What are the advantages of electronic money compared with traditional money?

What is electronic money? How is it different from traditional currency?

With the improvement of social productivity, the demand and quantity of social commodity exchange are increasing, and the form of money has also developed from shells, precious metals and ordinary metals to banknotes and bills, and then to today's electronic money. The development of information technology with computer technology as the core has caused great changes in people's production and lifestyle, and also promoted the development of currency forms. E-commerce, which is in the ascendant, has developed a variety of electronic payment means and tools, which are called electronic money, and some people call it electronic money, digital cash, digital currency, electronic cash and so on. What people call "electronic money" covers a wide range, such as credit cards, savings cards, debit cards, ic cards, consumer cards, telephone cards, gas cards, electronic checks, electronic wallets, online money, smart cards and so on. , including almost all electronic payment tools and payment methods related to funds.

Electronic money is developed on the basis of traditional money, and has many similarities with traditional money in essence, function and function. For example, the essence of electronic money and traditional money is fixed in universal equivalents as special commodities, which are embodied in certain social production relations. Both of them have five functions: value scale, circulation means, payment means, storage means and world currency. They all reflect the value of commodities, play an intermediary role in commodity exchange and regulate the circulation of commodities.

Compared with traditional money, electronic money has different backgrounds, such as social background, economic conditions and scientific and technological level. Its manifestations are: electronic money uses electronic pulses instead of paper to transmit and display funds, which are processed and stored by microcomputer, without the size, weight and imprint of traditional money; Electronic money can only circulate in the field of transfer, and the circulation speed is much faster than that of traditional money; Traditional money can be used in any field, while electronic money can only be used in the credit card market; Traditional currency is issued by the state and forced to circulate, while electronic currency is issued by banks. Its use can only be propaganda and guidance, not mandatory orders, and it is necessary to use legal tender to reflect and realize the value of goods in order to settle the creditor's rights and debts of commodity producers; Electronic money has a wider and deeper impact on society.

Second, the application of electronic money.

Electronic money relies on computer technology for storage, payment and circulation; Widely used in production, exchange, distribution and consumption fields; Set savings, credit and non-cash settlement in one; At present, the use of electronic money is usually based on bank cards, so it is also called denomination-free money. Due to the above characteristics, electronic money has the characteristics of simple, safe, fast and reliable use, and has many functions: saving function, using electronic money to deposit and withdraw money; Transfer settlement function, direct consumption settlement, not cash transfer; Cash function, when currency is used in different places, currency exchange is performed; Consumer loan function, under certain conditions, first borrow from the bank and use the funds in advance.

Credit card payment is the most commonly used tool in electronic payment. With the development of technology, the card base of credit card has developed from magnetic stripe card to more secure and reliable smart card, which is called electronic credit card, electronic wallet and electronic card. E-wallet can also be said to be an electronic payment tool based on or combined with WWW browser, which can show how much money the user has on his smart card, and can transfer funds between multiple e-wallets with mutual recognition. Some electronic wallets can also carry out wireless data communication, which makes electronic payment more vital.

E-check is another electronic payment tool commonly used in online banking. Changing a traditional check into an electronic message with a digital signature, or replacing all the information of a traditional check with other digital messages, is an electronic check. Electronic check refers to the advantages of paper check transfer payment, and uses digital transfer to transfer money from one account to another. Electronic check payment is the most efficient means of payment, because the transaction cost is low, and banks can also provide standardized fund information for businesses involved in e-commerce.

Besides the electronic credit card and electronic check mentioned above, there are also electronic cash, electronic change, safe change, online money, digital currency and so on. The common characteristics of these payment tools are paperless, electronic and digital cash or currency, which is conducive to transmission, payment and settlement in the network, the use of online banking, and the realization of electronic payment and online payment.

Since 1970s, checks and cash payment methods have gradually given way to bank cards. In this transformation process, the "cash flow" in the payment process has become a "bill flow". With the deepening application of computer network technology in banks, banks have been able to use computer application systems to further transform the above-mentioned "cash flow" and "bill flow" into "data flow" in computers. The transfer and allocation of funds in the bank computer network system is invisible to the human eye and is a modern payment method introduced by the banking industry. This kind of funds, which are stored in computers in the form of electronic data and can be used through computer networks, are more and more widely used in e-commerce.

