Electronic cash systems, such as Mondex, seek to re-engineer cash payments. While the use of cash imposes numerous invisible costs on the economy, numerous invisible security and consumer acceptance issues prevent its immediate replacement. After analyzing the economics of the proposed Mondex electronic cash system, including suggesting sources of gain for multiple channel members, we conclude that the major challenges in the global implementation of electronic currency will be establishing the proper incentives for channel members, regulatory barriers, and gaining critical mass of consumer and merchant acceptance rather than difficulties with technology or network security.
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