As we know, the invasion of mobile and online services to handle money and values is now a reality. e-Values come in many different shapes and forms.

How will this affect future governance by governments?

“What can governments govern if there are
less coin and bills, or none, in circulation?”

This White Paper defines the word “e-Value” and develops this concept in order to assist e-entrepreneurs, governments, lawmakers and regulators to set common standards, thus enabling a better way to create guidelines on how to handle the new generation of future values. It will also explain why it’s counterproductive to use money in its current form.

‘e-Money’ has become the catchall word for any money ‘stored’ and used with an electronic device, smart-chip cards, electronic tokens, vouchers, scratch-cards, or mobile phones. Digital Money has become the term for newly invented ‘digital’ currencies, excluding conventional currencies.

Early on, we could define things by how they are used. But today, all barriers between different technical domains are merging into a more complex world which offers a whole new range of problems and opportunities.

There would likely be more complex fiscal rules, but, in the end, a comprehensive definition and a balanced solution would lead to a simpler world, empowering the e-Society.

There are already many examples of ‘values’ which are not e-Money, not Digital Money, and not conventional money. By defining e-Values, everyone can easily grasp where different concepts belong, and how common rules and terms could help the new e-Society.

VALUES

Crusial & Critical

This White Paper will elaborate on crucial and critical issues, which will, or have already become, the next ‘nightmare’ for tax authorities and where governments make decisions blindfolded in modern e-Societies due to lack of transparency.

Government 'Blindfolded'

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Lars Olof Kanngard

Lars Olof Kanngard (Sweden) has been a spearheading innovator, entrepreneur and a true free-thinker, born to see solutions, with focus within IT and Telecom since 1974, and has lived on more than 5 continents, building and exploring businesses.

He invented his first transaction-based innovation in 1979, when he solved the problem on how to trace pirated video films to where each movie rental was recorded.

In 1983, co-inventor Mats Engstrom (Sweden) joined forces and, from that day on, they have worked as a team to develop a number of solutions which later became industry standards.

In 1998, Lars Olof Kanngard presented to the first e-Government Conference in Dubai, UAE, the concept of creating a d-dollar, as a digital currency concept, which later became the e-dirham.

The d-dollar was meant to be a global digital currency, while the e-dirham became a tool for paying fees only to the local government.

At that same time, Mr. Kanngard also proposed the concept of establishing a WORLD NON-BANK as an institution for governing and exchanging both digital money values, as well as e-Values and e-Money, which later developed into a modern concept in which Governments can operate an autonomous open-source based solution as a ViA National e-Value Hub or, as we also have come to call it, the Digital Central Bank™

Bernard Lietaer

The ViA team learned more about complementary currencies when an advantageous relationship was formed with Professor Bernard Lietaer, who has, on an academic level, been very entrepreneurial in promoting monetary innovations. He is the author and co-author of several books on this subject, and more than 20 articles in peer-reviewed journals.

The books include: The Future of Money (1999); Creating Wealth: Growing Local Economies with Local Currencies (2011); People Money: The Promise of Regional Currencies (2012); and Money and Sustainability (2012).

He is an internationally recognized expert in the design and implementation of currency systems. He has studied and worked in the field of money for more than 30 years in an unusually broad range of capacities, such as Central Banker, Fund Manager, University Professor, and a consultant to governments in numerous countries, multinational corporations, and community organizations.

While at the Belgian Central Bank, he co-designed and implemented the convergence mechanism of the single European currency system (the ECU), and served as president of the Electronic Payment System. He co-founded and managed GaiaCorp, a top performing currency fund whose profits funded environmental projects.

He is also a member of the Club of Rome EU Chapter, a Fellow of the World Academy of Arts and Sciences, the World Business Academy, and the European Academy of Sciences and Arts. More information about him is available at

1998 The d -dollar concept was invented.

If you thought that the $ sign was created for the dollar you would be mistaken. The $ sign was created and based on 'Spanish Dollar back in 1770. So why not create the d -dollar?

The d -dollar? concept was created back in1998 by the Author Lars Olof Kanngard with the vision of making a global digital currency, which now has started to take the shape of a digidal currency backed with gold.

If you are interested to read more about the d -dollar? and the history you will find it all on www.d-dollar.ae or www.d-dollar.info

1998 The eValue Theory was created by Lars Olof Kanngard.

When the author was examen how we have handled values for close to 2,000 years and he realized that few things have happened or being defined for what he did see, already then, for a future society going towards a cashless society, he then developed the eValue Theory.

