Third, existing rules should be modified and new rules should be adopted only as necessary or substantially desirable to support the use of electronic technologies. Finally, any drafting process should involve the high-tech commercial sector as well as businesses that have not yet moved on-line. BIS Review 26/1998  -5Unlike the situation in the retail electronic payments area, where there has been significant private-sector resistance to developing legal standards, there is an increasing consensus, both domestically and abroad, that electronic commerce will not flourish until there are laws addressing the validity of electronic contracts and the legal significance of attribution procedures used by parties to determine the identity of the sender of an electronic message. Domestic Efforts Domestic efforts to address these needs have proceeded under two very different venues. First, there is the work of the NCCUSL and the ALI to modernize the UCC to reflect the realities of the Internet. In the absence of Federal legislation or regulation, the NCCUSL/ALI drafting process is attractive for at least two reasons. First, the general approach of the UCC is consistent with the views of many in the emerging electronic commerce community in that it allows for variation through private contract. Second, NCCUSL/ALI has been extremely successful in ensuring that commercial law is essentially the same in substance among the fifty states. This success largely results from the care that NCCUSL takes in establishing drafting committees that reflect diverse interests affected by the particular legislation being considered.

When used in connection with these products, the Internet no longer acts solely as an access device to communicate payment information to merchants and banks. Instead, the transfer of “value” over the Internet will become, for all practical purposes, the modern day equivalent of tendering currency in satisfaction of a debt. While private electronic money will not have “legal tender” status, electronic money issuers will use private contractual relationships to effect discharge of their obligations. “Electronic money” is essentially the re-emergence in the United States of privately-issued currency, the value of which depends on the financial health of the issuer. Because electronic value is simply a promise of the issuer to pay on demand, the question arises as to whether the issuance of electronic value should be limited to banks and other supervised institutions. In the United BIS Review 26/1998  -3States, banks have been intricately linked to the payments system and, as a result, are subject to unique regulatory burdens such as reserve requirements, deposit insurance premiums, and extensive supervision. Some argue that the safety and soundness of the payments system require limiting the issuance of electronic money to banks. In fact, some foreign jurisdictions, such as Japan and the European Union, have limited the issuance of electronic currency to banks or credit institutions in EU parlance. Unlike Europe and Japan, however, the United States is, at least for the time being, remaining silent on the issue of nonbank issuance of electronic money.