The New Old Law of Electronic Money

Abstract

A variety of electronic money systems have recently been proposed or implemented in which the initial transaction between the parties would - without any contact to the banking system - result in the instantaneous transfer of bank credit. For example, smart-card systems and various systems that have been proposed for internet payment transactions would operate by loading transferable value onto a device, so that a payment transaction could be completed by a transaction between the parties, without any contact to the banking system. It is generally assumed that there is no present law, statutory or judge-made, that applies directly to such electronic money systems. This article contends, to the contrary, that such electronic systems are essentially identical to the system of circulating bank notes that flourished in the United States in the early nineteenth century. Indeed, in its strongest form, the claim considered in this Article is not simply that the law of circulating bank notes might serve as a source of potential analogies, but that this body of case law already applies to such systems as a matter of ordinary principles of stare decisis.

Keywords: electronic money systems, smart-card systems, Internet payment transactions, circulating bank notes