E-cash and Interest

I had been doing some thinking about E-cash and some of the implications. 
It seems to me that there is another element in the discussion that has 
not gotten very much consideration.
When you have your money in the bank, you are earning interest on the 
money (albeit not very much! <g>) and that money continues to earn 
interest until it is withdrawn. If you write a check to pay for 
something, that ends your interest accumulation for that money. 
With the E-cash systems that I have seen, you generate your own E-cash 
and have it signed by a 'bank' At that moment, it becomes like cash in 
your wallet and you loose interest that this money could be earning.
Has this issue been addressed, or am I missing something?
Regards, 
Tim Philp

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> When you have your money in the bank, you are earning interest on the 
> Has this issue been addressed, or am I missing something?

     You are missing something.

   One can earn interest on money, or gold, or oil, or pork bellies, if
   one -  puts it at risk. Typically by lending it out.

 In our curent FDIC system, there is created  the myth, that bank 
interest is given without concomiitant risk.

The laws of economics are like the laws of physics. They apply, no matter 
what anyone says about anything. There is no free lunch - nor risk-free 
interest.

On Wed, 10 Jan 1996, Tim Philp wrote:

> With the E-cash systems that I have seen, you generate your own E-cash 
> and have it signed by a 'bank' At that moment, it becomes like cash in 
> your wallet and you loose interest that this money could be earning.

>From the standpoint of monetary economics, this is correct.  The (ecash)
bank has the right to use your deposits to give out loans.  When you
withdraw your money (and turn it into either cash or ecash) they (the
bank) no longer have the right to turn your deposits into loans. 
Withdrawn cash/ecash can not earn interest.

This is the problem of (e)cash: if you have it on hand you _must_ forgo
any interest earnings.  Theoretically, the optimum holding of (e)cash is a
function of interest rate (the greater the interest rate, the less cash on
hand), transaction cost of making withdrawals (the easier and more
convenient the withdrawals, the less cash on hand), and the "providence
value" of cash (the more you value instant gratification, the more cash on
hand). 

Thats why ATM machines have caused us to hold less cash.  We can now keep
money in the bank (letting it earn interest and letting the bank create
loans with it) and withdraw from ATM terminals only when we need it.

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