Definition of e-money

E-money is electronic money which is exchanged electronically over a technical device such as a computer or mobile phone. E-money in circulation operates as a pre-paid bearer instrument. The best known example of e-money is the Bitcoin, which can be bought with real money and traded on an exchange like any other currency.

 

e-money in the news

In June 2013 the FT's Alphaville returned to a growing debate about whether digital e-money should be added to central banks toolkits. Economists have pointed out that it would be a logical step to introduce e-money in a zero or negative rate environment. The ability to convert deposits into banknotes during a period of negative rates represents something of a monetary loophole. If negative rates were introduced, one could consequently expect a marked shift from bank reserves being the primary interface between the central bank and the money supply, to banknotes. The introduction of e-money would encourage the velocity of money and bring back seigniorage revenue to the government.

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