Identifying the Dynamic Impact: A Regulatory Perspective on Electronic Money

Diversified electronic money products are emerging recently with the rapid growth of e-commerce in China. A hot research topic now is to identify the dynamic impact arising from various uncertainties of e-money evolution, which is essential for an effective regulation. This paper gives e-money a formal definition, and puts it into two categories according to legal tender dependency. Detailed discussion is given about the difference between the two. We recognize the sedimentary money as the key element in the analysis of e-money's impact on economy. A quantitative model is built to calculate the speed of sedimentary accumulation. Then the dynamic impact is analyzed from typical modes dealing with the sedimentary money. Finally the implications for e-money regulation including the IT architecture are presented based on above analysis.