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The Electronic Money Revolution

Most journalistic accounts of the new forms of electronic money misleadingly spin the story as the emergence of yet another convenience for the technologically pampered. So what if we can pull out a "smart card" rather than carry coins? Big deal. These new forms of money sound like power windows on cars, or remote control for TV sets. Maybe we'd be better off without these gadgets.

But media coverage has failed to look far enough into the future, and to comprehend the full extent of the changes that will be wrought by new forms of electronic money, as people and businesses invent new ways of doing business. Electronic money is not a channel changer: as it develops, it will help transform the world economy.

Two benefits of electronic money stand out, and will likely contribute to its growth. Most important, it will have profound intellectual benefits by creating incentives for the active pursuit of ideas. Second, electronic money will advance globalization , expanding the scope and versatility of the Internet and making it easier for people to interact constructively with others around the world. Taken together, these two benefits will enable millions of minds to work together far more effectively than ever before.

To understand electronic money's potential significance, consider the invention of coins, the first form of true money, in Lydia (now Turkey) in the seventh century BC and, independently, in China. This was an important advance, and thus one that spread quickly.