PROJECT REPORT

ON
“E-MONEY AND HOW IT CAN INFLUENCE THE WORD
FINANCE MARKET”

A Project Submitted to
THE LEADING SOLUTION of the Degree of
Master of Management Studies (MMS)
BY
Rushil Chavan
ROLL NO.: 20221138

Durative Saraf Institute of Management Studies

(DSIMS)

UNIVERSITY OF MUMBAI
2022-23
INDEX
 EXECUTIVE SUMMARY

The aim of this

Research is to
analyze the stages
in the evolution of
electronic money and
how it can influence
the world finance
market. The
research
methodology is
composed of the
evolutionary theory
of the
origin of money
and the theory of
money and credit
developed by the
Austrian School of
Economics. The
emergence
cryptocurrency is
seen as
the next stage in
the process of
money evolution.
The article
concludes
that it is crypto
currency which can
truly be considered
electronic money
as it exists only in
electronic form and
is in no way
connected to the
objects of in
material world. As
a result,
cryptocurrency have
several
advantages when
compared to other
forms of money.
Key Words:
Electronic money,
gaming currency,
virtual currency,
crypto
currency, Bit coin.
The aim of this
Research is to
analyze the stages
in the evolution of
electronic money and
how it can influence
the world finance
market. The
research
methodology is
composed of the
evolutionary theory
of the
origin of money
and the theory of
money and credit
developed by the
Austrian School of
Economics. The
emergence
cryptocurrency is
seen as
the next stage in
the process of
money evolution.
The article
concludes
that it is crypto
currency which can
truly be considered
electronic money
as it exists only in
electronic form and
is in no way
connected to the
objects of in
material world. As
a result,
cryptocurrency have
several
advantages when
compared to other
forms of money.
Key Words:
Electronic money,
gaming currency,
virtual currency,
crypto
currency, Bit coin.
The aim of this
Research is to
analyze the stages
in the evolution of
electronic money and
how it can influence
the world finance
market. The
research
methodology is
composed of the
evolutionary theory
of the
origin of money
and the theory of
money and credit
developed by the
Austrian School of
Economics. The
emergence
cryptocurrency is
seen as
the next stage in
the process of
money evolution.
The article
concludes
that it is crypto
currency which can
truly be considered
electronic money
as it exists only in
electronic form and
is in no way
connected to the
objects of in
material world. As
a result,
cryptocurrency have
several
advantages when
compared to other
forms of money.
Key Words:
Electronic money,
gaming currency,
virtual currency,
crypto
currency, Bit coin.

The aim of this

Research is to
analyze the stages
in the evolution of
electronic money and
how it can influence
the world finance
market. The
research
methodology is
composed of the
evolutionary theory
of the
origin of money
and the theory of
money and credit
developed by the
Austrian School of
Economics. The
emergence
cryptocurrency is
seen as
the next stage in
the process of
money evolution.
The article
concludes
that it is crypto
currency which can
truly be considered
electronic money
as it exists only in
electronic form and
is in no way
connected to the
objects of in
material world. As
a result,
cryptocurrency have
several
advantages when
compared to other
forms of money.
The aim of this Research is to analyse the stages in the evolution of electronic money
and how it can influence the world finance market. The emergence cryptocurrency
is seen as the next stage in the process of money evolution. The article
concludes that it is crypto currency which can truly be considered electronic money
as it exists only in electronic form and is in no way connected to the objects of in
material world. As a result, crypto currency has several advantages when compared
to other forms of money. This paper analyses the concept of electronic money in the
context of the evolutionary theory of the origin of money and put forward the
hypothesis that the emergence of cryptocurrency was the next step in the evolution
of money, which resulted due to the presence of objective disadvantages of
unsecured paper money.
Page |1

CHAPTER NO. 1 : INTRODUCTION

The economic dynamics that are increasingly fast in line with advances in information
technology have important implications for the framework of monetary policy
transmission mechanisms throughout the country.