In e-commerce, banks play a vital role in connecting production enterprises, commercial enterprises and consumers. Whether banks can effectively realize electronic payment has become the key to the success or failure of e-commerce. Take a simple online transaction process as an example. First, the buyer sends a shopping request to the seller. The seller sends the buyer's payment instruction to the seller's acquiring bank through the payment gateway; The acquiring bank obtains the authorization license from the issuing bank through the bank card network and sends the authorization information back to the seller through the payment gateway; After obtaining the authorization, the seller sends the purchase completion information to the buyer. If the payment acquisition and payment authorization cannot be completed at the same time, the seller will also send a payment acquisition request to the acquirer through the payment gateway, and the funds for this transaction have been transferred from the buyer to the seller's account. The final inter-bank settlement is completed between banks through the payment system. From the above transaction process, it is not difficult to find that online transactions can be divided into two parts: the transaction link and the payment and settlement link, in which the payment and settlement link is completed by the financial professional network including the payment gateway, the issuing bank and the issuing bank. So if you leave the bank, you can't complete the payment of online transactions, and you can't talk about real e-commerce.

Citibank is currently developing an electronic money system, which, once completed, will enable consumers and businesses all over the world to pay their accounts through the Internet. 1996 during the Atlanta Olympic games, VISA group issued 300,000 smart cards, which can record the transfer amount and deduct the consumption amount each time. It is a stored-value electronic currency. 1In May 1997, the Bank of Finland also took the lead in the experiment of online payment, setting a precedent in Europe. With the gradual popularization of the Internet, financiers have invested in online financial services, which has also accelerated the arrival of the era of electronic money. In the global plan to promote business automation, merchants and manufacturers are connected through an electronic ordering network, and each store is equipped with a point-of-sale system (〔POS), so consumers can pay various kinds of money with electronic money through the terminal equipment of merchants.

Electronic money is usually transmitted on a private network and processed by POS machines and ATM machines. In recent years, with the development of the Internet, online financial services have been developed worldwide. Online financial services can meet people's needs, including online consumption, online banking, personal finance, online investment transactions, online stock trading and so on. These financial services are characterized by timely electronic payment and settlement through electronic money. At this time, the types and forms of electronic money have further developed. The electronic money system on the Internet includes credit card system, electronic check system and digital cash system.

Third, the main characteristics of the electronic money system

All kinds of electronic money systems are under development, each with its own characteristics, and many aspects are inconclusive. First of all, electronic money products are different in technical realization. In order to store the prepaid value, the card-based system needs special portable computer hardware facilities, usually a plastic card embedded in a microprocessor chip, while the software-based system uses special software installed on a standard PC.

Second, institutional arrangements may change. Obviously, the operation of an electronic money system will include four service providers: the issuer of electronic money value, the network operator, the supplier of special software and hardware, and the liquidator of electronic money business. From a policy point of view, the most important provider is the issuer, because electronic money is the debt responsibility of these institutions' balance sheets. In contrast, network operators and software and hardware suppliers only provide technical services, while clearing institutions are typical banks or professional companies under banks (no different from other non-cash payment services). Obviously, when there are many issuers, but in some cases there is only one issuer, other institutions "buy" the value from the issuers and then "sell" it to consumers.

Third, the value transfer methods of electronic money products are different. Some electronic money systems allow direct electronic money transfer between consumers without involving any third party, such as the issuer of electronic value. More generally, payment is only allowed from the consumer to the merchant, and the merchant must exchange the recorded value in turn.

Fourthly, related to transferability is the degree of transaction records. Although some systems envisage keeping only limited personal transaction records or no records at all, most systems register certain transaction details between consumers and merchants in a central database, and these records can be monitored. If direct transactions between consumers are allowed, these transactions can only be recorded in consumers' own storage facilities, and can only be monitored centrally when consumers are connected with operators of electronic money systems.

Technically, all enterprises can issue electronic cash. If it is not controlled, e-commerce will not develop normally, and even bring quite serious economic and financial problems. The safe use of electronic cash is also an important issue, including the limited use of legal persons and avoiding repeated use. For borderless e-commerce applications, e-cash still has a lot of potential problems in taxation, law, foreign exchange rate, money supply and financial crisis. It is necessary to formulate a strict economic and financial management system to ensure the normal operation of digital currency.

Electronic money is the core of electronic commerce, and it will gradually play an important role in international financial activities. The application of e-commerce in China has just begun, and the establishment of e-money system is the guarantee for the development of e-commerce. As an electronic currency in e-commerce capital flow, it must reach a certain advanced level in terms of security, timeliness, confidentiality, flexibility and internationalization, so as to ensure its reliable application in e-commerce.

