Evidence that the Fed has noticed Internet banking. It looks like they're more concentrating on electronic checks than on digital cash, though; I may be mistaken in that, however. Any of the lawyers on here know much about banking law? -Allen Reuters New Media _ Friday January 26 2:01 PM EST _ Boston Fed Minehan Warns Of "Virtual" Bank Danger NEW YORK - Federal Reserve Bank of Boston President Cathy Minehan is warning against potential risks of "virtual" banking -- or electronic account systems handling electronic money. Minehan stressed that the regulatory community has just begun to consider these issues and that much work needs to be done before it even knows all the questions to ask, let alone what answers to give. "Legislation and regulation of new payments system alternatives could be unwise right now, but that does not mean that participants in such systems should not oversee them or that central banks should not be concerned" Minehan said in an address to the Goldman, Sachs Conference on Risk Reduction in Payments, Clearance and Settlement Systems. "'Smart' card technology is now being used to store electronic 'notes' authorized by the card-holder's bank that can be used to transfer value between banks, consumers and merchants," she said. "These electronic 'notes' flow over the Internet and give authorization for funds to be withdrawn from a bank account and paid to another party electronically," Minehan said. "This can come close to being a new form of currency in that the potential exists for the value on the card to remain in circulation, transferring from card to card, and one endpoint to another, without necessarily being converted to a more traditional form of money," she said. [...] "'In this regard, it is especially intriguing to consider how the 'virtual' bank might be regulated," said Minehan. "Some maintain that virtual banking is just a new form of bank which all the usual rules and regulations apply," she said. Copyright, Reuters Ltd. All rights reserved