Should We Get Rid of Paper Money and Starting Using E-money

Digital currency, also called E-money, is the new idea to be implemented as a substitution for physical money, also called E-money. This idea of innovation is already officially regulated since December 2012 as a payment method and is also used for making payment transactions. This type of digital currency can be held on devices, cards or a server. For this essay I would analyze should we get rid of paper money, and what the advantages and disadvantages of using E-money and physical money and how is this more of the advantage rather than a disadvantage for the economic. For instance, we can purchase stocks, transfer funds, and offer a variety of other services without the need to handle physical cash or checks if banks are providing such services online. One of the significant effect or advantage is that we do not have to queue in lines to make transactions; thus, saving our time and consumers will have greater privacy when shopping on the Internet.

The constant improvement of computer technology such as it is in the area of telecommunications has allowed virtual electronic money to have constant growth since its appearance at the end of the twentieth century, and it turned to become tools for the daily use of the general public. Since the beginning of the appearance of the E-money, there was the distrust and fear of users, because of the ignorance or of the lack of knowledge in the technological field and also the lack of seeing physical evidence to which they are accustomed see as paper money or the physical currency. In the world, using electronic money as a means of payment has become as common as the use of physical currency around the world.

E-money is a currency system, as well as the euro in Europe and the dollar in the United States. The E-money can be a simple new currency in denomination or simply different by its electronic annotation form. The origin of its name is based on the fact that it allows interconnected systems through automated transactions and without the use of paper or metal, it accelerates the transaction dynamics and liquidity pressure is removed from the tangible currency.

Concepts of E-money and physical money. What is money? Money is the current currency that has legal value. Therefore, is used as a means of payment for economic exchanges. It is mainly composed of coins and bills, although, in recent decades, checks, cards and electronic money have also been integrated into this concept. Nowadays, for a good to be considered as money, it must respond to three fundamental criteria:

• Serve as a means of exchange for commercial transactions.
• Function as a unit of account, that can be used for pricing in an economy.
• Store of value, which means that money can keep its commercial value for the future, without suffering depreciation.

However, for money to have a value, it must be officially endorsed by the issuing entity. Nowadays it is the governments that through laws, establish what is the money of legal tender in each country.

On the other hand, there are institutions, such as the central banks, which are in charge of regulating and controlling monetary policy and the creation of banknotes and coins according to their demand and need. The money was created in the past in order to avoid the inefficiencies and inaccuracies of the barter system in the economy. The word, as such, comes from the Latin denarĭus, which was the name of an ancient coin of the Roman Empire. The name is composed of the termsdeni, which means 'every ten', and the word decem, which translates 'ten', since originally a denarius was equal to ten aces.

Mobile banking and E-money: what’s the difference? The two are different from each other, but either by the dynamics of the transaction: system, coordination or form of payment tend to be confused; I therefore is considerable to reviewed the three themes relevant to clarify. Mobile banking is a mean by which a bank tries to reach its users more dynamically in the offer of its services. For example, baks offers this service because Mobile Banking allows users to access many services; such as checking balances of their financial products, paying credit cards, paying for public services or cell phones; All societies would like to stop doing cues at banks and make their transactions faster, safer and more agile. These, among other dreams of societies, have become reality thanks to technology and services such as Mobile Banking, a channel enabled to make life easier for Consumers.  in addition, it generates the opportunity to collect services demanded by this route.

To simplify, the cell phone or mobile would be the modern version of access to banking if you consider the evolution line that starts from the Bank Agency to the ATM, Online Banking and even the Non-Bank Correspondent (a third party acting as a representative of the Bank). All of them, in each of their forms, along with the mobile banking, are simple channels to access the client and offer the services of the bank to the extent that each of the financial institutions design it for, offering differentiated services in prices, in the form of commission.

Other other hand, physical money or cash is denominated to what is presented in the form of coins or bills (paper money) for the realization of payments and economic transactions. 

