From: jimn8@netcom.com (Jim Nitchals)
Date: Thu, 9 Dec 93 14:01:02 PST
To: cypherpunks@toad.com
Subject: Re: new electronic cash card to be tested in UK
In-Reply-To: <1682.9312091318@geography.leeds.ac.uk>
Message-ID: <199312092200.OAA09208@mail.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


Ian Turton writes, in part:
[portions of discussion on money cards deleted]> 
> 
> However, cards could be locked to prevent unauthorised use by tapping in a
> four digit personal code. Once locked, the money could not be spent without
> reentering the code.

When cash is lost, the value of all remaining money in the system
increases, and everyone holding money benefits from reduced inflation.
When a money card (as proposed) is lost, the backing money eventually
returns to use, profiting the bank that issues the cards, unless some
protections are put in place.

These cash cards are a bank's dream come true in other ways: they get
full use of the float on the money backing the cash cards.  For every
day a money card goes unused, the banks can lend and invest the card
holder's money even as it sits in his wallet.

The idea of an S&L investing my money card's backing money in junk
bonds makes me nervous.  I'd like full disclosure on how each bank
issuing cards invests or uses backing money.

This scheme isn't any worse in theory than Traveller's cheques, but if
their goal is to eliminate all actual cash from the marketplace, the
actual amount of money involved would make even American Express blush
with greedy embarrassment.

Without addressing the privacy issue as well as the inflation and
investing issues I've brought up, they'll never be able to achieve
their goal of widespread consumer acceptance.
> 
> 
> Ian Turton - School of Geography, Leeds University
> 	     0532 -333309
> 
>