Cybercash: The Coming Era of Electronic Money by Robert Guttmann

By Robert Guttmann

Cybercash refers back to the construction and circulate of on-line funds. Guttman applies fiscal research to this digital funds to appreciate the way it will allow the web to re-establish itself because the dynamic heart of the hot economic system and the way this new funds shape turns into the dominant fee mechanism rivaling money, paper exams or charge cards. this may be the 1st publication to examine the arriving period of digital funds in the broader context of the economic system.

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By the time of Rome’s collapse in 476 AD, metal coins had been so eroded that it took almost a millennium for them to revive and begin penetrating a feudal economy which for centuries had been predominantly based on payments in kind from serf to landlord. When precious metals made a comeback in the Middle Ages, their storage generated deposit receipts which soon began to circulate as a medium of exchange in lieu of the underlying precious metals (‘specie’) they represented. From then on any gold, silver, or bimetallic standard included a considerable amount of paper claims on specie reserves which complemented the rather inelastic supply of these precious metals.

Access to these money-market instruments enabled banks to fund their lending (and money-creation) activity beyond their deposit base controlled by the central bank. 5 The transnational banks operating in the euromarket set up their own payments system, an interbank network for electronic fund transfers known as SWIFT (Society for Worldwide Interbank Financial Telecommunications), to escape the reach of any central bank. SWIFT, which is owned and controlled by the banks using it, is basically a communication network which handles the electronic mail containing the instructions for money transfers and other accountsettlement procedures between banks.

But whenever overextended banks suffered from financial problems, a worried public would rush to redeem their notes before it was too late. Such panic runs, which might sink even relatively healthy banks, would shrink the inflated money supply back to its metallic core in the wake of recessionary adjustments following such banking crises. It was only in the late 17th and early 18th century that the public – first in Holland, then in Britain – began to accept de facto irredeemable notes without panic.

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