The Future of Electronic Money ( case 1) Essay Example | Topics and Well Written Essays - 500 words

The Future of Electronic Money ( case 1) - Essay Example There are many viewpoints on whether paper money should be completely eliminated. However, it would seem fair to suggest that paper money will still have a number of uses and it would be impractical to rely completely on electronic forms of money. This is because of the problems that are generally associated with information technology, such as power failures and database overloads, which could cause a break in the system and would therefore necessitate the use of paper money (Khilawala, 2011). It would be foolish to eradicate paper money completely whilst there is still a risk of these things happening. Paper money is also still popular with many. This is for a number of reasons. Firstly, if paper money were to be abolished, the government of that particular country would have to sell assets to ‘soak up the unwanted notes and coins’ (Rogoff, 2002, p2). It would mean a movement from the non-interest holding debt (cash) to interest holding debt (electronic money), which is an unappealing prospect for any government. The public also seem to have an insatiable demand for paper money, with the main reason for this popularity being the anonymity of cash. This is useful for those committing money-based crimes, but also appeals to the innocent as well for a number of different reasons. It has been suggested that when the government is able to identify the holders of cash using DNA techniques, electronic money may then become as popular as paper money (Rogoff, 2002). Conversely, this does mean that electronic money may be more useful for crime-detection. Despite this, there are a number of reasons why paper money is problematic. Governments may print off more paper money in anticipation of certain events as a way of controlling the economy (Jakobsson & Yung, 1996), but if this prediction is wrong then it may cause issues and as a