E-cash and Interest
Once the Ecash Mint and the account (in our case the WorldCurrency Access account - others will be different) are merged, the balance you hold in the Mint may be able to earn interest. Like an individual, the amount of interest offered will involve a cost benefit relationship based on cost of funds, regulation, and operational costs, but there should be no obvious reason not to pay something in most curencies. One note, under US banking regulation, "transaction accounts" fall under different rules than money market accounts, savings accounts, and NOW accounts. Depending on the exact functionality desired, and future regulation changes, there will be more or less incentive and/or legal ability to pay interest. Given the current functionality of Ecash there will be little incentive to hold balances on your hard drive once interest is available. It is just too easy to move the money down when you need it. Today there is no specific cost incentive between the Mint and your hard drive. It does not take a long leap to see that when the account and the Mint are merged, that since the Mint _is_ the account, PC/Internet banking, debit and all other regular banking functionality can become immediately integrated! Frank Trotter ftrotter@marktwain.com Opinions expressed are my own....
On Wed, 10 Jan 1996, Tim Philp wrote:
With the E-cash systems that I have seen, you generate your own E-cash and have it signed by a 'bank' At that moment, it becomes like cash in your wallet and you loose interest that this money could be earning.
From the standpoint of monetary economics, this is correct. The (ecash) bank has the right to use your deposits to give out loans. When you withdraw your money (and turn it into either cash or ecash) they (the bank) no longer have the right to turn your deposits into loans. Withdrawn cash/ecash can not earn interest.
This is the problem of (e)cash: if you have it on hand you _must_ forgo any interest earnings. Theoretically, the optimum holding of (e)cash is a function of interest rate (the greater the interest rate, the less cash on hand), transaction cost of making withdrawals (the easier and more convenient the withdrawals, the less cash on hand), and the "providence value" of cash (the more you value instant gratification, the more cash on hand).
Thats why ATM machines have caused us to hold less cash. We can now keep money in the bank (letting it earn interest and letting the bank create loans with it) and withdraw from ATM terminals only when we need it.
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In one of many possible worlds, Frank O. Trotter, III did say:
One note, under US banking regulation, "transaction accounts" fall under different rules than money market accounts, savings accounts, and NOW accounts. Depending on the exact functionality desired, and future regulation changes, there will be more or less incentive and/or legal ability to pay interest.
Yet more incentive for starting a bank somewhere in the free world...
Given the current functionality of Ecash there will be little incentive to hold balances on your hard drive once interest is available. It is just too easy to move the money down when you need it. Today there is no specific cost incentive between the Mint and your hard drive.
Ecash really would be a lot nicer if it were implemented in a multi-issuer system with even more choices for storing your money, like in an ecash money market account at a non-issuing institution. I can wait. I agree that there's little point in storing ecash on your hard drive past a slush amount for purchases (hopefully the sw will be smart enough to advise people as to how much to keep on hand)...ecash still requires a check with the bank before spending any cash, correct? Ecash on disk doesn't protect against denial-of-service-through-networking attacks then. Keeping ecash at MTB, however, wouldn't be my reason for keeping it at a remote location. Probably.
It does not take a long leap to see that when the account and the Mint are merged, that since the Mint _is_ the account, PC/Internet banking, debit and all other regular banking functionality can become immediately integrated!
If I had to conduct all of my banking in accordance with Mark Twain's fee schedule and legal restrictions, I'd be buying another mattress right now..well, maybe pillowcase. By integrating all of these services under Mark Twain Bank Ecash Mint, I would get all of the advantages of a rather pricey bank, 4-5% loss on all my deposits, minimal privacy protection, no FDIC protection, $2500 initial deposit (not a problem for me, but it does keep many of the people I'd like to send money to out of the system..always a feature), and _tens_ of places to spend my ecash, only 4 or 5 of which that really sell things. -- Ryan Lackey -*- ryan@pobox.com -*- http://www.netaxs.com/people/ryan/ "Calmly and impersonally, she, who would have hesitated to fire at an animal, pulled the trigger and fired straight at the heart of a man who had wanted to exist without the responsibility of consciousness." -- Ayn Rand, _Atlas Shrugged_.
participants (2)
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Frank O. Trotter, III -
Ryan Lackey