The existence of technology in the financial system especially the payment system not
only has a positive impact on the acceleration of a country's economic growth and
financial system development, but also presents its own challenges and the risks in
changing the pattern of policy settings in the payment system.

The rapid of information technology based on electronic finance (e-finance) has

changed the financial system which is increasingly difficult to predict. The main
purpose of this article is e-money and how it can influence the world finance market.
In the study, the objective is to find out what factors influence the use of e-money in
different areas in order to improve its use.

Electronic money refers to the currency electronically stored on electronic systems

and digital databases used to make it easier to transact electronically. It is popularly
referred to by many names, including digital cash, digital currency, e-money, and so
on.

This research states the expanded monetary unsteadiness could rise up out of the
expanded flexibility of private cash creation, and from intermittent reaches a financial
dead end into national bank cash that produce liquidity emergencies and uncertainty.

CHARACTERIZING MONEY
Everybody uses cash in their daily life. Everyone needs it, works for it, and thinks
approximately it. The level of characterizing what cash is, where it comes from and
what its actual value has a spectrum for those who devote themselves to the
economics of financial matters. Whereas the development of cash appears to some
degree intangible, cash is the way we get the things we require and need. Sometime
recently the advancement of a medium of trade, individuals would trade to get the
merchandise and administrations they required. Usually fundamentally how it
worked: two people each having a product the other needed or required would enter
Page |2

an assentation to exchange their merchandise. The need of transferability of

bargaining for merchandise, as ready to see, is tiring, befuddling and inefficient. Cash
is therefore any item or unquestionable record that's for the most part acknowledged
as installment for merchandise and administrations and reimbursement of obligations
in a specific nation or socio-economic setting or is effectively changed over to such a
shape (team, 2022).

The most capacities of cash are recognized as: a medium of trade; a unit of account; a
store of esteem; and, now and then, a standard of conceded installment. Anything or
unquestionable record that fulfils these capacities can be considered cash.
Page |3

CHAPTER NO. 2 : RESEARCH AND METHODOLOGY

Research Design
Secondary research method is used in this research. Several secondary data sources
were consulted for this study, including internet, books, magazines, libraries and
finance market websites, banks website and other e-money platform. Alternative
payment instruments, such as e-money, have been found to be beneficial, especially
for micropayments and retail payments.
It is possible to change the money demand function by issuing e-money, as well as
decrease the length of time an average amount of cash is held. The economy would
benefit from an increase in the circulation of money, which would also increase
money's velocity.

Objectives of the study

To identify how the velocity of money varies based on the rate of e-money use and
how much money circulates.
To analyse the impact of e-money on the world finance market.

Hypothesis Of The Study

Limitations of the study

Limitations of the study on the include limited data availability, challenges in

establishing causation, limited external validity, subjectivity in assessment, time
constraints, and limitations of quantitative analysis. These limitations can affect the
generalizability, reliability, and validity of the study's findings. It is important to
consider these factors when interpreting the results and recognizing the potential
constraints in understanding the broader implications of e-money in world finance
market.
Page |4

CHAPTER NO. 4 : FINDINGS & RESULTS

1. The development of cryptocurrency is the new stage of money evolution

The development of IT technology and the emergence of the global network led to
development of online games, social networks and other online communities. Those,
in turn, gave rise to virtual currency and game currency, which were used to pay for
services provided within these online structures. Virtual or game currency is a type
private (non- fiat) electronic money used for purchase and sale of virtual goods in
various online communities such as: online games, social networks, etc.

Every online game has a contest between people in the virtual world. The internal
game currency created as part of the virtual game world in which there is some
economic component present. Virtual currency, in this case currency emitted by the
game itself, is in accordance with an algorithm installed by the game developer.
Usually, it is awarded to players according to their achievements in the game or
through the purchase using real money (state currency). This allows players who have
achieved certain achievements, to strengthen their position by buying in- game virtual
goods items that give them an advantage over other players. Thus, the virtual currency
is purposefully created as a limited resource in the game. This is achieved through the
creation of game developer specific set of virtual goods sold for real money.

