Virtual money - Elinor Harris Solomon

The amount of "virtual money" circling the globe each day is huge: the Federal Reserve's Fedwire and the New York-based CHIPS alone send out well over $2 trillion in virtual money daily. Retail systems such as credit and debit cards deliver several hundred billion more, meaning the combined dollar flow in just one day equals over one third of the USA's gross domestic product for an entire year. Trillions of dollars of ethereal money soar around the globe, on a narrow "real" money base, and with the growth of the Internet, these vast numbers are expected to grow.;This volume provides an introduction to electronic monies, describing how each system works. Starting with gold and paper money, the author examines the growth of the credit card from the mid-1960s, when it was a status symbol for the wealthy, to its present near-universal use throughout America, and discusses the evolution of e-monies, such as "smart cards", e-cash, electronic wallets and cybermoney, and the prospect of electronic benefits transfers (EBT), which may replace food stamps by 1999.;The text discusses the advantages and disadvantages of electronic money, looking at the benefits for consumers, investors and corporations as goods and services competing in world markets can be purchased instantly from anywhere across the globe. The hazards are also explored: the size of virtual money movements creates an enormous float which exceeds the amount of monetary reserves to back it up at any given moment and digital glitches can cause chaos, as in 1995 when a snafu which delayed the opening of Wall Street's Big Board by just one hour caused the Nasdaq Composite to fall 27 points. Other risks include fraud, piracy and invasion of privacy, as well as possible threats to national security. The author also explores the world of international money-laundering - a 300 billion-dollar-a-year business - showing how vast electronic wire transfers help conceal illegal activities.