The main characteristics of electronic money are also shown in the following five aspects: universality, security, controllability, dependence and high starting point. Universality refers to the unique simplicity in the use and settlement of electronic money: the use and settlement of electronic money are not limited by the amount, object and region, and the use is extremely simple. Security refers to rejecting the risks in the circulation of electronic money. Controllability refers to controlling the flow direction and flow of electronic money within a certain range through necessary management means, thus ensuring the normal circulation of electronic money. Dependence refers to the dependence of electronic money on scientific and technological progress and economic development. A high starting point is a high foundation, that is, a high economic foundation, a high level of science and technology and a high theoretical starting point.

Fourthly, the factors that affect the development of electronic money.

Expanding the use of electronic money depends on its attractiveness to publishers, consumers and enterprises. The potential attraction to the issuer includes the income from various fees charged to consumers and merchants, as well as the investment income without paying the difference. For the bank issuing bank, its advantage is to reduce the handling fee of cash. Meeting the cost of existing and expected systems may be a disadvantage to the development of electronic money. Consumers' demand for electronic money will depend on the fees paid by the electronic money system and other payment methods to issuers (paying interest on the balance of electronic money owned by consumers may potentially offset the impact of fees, although this is technically feasible, but there is no system to announce that they have such a plan), the security and convenience of electronic money, and consumers' demand for electronic money also depends on the willingness of merchants to accept electronic money.

The willingness of merchants to accept electronic money is related to the fees charged by issuing banks or operators, and to the reduction of terminal costs and cash handling costs. As far as the consumers and enterprises involved are concerned, a key factor is their spontaneity in adopting new technologies. Most observers believe that electronic money will be moderately developed and popularized in the short and medium term, but in the long run, it will become universal.

An interesting question is whether there is a special attraction that enables electronic money products to be adopted in countries that rely more on cash as a means of payment. This attraction may appear in some emerging market economies (see table 1). When the efficiency of electronic money products may be greater than that of cash-based economy, if so, assuming that the electronic money system is mainly used for small transactions, it will only have an impact on coins and small banknotes, and will only have a little impact on the total value of cash assets. In addition, although the cost of calculation and communication has dropped rapidly in recent years, in some emerging market economies, the infrastructure required for the operation of non-cash retail payment systems, especially for national systems, may be expensive to set up and operate. The relatively good non-cash retail payment infrastructure developed in some countries can also be used to clear electronic money transactions. In addition, the electronic money system may decide to use the infrastructure provided by the established system operators (such as the International Payment Card Organization).

Verb (abbreviation of verb) Problems brought by the development of electronic money

The possibility that the security of the electronic money system is violated is directly related to the interests of the central bank, because any loss will have to be borne by the issuer and the system operator. Security violations will occur at the consumer level, merchant level or publisher level, and the attempt to violate security will be to steal consumer or merchant equipment; Making false devices or information as acceptable as real information; Modify the stored data or information contained in the transmission process on the device, or modify the software function of the product. Attacking security is most likely to get money, or it may try to paralyze the system.

All retail payment systems are vulnerable to attack to some extent, but measures can be taken to control potential risks. The unique security features of electronic money products can be used to protect electronic money products. A key protection of card-based system is to embed micro-integrated circuit chips into anti-interference cards. The core technology to ensure the security of card-based system and software system is to use encryption technology to verify the facilities and information of electronic money and protect the data on the device from illegal modification. The maximum value and maximum transaction volume that can be maintained in electronic money facilities can play an important role in limiting the losses caused by security loopholes.

Another problem is that security violations can be difficult to detect. The operator of the central system mainly supervises such security violations in the electronic money system on the basis of transactions. This supervision method is very beneficial to the security of electronic money products by maintaining the records of personal facilities or central databases and tracking personal transactions. The extent to which electronic money can be directly transferred between users may also be related to the safety evaluation of electronic money products, because this transaction information is usually incomplete and may be received by the operator of the central system after a long time, which will make it more difficult to find the security violation inspection.

Many characteristics related to the security of electronic money will also affect its attractiveness to money laundering and other criminal activities. Its influence on this intention will depend on the extent to which the balance of electronic money can be transferred without interaction with the system operator, the maximum amount that can be saved in the electronic money facility and the ability to keep records, and the convenience of cross-border transfer of electronic money. If funds from illegal activities can be quickly transferred to countries with weak legal restrictions on money laundering, it will be very attractive for criminals to allow electronic money to make transnational payments through computer networks.

