of intermediaries such as Paypal

Smart cards looks at smart cards, online payment systems and regulatory challenges

Nanopay looks at 'micropayment' schemes, considered by some to be a basis of future 'for-profit' online publishing 

e-Currency considers digital private currency schemes such as Beenz, Flooz and e-Gold

Terms - some e-banking and e-payment jargon

Landmarks - banking, currency and payment landmarks

subsection heading icon     orientation

Money is a key aspect of digital commerce. This guide looks at e-money and electronic payment issues, frameworks and technologies. It considers the shape of payment - whether wholly online, via mobile phones or through mechanisms such as smart cards - for goods and services. It notes debate about virtual currencies. And it highlights discussion about banking and information handling in the digital environment.

Speakers at a 2001 OECD Future of Money conference agreed that "money's destiny is to become digital", continuing the long trend towards greater abstraction and ease of handling (eg digits in your bank's paper ledger or computer rather than its store of gold, cows or cowrie shells). There was less agreement about the pace of change, technological mechanisms, standards, regulatory questions and other issues.

An introduction to money is provided in The Origins of Value (Oxford: Oxford Uni Press 2005) edited by William Goetzman & Geert Rouwenhorst. For literary and other perspectives see The Social Meaning of Money (Princeton: Princeton Uni Press 1997) by Viviana Zelizer, Financial Statecraft (New Haven: Yale Uni Press 2006) by Robert Litan & Benn Steil or the more diffuse Money, Language & Thought (Baltimore: Johns Hopkins Uni Press 1993) and Art & Money (Chicago: Uni of Chicago Press 1995) by Marc Shell.

Among basic introductions to existing and proposed electronic money systems - from interbank electronic transactions and EFTPOS through to digital cash - we recommend Elinor Solomon's Virtual Money: Understanding The Power & Risks Of Money's High-speed Journey Into Electronic Space (New York: Oxford Uni Press 1997) and papers from the 2001 OECD The Future of Money conference (PDF abstract). A perspective is provided by Benjamin Cohen’s lucid The Future of Money (Princeton: Princeton Uni Press 2003).

Electronic Money Flows: The Molding of a New Financial Order
(Norwell: Kluwer 1991) edited by Elinor Solomon and Payment Systems in Global Perspective (London: Routledge 1999) is a more academic collection of essays edited by Maxwell Fry, Isaack Kilato & Sandra Roger.

Trust & Risk In Internet Commerce
(Cambridge: MIT Press 2000) by L Jean Camp is more rigorous: we found it of particular value in complementing Bruce Schneier's excellent Secrets & Lies: Digital Security In A Networked World (New York: Wiley 2000) and the 2001 Payment-Culture Matters - A comparative EU-US perspective on Internet payments study (PDF) by Knud Böhle & Malte Krueger for the EU ePayment Systems Observatory.

The Bank of International Settlements has released a detailed survey of electronic money developments. Because such systems are generally being designed to operate internationally and in multiple currencies, it will be difficult to determine the applicability of jurisdictional authority. 

The BIS argues that as a result, "the apparent and immediate erosion of international financial borders ... mandates enhanced cooperation and efforts among international entities to ensure that there are consistent policies and standards", since if one country has "extensive laws and regulations and another has none the illicit money will merely move to the weakest link".  

Such issues were explored in Henry Perritt's paper on Jurisdiction & the Internet, in the collection Borders In Cyberspace (Cambridge: MIT Press 1997) edited by Brian Kahin & Charles Nesson and in the landmark Global Business Regulation (Cambridge: Cambridge Uni Press 2000) by John Braithwaite & Peter Drahos. 

Locally there's a snappy review in Andrea Beatty & Andrew Smith's 1997 paper on Legal aspects of Internet banking & digital cash.

An overview of electronic money Consumer Protection, Law Enforcement, Supervisory & Cross Border Issues is provided in the Group of Ten paper. Background is provided by Dennis Richardson's Electric Money: Evolution of an Electronic Funds Transfer System (Cambridge: MIT Press 1970)

Other G10 and BIS papers include those on: 

the Security of Electronic Money

the Implications for Central Banks of Electronic Money

Risk Management for Electronic Banking

the 1989 Risks in Computer & Telecommunications Systems

Among global initiatives the Joint Electronic Payment Initiative (JEPI) is a project involving the World Wide Web Consortium, CommerceNet and individual industry partners in exploring interoperability and user aspects of online shopping, in particular protocols to accommodate different payment systems such as credit cards, debit cards, electronic cheques and electronic cash. 

Contributors to The Future of the Electronic Marketplace (Cambridge: MIT Press 1998), edited by Derek Leebaert, explore business-to-business connectivity, the revolution in finance, payment systems, regulatory issues, retailing and communications infrastructure developments.  

Global Economic Commerce: Theory & Case Studies (Cambridge: MIT Press 1999) by J Christopher Westland & Theodore Clark is an excellent introduction to the economy as a whole and to specific areas such as electronic auctions and digital shopfronts. It's refreshingly free of hype and the case studies are pertinent.  

We've noted Dan Schiller's provocative Digital Capitalism: Networking the Global Market System (Cambridge: MIT Press 1999) in writings about the future of the web.

Guides elsewhere on this site deal with particular issues -

the Taxation guide provides pointers to taxation of online purchases, suggestions for a 'byte tax' and other matters.  

the e-Capital guide deals with venture capital, inves
tment angels, banking and government innovation funding.

questions of privacy and anonymity are considered in the Privacy guide.

the Governance guide considers jurisdictions and national/international regulatory frameworks affecting money, crime and currency flows.

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version of February 2006
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