'Value'

Value is defined as anything that can be used to barter, trade or exchange for something else.

'e-Value' (Electronic Value)

e-Value is any electronic record of value that belongs to the user, therefore enabling him or her to barter, trade or exchange for something else.

‘e-Money’ (Electronic Money)

‘e-Money’ (Electronic Money) Electronic money (e-money) is broadly defined as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument, which does not necessarily involve bank accounts in transactions.

e-Money products can be hardware-based or software-based, depending on the technology used to store the monetary value.

Definiion of e-Money by: e-Money definition by European central Bank

'Digital Money'

'Digital Money' Any means of payment that exists purely in electronic form. Digital money is not tangible like a dollar bill or a coin. It is accounted for and transferred using computers. Digital money is exchanged using technologies such as smartphones, credit cards and the internet.

It can be turned into physical money by, for example, withdrawing cash at an ATM.

Definiion of Dgital Money by: Digital Money Definition | Investopedi

'e-Scrip' - Electronic Scrip

'e-Scrip' - Electronic Scrip In contrast with e-Value, we will define as e-Scrip any electronic record of value that is owned by the provider or the issuer, and that allows the user to barter, trade or exchange for something else.

The easiest way to distinguish between e-Value and e-Scrip is to check what happens when and if the issuer goes bankrupt.

If the value of the record vanishes with the bankruptcy of the issuer, we are dealing with e-Scrip. If the issuer has protected the user against such a loss through some form of custodial function, we are dealing with e-Value.

In this White Paper any e-Value example may also be an e-Scrip, depending on the way the value has been secured.

An e-Value is, therefore, any electronic record that expresses a value, which can be kept (stored) and used at any time. The e-Value can be used in trade or barter for either another e-Value (or e-Scrip) of any type or exchanged into Digital Money, e-Money or exchanged to traditional Cash (Conventional Currencies), tokens, coupons, etc. and, if backed with Government custodian protection (eg. Tenancy Deposit Protection in the UK, Deposit Guarantee and Investor Compensation Act in Germany), otherwise, it is an e-Scrip.

e-Value can be anything from a prepaid subscription or service, registered handout (record/transaction) of a kilogram of rice, a blanket, time-units or a value of any type of complementary currency which previously may have taken the form of physical coupons or tokens or points, rather than an electronic record.

e-Value Eco Illustration - the eValue Theory

The e-Value Eco Illustration gives a simplified overview of the......

e-Value can, for instance, be a prepaid subscription, a prepaid service or ‘TIME’ recorded in minutes, hours or units, and can be exchanged, bartered or traded between two users as time-units.

Exchanging these e-Values without the ability to convert them to conventional currencies is a closed-loop e-Value product or service.

When there is full convertibility, we will be talking about an open-loop e-Value system.

Today, there is confusion between e-Money, Digital Money, Digital Currencies, Cryptocurrency and Virtual Currencies. To our knowledge, there is no publicized definition, which makes it clear and useful on how to govern the future of values in a digitalized world (e-Society). The consequences can be huge.

In addition, in some countries, authorities grant licenses for companies to ‘issue’ e-Money but in reality, it is just a prepaid service or subscription.

If a regulator stipulates that only x% of sold e-Money (received ‘deposits’) shall be secured in ‘assets’ in the balance sheet, but not necessarily backed with ‘real’ conventional currencies or a bank guarantee, in case of a bankruptcy, such ‘soft’ assets may not be recovered as intended resulting in the user losing all or part of its value. This is why a good definition would be to use the term “e-Scrip.”

It is also crucial to clarify from the start, the real purpose of a transaction.

Selling prepaid subscriptions for a mobile phone, for example, is a service, and it remains a service, even though the user can also use the pre-paid subscription to use (exchange to) game-time or even send part of its ‘subscription value’ to another user.

If the ‘value’ cannot be cashed out (returned) as conventional currencies, it is, therefore, an e-Value.

Why use anything other than Money?

After reading this White Paper, or even before, one may ask, “Why not just use ‘Money?’ Why create different type of ‘Values’ in this new era of electronic shifting of values?”