Even without considering the special technical and institutional characteristics of the electronic money system, the various contractual and legal relationships among consumers, retailers, publishers and operators may still be complicated. As for when the payment is final, before the settlement occurs, consumers or businesses bear risks such as credit risk and settlement risk, and each system is different. The question is whether the rights and obligations of all parties concerned are clear and transparent. For example, fraud, forgery, accidents (such as loss or theft), breach of contract by one or more participants, etc. May be caused by liability problems. How to deal with the balance of electronic money that cannot be redeemed by law is a very special problem.

Whether the existing bank management or other management is applicable to electronic money arrangement is a legal issue of general rights and interests. In addition, when electronic money is paid internationally (especially for software systems running through computer networks), it may be difficult to determine to what extent the specific judicial scope of the electronic money system is determined, if it is finally determined. Specific legal issues related to the central bank include whether the electronic money system violates the right of banks to issue coins, which is usually protected by legislation, and whether the central bank can issue electronic money on its own under the current legislative conditions.

All electronic money systems under development basically need inter-agency clearing and settlement arrangements. Many electronic money systems plan to use existing banking protocols. Operators and supervisors of inter-bank clearing and settlement systems need to ensure that such systems have sufficient capabilities in terms of systems and operating agreements, risk management and settlement methods.

The introduction of electronic money may have a potential impact on the total demand for money and the formulation of monetary policy. Electronic money will cause changes in the speed of money circulation. For those countries that aim at the total amount of money, the change of money speed can temporarily reduce the effectiveness of the total amount of money, especially the narrow money. The influence of electronic money on the implementation of monetary policy will depend on whether the demand for bank reserves or the ability of the central bank to provide these reserves constitutes the main influence. The impact on demand may be the substitution of electronic money for deposits, or it may be the sharp reduction of bank demand for settlement balance (interbank settlement mainly occurs in the central bank's books). The value of large-scale inter-bank fund transfer settlement (including the value generated by financial markets) dwarfs the value generated by retail payment. It is believed that widely used substitutes will complicate the procedure for the central bank to determine the interest rate in the money market. However, because it is expected that electronic money will be mainly used to replace cash rather than deposits, it will be very unnecessary to make important adjustments to the operation technology.

The impact on supply may come from the impact of electronic money on the size of the central bank's balance sheet, which will depend on the scope of electronic money replacing cash. As cash is a large or largest debt component of central banks in many countries, as shown in table 1, the extensive development of electronic money may greatly reduce the balance sheet of central banks. The question is, when this reduction may start to have an adverse impact on the implementation of monetary policy. Under normal circumstances, the relatively moderate scale of open market business reminds people that a relatively small balance sheet may be enough. However, under special circumstances, due to the lack of sufficient funds on the balance sheet of the central bank, it may happen that the central bank cannot achieve sufficient reserve absorption operations (for example, to eliminate the impact of large purchases in the foreign exchange market).

Since the circulating bank notes represent the interest-free debt of the central bank, replacing cash with electronic money may lead to a corresponding decrease in the assets of the central bank, and lead to a corresponding decrease in the income of the central bank from coinage, that is, the interest on these assets. Since this income is closely related to the operating costs of central banks, as shown in Table 2, the situation of the G-10 countries may be greatly reduced before they become too small to pay the operating costs of central banks. However, if the scope of electronic money expansion is large enough, the loss of coinage income will become the concern of the central bank, and as a result, it will be more dependent on other sources of income. In addition, even a moderate loss of coinage income will become a concern of some governments, especially those countries with high budget deficits.

Some problems are related to the responsibility of the central bank, such as supervising the payment system. In addition, in those countries where central banks are responsible for banking supervision, they may also need to actively participate in the development of electronic money products, because banks (deposit-taking institutions or credit institutions) may play an important role as issuers of electronic money. Like other payment or financial products, all possible risks must be properly managed. For the central bank, the key issue is the acceptable risk level. This will depend in part on the risk tolerance of each institution. Other considerations include whether the bankruptcy of one participant will threaten the survival of the whole system, or whether the collapse of one system will threaten the survival of other systems or more generally affect the reputation of electronic payment systems. Due to the retail characteristics of the system, the number involved may be small, and the systematic problems of electronic money may be limited.

The introduction of the above-mentioned electronic money will cause problems related to the legal treatment of transnational money laundering and transnational electronic money payment. The fact that the electronic money system may provide more than one kind of electronic money may cause other transnational problems. For example, it may make it more difficult for the central bank to accurately measure the electronic money stock of its own currency. Many electronic money systems are developed on the basis of technologies and procedures developed by foreign companies (such as large international payment card companies). The problem may be how the public authorities get detailed and accurate information about the products and systems provided by suppliers in other countries, and considering their specific domestic business, they may also affect each system.