By: Iang

Iang — Mon, 22 Jun 2009 15:27:35 +0000

I think the notion of retailers issuing electronic money has always been on the table, but more as a threat than a reality. Back in the early 1990s, in the Netherlands, it was an implicit threat of ah, the major retailer, to say that if the banks don’t do a scheme, they will.
For the most part, the European banks believed that all money is their business. They successfully got national laws and directives to keep others out for at least a decade, probably two. As I predicted in my (1996) paper _Critique on the 1994 EU Report on Prepaid Cards_, the European government(s) blocked the industry from digital cash, and nothing happened. For obvious reasons: banks don’t want it, at all, even if they are the only ones who are allowed.
Now the European Union has seen the results of its error, and is trying to roll back things. See recent e-money directive, and earlier payments directive. However, government(s) are still trying to be “prudential” and to force a “single European market.” Neither of these things are appropriate, and the resulting prescriptions will slow down all entrants.
It may be that retailers are big enough to overcome these barriers. But, and to take on the devil’s advocacy, why would retailers choose to enter this difficult, barrier-ridden area when the government(s) are not sending a clear signal of “open for business” ? It’s too risky, if the government(s) change their vague minds to back the banks, then the expensive experiment goes down the tubes.
In my opinion, the European scene is left with crazy underfunded startups and foreign successful entrants (like Paypal, WebMoney, etc). If I was advising a retailer, I’d advise them to buy a successful one, not start their own. Much cheaper, much less risky.

By: Iang

Iang — Mon, 22 Jun 2009 15:04:43 +0000

Calculating money by measuring the face value on issuance is like comparing a sports car and a truck by its mass, it misses the point. Money works, so it is necessary to calculate the sum of transactions, not the face. As in newtonian physics, multiply the velocity by the face.
Unfortunately we don’t have good velocity figures. The numbers I know of are from e-gold, which sustained a velocity of around 5 to 10 days. This is around 5 to 10 times faster than central money which is generally around 40-50 days from memory. e-gold punched far above its weight, in its heyday of 2000.

Comments on: Not a template, but some inspiration

By: Iang

By: Iang