|
Finally, the fifth objection states that e-money is not “legal tender”. Obviously, this argument does not shake the fundamental position of e-cash as “money”. The main problem is whether the law considers e-money as money. The US Treasury, the Bank of Canada and Bank of Japan have studied this issue. No conclusions have yet been reached by the US Treasury or the Bank of Canada. The Bank of Japan had, in their report “implications of Central Bank E-money”, indicated that ultimately e-money would be issued by the central bank, reducing the use of commercial banks’ deposits as means of payment. As legal tender, e-money is “cheaper” than paper money, which can improve the efficiency of currency operations and reduce the cost of cash handling. According to a survey conducted by the Asian Bankers Journal, even the cost of handling physical cash in Singapore is the lowest of East Asia and the Pacific Rim, it still cost the economy S$656 million in 1998 to support local currency in circulation, and it is projected to exceed S$1 billion by 2006. E-money will be regarded as legal tender by Singapore in 2008.
IV. Legal basis of electronic money
All of these considerations hereinbefore suggest that it is necessary to determine the legal nature of electronic money. In one word, electronic money systems depend on contractual relationship for legal effect.
A. The parties involved in e-money
Normally, the e-money is issued by an “originator” to participating banks and the banks re-issue it to customers in a smart card or e-cash. Then, the customers may use the e-money to instantaneously transfer money from the cardholder to retailer. The parties involved in this system include the issuer (because it is a private body, so some call it originator), vendor and customer. In practice, the vendor always is a bank, which takes part in issuing the e-money, and pays for e-money by transferring real funds to the issuer. Benjamin Geva & Muharem Kianieff think the parties should be four, issuer and payer, payee and acqurier. I think they just classify the customer into payer and payee, and call the vender as acqurier, because they will acquire the issuer to fulfil the obligations to redeem the money.
B. The relationship among the parties
As stated previously, e-money systems are based on contractual relationship. The liability of the issuer to redeem e-money is a contractual liability. Obviously, there is contractual relationship between the issuer and the participating banks (venders) and the bank and its customer. For participating banks, it is clearly that the issuer has liability to redeem e-money (convert it into real value). However, it is intended that the issuer will also be liable to consumers to whom the digital cash is further transferred. This further transferee may be a person who has themselves purchased e-money from a bank, but equally it could be someone who has been given a card. In this sense, the challenge is to establish a contractual relationship between the holder of e-money and the issuer. A possible solution of the problem is regarding the bank as agent of issuer, since there is an express contract between the bank and its customer. However, it cannot create a contractual link between the issuer and this e-money holder, who has been given a card and has no relationship with bank. Similar problems arise with regard to the relationship between e-money holder and a participating bank that is not the bank which issued the e-money. Nevertheless, it is intended that the e-money holder should be able to go to any participating bank to convert e-money to real value. A number of possible analyses enable this result to be achieved but “the simplest is to regard the originator and participating banks as making, by displaying the relevant logo, a standing offer to redeem digital cash which is accepted by anyone who tenders the digital cash for conversion into real value” .
|