Advantages and Disadvantages of Using E-Money

Below are the advantages and disadvantages of using the electronic system for money:

• Prevention: The use of an electronic system for commercial transactions provides the possibility for control entities to monitor the existing funds for these, which can be considered a disadvantage, since there are some transactions that require confidentiality, but an advantage from the point of view of prevention of crimes related to money laundering.
• Reliability: Using electronic channels reduces the illicit activities linked to the use of cash, in addition to serving as a tool to prevent misdemeanors such as theft, since the cash is the article of change to obtain different stolen items. However, there could be an increase in the theft of cell phones, since it will be the main article for electronic money transactions, as well as the possibility of computer crimes.
• Segregation: The use of the cell phone is the only requirement to use the electronic money system, so despite being an inclusive means of payment, ignorance in the use of the device would result in a situation of marginalization for these sectors, but because USA has a high index of its population that handles this type of devices, this system would become a means for the inclusion of those people who do not have access to the financial system in a traditional way.
• Unnecessary consumption: This can be classified as one of the most considerable disadvantages of using an electronic money system in countries classified as consumerist, since using cash requires its withdrawal from banking entities, so if you do not have this , the purchasing power decreases; however, having the possibility of using all the available capital in an account, the item could be increased by superfluous expenses
• Government control: It is a factor that has great importance for the citizenship and for the State, for what it is necessary that the government handle with responsibility the existent funds, setting aside this responsibility to the private bank; In the long term, this will provide the state with an important power of control, which could be positive or negative depending on the political situation that the country goes through at different times.
• System faults: Because it is a computer system, they could be presented different failures within the computer part or if the electronic device were to be damaged, then the citizen would be unable to carry out a commercial transaction, a situation that would cause great inconveniences for the users of the system.

Advantages and Disadvantages of Using Physical Cash

This is a subject that is everything related to personal finance, each person should apply what is treated according to their preferences and their profiles. Having cash with us makes us feel relatively powerful, cash is an extremely liquid financial instrument, we can exchange it for a lot of things with amazing comfort. On the other hand,it can be dangerous and more for those people who live in dangerous cities. But it is also dangerous for our personal finances, if our partners go to a mall with a large amount of cash in our wallets. what to do, Do we spend it all? Do we pay with credit cards? Do we pay with a debit card? A mix of these options? Here are some advantages and disadvantages of using cash:

• Protection against identity theft: By using cash to pay our expenses, we greatly reduce the risk of having our credit or debit card cloned.
• Lower propensity to spend: If we have a relatively low amount of cash with us, and we discard the idea of ​​using the credit card, that will force us to limit our spending and it is an excellent way to adopt habits to achieve a more savings for the furutes needs. In other words, a life with unnecessary expenses brought to a minimum. This does not apply if we go shopping with large amounts of cash.
• It prevents us from falling into a spiral of debt: Used wisely, cash leads us to spend money that we actually have. We must remember that when using credit cards to pay for our things, we may be spending money that we do not really have.
• Cash may be subject to theft or loss: As the probability of cloning the cards decreases, when we carry cash it can be stolen or it can simply be lost.
• It is more difficult to track expenses: By using the different cards to make our payments, these are reflected at the end of the month in our account statements. The use of cash makes this tracking a bit more difficult, and requires an extra effort from us to be able to know precisely what we spend our money on.
• Prevent you from creating a credit history: If all your expenses are made in cash, you may not be able to create a credit history, either with the use of credit cards or loans associated with these cards. Most people are not supporter of the use of credit to buy consumer goods, but that history can be used to obtain a commercial credit to start or expand an enterprise.

These are just some advantages and disadvantages of using cash. The advice is that each one analyze their profiles and preferences so that they use the cash in the most appropriate way. An interesting option is the use of the debit card, that merges the best of both worlds, cash and plastic money. In fact, I think we should encourage and get used to the use of this type of system, as many governments are considering to have economies in which the use of cash is very low for example mosthly the scandinavas countries.

Conclucion

In conclusion we must make a reference to what we are having in the Information society where a new scenario takes place, in which a series of agents and subjects are interrelated within the framework of what we can call electronic commerce; which force people to use electronic devises in order to make a purchases for a certain good or service. Nowdays, because of the increase of the artificial intelege people are more likely to use electronic money rather than physical money, because is more accommodated to their needs . That within the framework of this new electronic commerce, new interests arise that must be protected by the law, especially in relation to the fundamentals problems that this new way of relating to the legal world. These problems are none other than the security, the trust and the degree of responsibility in which its agents intervene.

Secondly E-money is an electronic means of payment to which we can transfer and apply the differentiating notes of traditional money. Thus, it is one form of money, which meets the three conditions of store of value, Serve as a means and Function as a unit of account.

Therefore, one final conclusion is that ''lectronic money', since it is an instrument dedicated to consumption, should be protected by a series of rights to guarantee a series of obligations and minimum transparency requirements, which on the other hand will mean an increase in confidence of the economic agents that intervene in this new scenario, thus promoting the growth of a strong and solid economy.