German Federal Bank opposes e-cash

[What follows is my translation of a Reuters news item as seen on a
mailing list.]

"Risks with computer money"

Frankfurt - the Federal Bank has once more warned against security risks
with computer money. There is the danger that "Cyber-Money" stored in
computers be counterfeited, said Directory Board member Edgar Meister
at a conference in Schwaebisch-Hall. In addition there were the danger
of money laundry, because the computer money could be wired across
borders without problems. Meister announced that, if necessary, the EU
Central Banks would take counter-measures, should computer money and
re-loadable payment cards endanger the monetary policy. (rtr/18.6.96)

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In article <m0uWKRm-0000B2C@ulf.mali.sub.org>, Ulf Moeller <um@c2.org> wrote:
>[What follows is my translation of a Reuters news item as seen on a
>mailing list.]
>
>"Risks with computer money"
>
>Frankfurt - the Federal Bank has once more warned against security risks
>with computer money. There is the danger that "Cyber-Money" stored in
>computers be counterfeited, said Directory Board member Edgar Meister
>at a conference in Schwaebisch-Hall. In addition there were the danger
>of money laundry, because the computer money could be wired across
>borders without problems. Meister announced that, if necessary, the EU
>Central Banks would take counter-measures, should computer money and
>re-loadable payment cards endanger the monetary policy. (rtr/18.6.96)

That's very interesting, especially considering Deutsche Bank has signed
on to be an ecash mint (http://www.digicash.com/publish/ec_pres5.html)...

I don't get this worry about counterfeiting.  It would seem to be harder to
counterfeit ecash than paper cash (though, admittedly, it would be harder to
track, but it would almost certainly have to be an "inside job").  Maybe
the journalists are just misinformed, or possibly the banking people?

   - Ian

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Ian Goldberg writes:
> I don't get this worry about counterfeiting.  It would seem to be harder to
> counterfeit ecash than paper cash (though, admittedly, it would be harder to
> track, but it would almost certainly have to be an "inside job").  Maybe
> the journalists are just misinformed, or possibly the banking people?

I think that the fear is that counterfeit E-Cash is much easier to
pass and much more "perfect", though I think that with proper controls
the system is indeed more secure than paper currency.

.pm

At 10:19 -0700 19.6.96, Ian Goldberg wrote:

> Maybe the journalists are just misinformed, or possibly the banking
> people?

When I met with the head of payment systems for the German federal bank
late last year, he seemed pretty with it and knowledgable about the
relevant issues.

> That's very interesting, especially considering Deutsche Bank has signed
> on to be an ecash mint

At the risk of providing redundant information, the Deutsche Bank is a
commercial bank that has nothing to do with the Deutsche Bundesbank,
which is the central bank.

Personally, I don't think too much should be read into the
announcement. It contains no fundamentally new information and is
simply a public articulation of on otherwise obvious state of affairs.
(Or did anyone really think that the central banks weren't paying close
attention to these goings on?)

Stephan

________________________________________________________________________
Stephan Somogyi                Mr Gyroscope                Digital Media