>From: "Joubin Houshyar" <joubin_444@...>
>>
>There is an interesting dialogue taking place in the JXTA security
>discuss list [1] which is related to the issues here.
>
>The gentleman who started the thread [1] began by rightly questioning
>the misleading payment project overview [3], which is a project to
>implement electronic money transfers in JXTA. I will not repeat the
>whole thread here - you should read it yourself - but the gist of it
>is that the system being implemented [4] is neither "anonymous", nor
>is it the "first" such system.
>>
>
Electronic cash – ie the anonymous electronic equivalent of paper money –
poses a significant, if long-term, threat to governments globally through
the leakage of tax revenue “offshore”. In addition, the growth of
proprietary currencies such as Beenz means that Central Banks are in danger
of losing control of the money supply, with possible inflationary
consequences.

Only by direct issue of electronic money – which, as Robin Bloor pointed
out, “knows who owns it” – can governments avoid such leakage. And it
appears inescapable logic that a “Value Transfer Tax” applied at the point
of payment would render all existing taxation systems obsolete.

So everyone, provided that they identify themselves, will be free to open
virtual basic payment accounts at the Bank of England ( for “e-sterling”)
and at the Federal Reserve Bank (for “e-dollars”).

Such an initiative is already taking place for “socially excluded”
individuals in the context of the UK Post Office “Universal Bank”, but being
based upon legacy systems, will be obsolete the day it starts.

For corporates there is an interesting recent example in the UK in the
experience of Huntingdon Life Sciences who were obliged by the pusillanimity
of the UK Clearing Banks to open, courtesy of the DTI, an account at the
Bank of England.

There is no reason why this facility should not be extended to all
corporates, a step which would have the added benefit that it would ease the
particular (to the UK) complex monopoly identified in respect of Banks
relationships with small businesses.

It is difficult to avoid the conclusion that the payment/exchange of value
function is a utility, and that for the strong competitive reasons outlined
in several UK reviews, notably that by Don Cruickshank, it should cease to
be a monopoly of the Clearing Banks.

The BOE will effectively be the virtual “market hub” of the e-sterling
market and its associated market network - land-based for corporates which
are static and mobile for individuals who are not – will be maintained by a
consortium Market Service Provider ("MSP") – Sterling Market Services.

The Sterling Market 3.0 sketched out here would be funded, like the new
capital market infrastructure described above, by those who would benefit
most from it, to wit the community of corporates.

e-money does not pay interest. We will have the option, however, of lending
our e-money for a defined period to Banks or other financial service
providers, who will pay us a rate of interest in return.

On the basis of these e-deposits the Banks will issue and lend e-money to
borrowers within the parameters laid down by the Central Bank or Monetary
Authority, as the case may be. Non-Banks would also be able to lend money,
but the difference here is that Non-Banks would be obliged to demonstrate
asset backing for such lending.

Not only does e-sterling know who owns it. It also knows who owned it last.
In regulatory terms the audit trail made possible by electronic money
would be one of the most powerful and far-reaching developments in the
history of financial services.

In addition, the previous owner or issuer of e-money, whether individual,
corporate or even, in the case of benefits, Government, would be able to set
constraints on it at the e-sterling Title Registry, rather like the
existence of mortgages and covenants at the Land Title Registry.

So if the bank lends you e-sterling to buy a car, then only a payment
against a transfer of title at the Car Title Registry (DVLC to you and me)
will be permissible.

And all kinds of (to borrow Robin Bloor’s phrase) “Designer” Money become
possible, depending upon the constraints imposed by the issuer. Student
money; pocket money; benefit money; e-incentives such as Beenz or Air Miles
and so on, all recorded at the e-sterling title registry.

The proposition is a simple, but powerful one. Electronic banking for all
via the Central Bank.

For as Willie Sutton, the US bank robber famously said; “That’s where the
money is”.

So while Banks or anyone else will be in a position to issue e-Money it has
to be on the basis of Government sponsored infrastructure.

As I previously posted, payment requires identity. IMO only Governments
(not Microsoft) should issue Passports. And they should outsource the
operation of the necessary ID Registry/Authentication servers.





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