Electronic+Cash

__**IT System: Electronic Cash by Emma and Adam**__

__ Definition of Electronic Cash:  __

Electronic Cash is also known as e-money, electronic money, electronic currency, digital money, digital cash or digital currency.

Where it is used: Electronic Cash involves use of computer networks, the internet and digital stored value systems. Electronic Funds Transfer (EFT) and direct deposit are examples of electronic money. __Direct deposit__: Direct deposit is a banking term used to refer to certain systems used to transfer money.

How it works: Information about Electronic Cash from []

Off-line 'anonymous' electronic money
In the use of off-line electronic money, the merchant does not need to interact with the bank before accepting a coin from the user. Instead he can collect multiple coins //Spent// by users and //Deposit// them later with the bank. In principle this could be done off-line, i.e. the merchant could go to the bank with his storage media to exchange e-cash for cash. Nevertheless the merchant is guaranteed that the user's e-coin will either be accepted by the bank, or the bank will be able to identify and punish the cheating user. In this way a user is prevented from spending the same coin twice (double-spending). Off-line e-cash schemes also need to protect against cheating merchants, i.e. merchants that want to deposit a coin twice (and then blame the user). Using cryptography, anonymous ecash was introduced by David Chaum. He used blind signatures to achieve unlinkability between withdrawal and spend transactions. In cryptography, e-cash usually refers to anonymous e-cash. Depending on the properties of the payment transactions, one distinguishes between on-line and off-line e-cash. The first off-line e-cash system was proposed by Chaum and Naor. Like the first on-line scheme, it is based on RSA blind signatures.
 * Blind signatures: Blind signatures is a form of digital signature in which the content of a message is disguised before it is signed.**

Issues/Problems: Although electronic cash can provide many benefits such as convenience and privacy, increased efficiency of transactions, lower transaction fees, new business opportunities with the expansion of economic activities on the Internet, there are many potential issues with the use of digital cash. The transfer of digital currencies raises local issues such as how to levy taxes or the possible ease of money laundering. There are also potential macroeconomic effects such as exchange rate instabilities and shortage of money supplies (total amount of digital cash versus total amount of real cash available, basically the possibility that digital cash could exceed the real cash available). These issues may only be addressable by some type of cyberspace regulations or laws that regulate the transactions and watch for signs of trouble.

These are some rules on Electronic Money from [] Clear rules on the conditions under which electronic money can be issued need to be established.With respect to monetary policy effectiveness, level playing-field considerations and in order toaddress the regulatory concerns mentioned above, the ECB in particular regards it as essentialthat the following minimum requirements be fulfilled: Issuers of electronic money must be subject to prudential supervision. The rights and obligations on the part of the respective participants (customers, merchants, issuers and operators) in an electronic money scheme must be clearly defined and disclosed. Such rights and obligations must be enforceable under all relevant jurisdictions. Electronic money schemes must maintain adequate technical, organisational and procedural safeguards to prevent, contain and detect threats to the security of the scheme, particularly the threat of counterfeits. **Requirement 4: Protection against criminal abuse** Protection against criminal abuse, such as money laundering, must be taken into account when designing and implementing electronic money schemes. **Requirement 5: Monetary statistics reporting** Electronic money schemes must supply the central bank in each relevant country with whatever information may be required for the purposes of monetary policy. **Requirement 6: Redeemability** Issuers of electronic money must be legally obliged to redeem electronic money against central bank money at par at the request of the holder of the electronic money. The details of this requirement are to be specified. **Requirement 7: Reserve requirements** The possibility must exist for central banks (for the ECB in Stage Three of EMU) to impose reserve requirements on all issuers of electronic money.
 * Requirement 1: Prudential supervision**
 * Requirement 2: Solid and transparent legal arrangements**
 * Requirement 3: Technical security**