Besides the many obvious facts that money is a huge source of crime, germs and costly to print, costly to handle and easy to lose there is an important difference when using e-Values as an alternative.

e-Values do not have a capital-cost, such as Interest.

Digital Money or e-Money as well as e-Values eventually could be affected by inflation, even a Time value can be inflated, but it does not have an interest cost, by its very nature.

“Perhaps banks, in their need to feel more relevant with the modern use of e-Values, and in an effort to be more innovative, could lend you ‘Time’ and they could charge you interest to borrow such Time . . “ . - Lars Olof Kanngard from an address to a group of bank executives in India.

The many benefits of using modern solutions for Digital Money, e-Money and e-Values with proper global adopted definitions and guidelines will have a profound impact on the modern e-Society, but, without it, the users/ consumers will be the ones to pay a costly price.

In the absence of a proper understanding and governance of e-Values at large, governments will not be able to base decisions on the real financial transaction and will find themselves blindsided.

Moreover, a Government that does not understand the financial marketplace will lose the opportunity to police and tax and only create a greater gap between the educated and uneducated, the poor and wealthy.

Money and a Computer = e-Money

One of the many reasons for confusion is the fact that a normal debit card used in an ATM or being used in a point of sales terminal (POS/EDC/eBM) device would be considered as e-Money today (in 2016).

All the money that banks handle in their electronic systems (excluding cash) is also e-Money, which means that all conventional money administrated with a computer is actually nothing else than e-Money, so that everything we do using a card, mobile phone, mobile based device or a transfer, if we handle money-values, it is considered e-Money.

That was not the original idea about e-Money, when it all started in 1995.

At that time, money in a bank account, accessible via a card or device, was simply named ‘debit-card account‘/’current account’ because everything was, at that time, handled with only standard bank products, and the user’s money was held in a bank account and it was deposited in the bank account before it could be used. Each user had his or her own bank-account and for convenience as well as for safety, many customers did not want to mix their savings account with the use of a ‘debit-card spendings.

Origin of e-Money

e-Money used to be defined as a ‘Pre-Paid Money value’ (1994/1995), exchanged or converted into the e-Money-Brands and was ‘stored’ in a NON-Bank Account, for the users.

The user could see his or her transactions online, in a ‘virtual-account’ while the e-Money Brand provider/Issuer kept the bulk balance in their companies’ commercial accounts.

The idea was that e-Money users/consumers were non-bankable customers, customers who fall below the line for whom banks cannot or will not provide commercial services towards, at that time in 1994/1995.

Note: Today 2016 there is only less than 30% of all global consumers who is so called ‘bankable customers’. Bankable Customers would have normal bank-facilities in form of deposit and saving account, cheque account, overdraft facilities, loan and to whom the banks can offer other commercial services.

The ‘OLD’ way to define users, has been based on a statistical ‘standard’ defined as the age group 15-65. The Author; Lars Olof Kanngard did distribute documents in as early as 1998 pointing out that there will be a shift in how services will redefine the industry at large and pointed out that there is one more billion consumers to be added to the traditional way of defining consumers by also adding the e-Kids to the reality of future consumers which starts at age 5 to 105 years of age.

The original concept of 'e-Money' also related to values issued as, what has become known as, a ‘complementary’ currency that complements or supports a conventional currency/economy.

Today, in 2016, the borders between prepaid cash cards, gift-cards or printed vouchers, a token or a one-time pre-loaded credit card number are disappearing.

We are witnessing the emergence of a monetary world without geographical borders.

In the past, some governments and regulators did not grasp the magnitude of e-Money. They allowed companies then, and still do today, to record/book e-Money as SALES. In some cases, there is not even a record of the fact that the issuer has an ongoing liability to fulfil the service to the buyer/ end customer

If there is no business risk taken on the Face-Value of an e-Value, such sales should only be recorded based on the margin (earning) the intermediary seller makes.

For example, today if an issuer, issues electronic vouchers/records for a pre-paid subscription and those vouchers/records were being bought and paid for by a distributor for the amount of the face-value, minus an agreed discount and the issuer is recording it as a sale, then the distributor would be the only one in a value chain who has an actual business risk. This is because the distributor has paid the issuer but, as yet hasn’t re-sold or received value for the prepaid subscription.

But if the distributor could facilitate a payment (face value minus a discount) to the issuer at the same time the end-user activated a prepaid value then the business risk shifts to being between the issuer and the end-user, which is where and how it should be conducted and structured.

