Let me offer but one example. Imagine, if you will, a country where there are no restrictions on what kinds of firms can issue stored value cards. In such a country, buyers and merchants discover too late and to their dismay that some issuers disappear as soon as sales reach a few hundred thousand dollars. Some merchants begin to discriminate against card issuers, taking off more than the cost of goods purchased to compensate for the risk of loss. Other merchants refuse to accept cards from issuers they do not recognize.
Honest issuers find exact copies of their cards circulating freely and face huge losses.
The growth of commerce slows. It is not long before consumers and merchants begin searching for a more reliable medium of exchange. We've already seen a country like that. Clearly, policy makers and bankers should carefully consider the implications of non-bank participation in electronic money and payments systems. Now, in addition to the payments systems, technology also touches the issue of geography.