From: "Perry E. Metzger" <pmetzger@lehman.com>
Date: Fri, 20 Aug 93 07:16:54 PDT
To: cypherpunks@toad.com
Subject: Re: Traveller's Checks...
In-Reply-To: <9308192136.AA18425@chiba.tadpole.com>
Message-ID: <9308201416.AA03878@snark.lehman.com>
MIME-Version: 1.0
Content-Type: text/plain



Jim Thompson says:
> 
> 
> > 
> > I think that American Express wouldn't be interested in 
> > anonymous cash because the most important "feature" of
> > a traveller's check is the lack of transferability. Once
> > they're bought, only one person can spend them. 
> 
> I doubt that Amex is interested in traveller's checks for this
> reason.  AMEX likes traveller's checks because they make a lot
> of money on the 'float', the time value of the money you give them
> before they have to redeem the checks when some bank presents them
> for payment.

This is not where my masters make theirs most money. Remember, over
the course of a few weeks during which you hold the travelers checks,
the riskless rate of return will bring in an insanely small amount of
money. Currently, even long term rates are at best 6% per annum, and
you can't make that much in the money markets in practice. In fact,
real interest rates, that is rates taking inflation into account, are
near zero right now.

On the other hand, the percentage of face value that you are charged
when you buy the checks makes a couple percent instantly.

The float is just cream -- its not the bread and butter.

Perry

Who works for Lehman Brothers, a division of American Express
but who is not directly affiliated with Travel Related Services, who
issue Travelers Checks and "The Card".