Thus, if a mobile phone operator allows users to buy any other service, like game-time, and such service only becomes activated after the user activates what he or she has purchased, such sales between the customer and the distributor can only be recorded based on the margin, not the face value and an outstanding service is still recorded against the issuer (not the distributor).

The latter definition is crucial to grasp due to the very large risk that companies around the world might create a ‘bubble’ effect, which could very well burst.

Consider the MCI WORLDCOM case, where potential capacity was booked as an ‘asset’ rather than recording the margin . .

Common sense

To use the definition, e-Money, the concept and the purpose should be based on the concept of ‘money’, which, for consumers, means a value one can use in electronic form or withdraw as cash in a conventional currency.

In banking terms, a custodian is usually a financial institution that holds customer securities or deposits in trust as part of a specific agreement so as to minimize the possibility of loss or theft.

Typically, there are three parties to a custodian agreement being; the legal owner of securities or deposit; the intermediary manager whose role is to invest or move securities or funds within the owners instructions and the custodian who is responsible for control of disbursements, ensuring the intermediary managers instructions are within the terms of the custodial agreement, and the provision of record keeping and safe custody of the assets.

In some countries there are specific Laws and Acts governing custodians who may be either registered with the Central Bank or both registered and licensed. Whilst custodians have been around in the financial services industry for centuries the role and responsibility of a custodian in the e-Money world is less recognized or practiced.

Perhaps that’s an outcome of the fact that e-Money transactions have traditionally been one-off or of lower value than those in Banking; but, with the advent of much broader services and larger providers coming online, the risk of loss from fraud, theft or negligence in the e-Money world is increasing, not decreasing.

The concepts around security are not indifferent, however. Where a third party entity sets itself up to manage e-Values or e-Money on behalf of an owner, it has an equal duty of responsibility to ensure that those assets are protected from theft or loss and that any movement of those assets is strictly in accordance with the customers instructions.

Central Banks also have a role here to ensure also that those funds are protected and it can be expected that as losses inevitably evolve, the regulation between digital money providers and banking will come closer together.

One of the biggest risks apparent, at the moment, is the custody of third party values or funds. In an unregulated or semi regulated world it’s not uncommon to see e-Money booked in the Companies ledger as sales and as a debt to the users.

This, from an accounting point of view, looks good, but, in reality, if the company goes bankrupt, such value could be used to offset the company’s debt with creditors.

The company could also use such funds for its own gain, such as risky speculation.

Looking at a company with $1,000,000,000 in sales but just a ‘real’ margin of 0.3% = $ 3,000,000 can mistakenly make the bubble to look much larger than it is in reality.

Custodian agreements are adaptable and have a purpose in protecting consumer e-Values. Perhaps it’s time responsible e-Value and e-Money companies to take the lead and differentiate themselves by taking a greater focus of responsibility towards the consumer.

A Custodian arrangement can be implemented simply by agreement between the issuer and the bank or banks, whereby the issuer, as an example, agrees to hold the money in trust and not as a registered asset of its own.

Such terms and conditions could easily be incorporated into an account opening authority and by submitting a highly protected data file once per day where each user and each balance is or can be identified, a third party such as a Central Bank could be the ‘SAFE KEEPER’ of such data files as well as have the ability to audit the total values.

Separately a third party registered auditor could also be engaged as part of either a secondary or primary check.

Such arrangement for data and value security could be made very secure. All information doesn’t need to be stored in traditional manners as one data-file and one data-record per users/account; it can preferably be made in ‘block’ and made in layers in such way that even if the best hackers in the world might ‘crack’ one file, they would not be able to make out any relevant data.

Finally, by introducing licensing together with policies and procedures, a Central Bank can drive improvements in the management of risk within these providers.

New, innovatve and highly secure ‘ideas’ will create a smooth-functioning e-Environment in which the e-Kids can enjoy e-Services and the e-Governments can lead the way to a pleasant e-Society simply via a better way.

e-Scrip – Non-Custodian

“A certificate indicating the right of the holder to receive payment later in the form of cash, goods, or land.”

By introducing the definition of Non-Custodian stored e-Values, as e-Scrip, it will be clear for users as to what they have and how it may be exposed. understood?

In emerging markets and developing countries, the percentage looks much different when those users/consumers start to trust electronic solutions. It is imperative that this important difference be emphasized.