Can Electronic Wallet (E-Wallet) Replace Cash?

Abstract

This paper aims to investigate the viability of Electronic Wallet (E-Wallet) as a substitute for traditional cash across various countries. The central thesis is that E-Wallet can effectively reduce the unnecessary printing of M1 (cash in circulation) while promoting M2 (deposits), offering a more efficient means of obtaining goods and services in the market. We suggest that this monetary transition from cash to E-Wallet could streamline GDP calculations, enhance tax collection, curb money laundering and illicit markets, reduce corruption, regulate the money supply, quantify demand for money, lower interest rates, incentivize sales through discounts, eliminate the need for physical currency production, exert greater control over inflation, facilitate cost-effective transactions, and accelerate the circulation of money within the market. Furthermore, the implementation of E-Wallet could lead to more efficient tax collection, reduced government spending, and a reformed monetary policy that includes better regulation of the money supply, improved quantification of money demand, lower interest rates, incentivized sales through discounts, and enhanced monitoring of exchange rates. A crucial condition for the success of this transition is comprehensive oversight and management of the E-Wallet system by the Central Bank Digital Currency (CBDC). Consequently, we classify E-Wallet and other electronic payments as M5 within the monetary aggregates. Additionally, we conduct simulations to assess the fundamental prerequisites for implementing E-Wallet in three countries representing different regions and stages of development: China (a large economy), Malaysia (a mid-sized economy), and Guatemala (a smaller economy).

Keywords: E-Wallet, E-Money, Monetary Policy, Multidimensional graphical modeling, learning machine, artificial intelligence, coordinate spaces, quantitative mega-data visualization

JEL Classification: Y20, Y2