Hugo Godschalk, PaySys Consultancy
What people are calling “digital money” today is nothing else but “old” money which can be accessed through digital instruments. The value is not stored on an electronic device (chip, magnetic stripe, pc or elsewhere) but is still registered at a traditional account at a bank or at an other provider. So only the access instruments to the funds are digital, not the money itself. On the other hand, almost all the account based funds should be digital money because the registration of the account information is not written in the books (scriptural money) but stored as bits and bytes.
But there was a real invention in monetary history and evolution. It was the electronic purse, a specific string of information with a monetary value stored in the chip of a card or on the hard disk of a pc, which could be directly transferred from person-to-person without the existence of an account. Developed in the early 90s as revolutionary concepts of a new monetary order which could mean the end of the worldwide central bank monopoly of the old cash. After a period of innovation and euphoria (1990-1995), central banks started to domesticate the digital cash by regulation (1995 – 2000). The forerunners of internet based e-purses, like Mondex and Digicash failed. Only card-based products survived in the market, until now a niche product in European and Asian markets kept under highly surveillance of the monopolists of the “old” money.
The period from 2000 until now could be seen as the period of disappointment, but also of re-egineering. Non-banks like telcos started to issue “new” account-based emoney regulated in Europe as “e-money-institutions”. But real innovations like emoney are still lacking which could be (anonimous) transferable from person to person or new digital “numeraires” (as a new private currency not nominated in state money units like $ or €). Most of the private money issuance (like the “Regio” money in Germany) is still based on traditional money (cash or scriptural money).
The focus of this presentation is the “history” of real digital money, its regulation and its potential for a new run-up.
About the author
Hugo Godschalk, a native Dutchman from Den Haag (1957) has been living and working in Germany for over 30 years. Following his PhD in economics from the University of Münster in 1982, he started his career in the payments industry at the Gesellschaft für Zahlungssysteme (GZS; now part of First Data International), last as head of the business administration. From 1990 on, he worked for 3 years as a senior consultant for Ordina (Germany) GmbH, covering payment and card business related topics. Since 1993 he has been managing director and partner of PaySys Consultancy (Frankfurt), a consultancy specialised in card business (www.paysys.de). Since 2000 he represents the European Payments Consulting Association (EPCA) as director (www.epca.de).
• Expert Member of the Payment Systems Market Group of the European Commission
• Member of the advisory board of the Payment Data Bank Paycomm (www.paycomm.org)
• Member of the committee of experts of the national network of Regiogeld initiatives in Germany
After 5 years (1979 – 1984) of scientific research and teaching at the Institute for money and currency at University of Münster with main topics in the area of payment innovations and electronic money his academic focus is still at monetary innovation and reforms as well as monetary history of private money during the Great Depression. The results were published in various books and articles and presented at national and international conferences.
Contact information: Dr. Hugo Godschalk; PaySys Consultancy GmbH; Im Uhrig 7 60433 Frankfurt; Tel: germany – 69 – 951177 0; Telefax: germany – 69 – 521090; Email: hgodschalk [at] paysys.de