Similar goals pursued by the creation of virtual money in social networks. Any
modern social network and online game is above all an enterprise that spends real
resources: labour force of programmers, capital in the form of computers, servers,
electricity, etc. Because of this, such projects cannot exist without bringing real
income. Monetizing customer base, i.e., converting the real popularity of the project
into a cash generating activity is a necessity.

Initially, popular online games used a subscription mechanism, or a monthly fee.

They demanded a fixed fee for a certain period of use of the game. This option of
generating in-game revenue didn't require the link of internal game currency with real
money. However, a significant number of users considered the introduction of a fixed
fee worthwhile. This reduces the actual customer base relative to potential. In simple
words, the monthly fee does not allow to "pull out" the maximum amount of money
from the consumer.
Page |5

Another way to monetize gaming projects was to simply sell virtual currency for real
money. By doing that, the user was able to gain advantage over other players through
the purchase of virtual goods. At the same time the game itself can be free to
download. This method can significantly improve the monetization of gaming
projects and social

networks. This is achieved by the fact that the user pays as he plays. The next stage of
the development of game currency is the ability to reverse currency exchange from
game currency to real money. This scheme is not widespread due to lack of interest of
game developers to reduce their income.

There was an opinion that the Bitcoin cannot survive for a long time. The appreciation
of the exchange rate is considered only speculation, such as the "Tulip Fever" in the
Netherlands in the first half of XVII century. There will come a point in time when
the rate begins to fall. In this situation, it can go down to zero, because bitcoin has no
support in the form of material backup. People will lose their trust in the currency and
it will cease to exist. However, this still hasn't happened.

The belief that the end of Bitcoin speculation will lead to the collapse of the payment
system is based on the fact that, in the event of it collapsing to zero, there is no return
mechanism to facilitate or manipulate the exchange rate back to normal. Since Bitcoin
does not have non-monetary demand, there will be no mechanism, which then pushes
up the exchange rate. However, these considerations have not yet been confirmed by
the facts. Moreover, such arguments ignore the fact that the original Bitcoin was
nothing and was able to obtain monetary value on the basis of demand.

The emergence of cryptocurrency was a natural step in the process of the evolution of
money. The process of evolution is to overcome obstacles to development. Its driving
force is rationality. Any phenomenon is evolving; trying to get around the obstacle in
the most optimal way.

2. Bitcoin system lacks the disadvantages of unsecured paper money: state

intervention and resulting inflation

The development of monetary relations within the society faced the aggressive
military intervention organized groups of individuals. The emperors, feudal lords, and
later the state throughout history have used inflation as a monetary resource
Page |6

withdrawals tool, i.e. theft (Vlasov, 2012a). However, by the end of the twentieth
century, the state was able to subordinate monetary sphere dictating its power,
replacing money with unsecured paper money. This allowed to significantly
increasing the scale of inflation-triggering processes, and the number of resources
redistributed in favor of the state and stakeholders (Vlasov, 2012b).

Activities of the State in the monetary field is "parasitic" as the mechanism of

inflation takes away from the good of society, and redistributes them in favor of
"parasites" - those who do not produce. It is natural that the society for its own
survival must put in efforts to resolve this forceful intervention in the monetary
system. One way is to create a new form of money. This form will not have the
disadvantages, allowing the state to pursue a policy of inflation. The disadvantage of
gold as a form of money is that it is an object of the material world; it can be taken
away, what the state has eventually done. Any material objects can be attacked.

The development of information technology, which began in the late 20th century led
to the fact that people have tried to create a new form of money - cryptocurrency in
which money does not exist materially, and there is only a certain algorithm, the
reliability of which is determined by the computing operations mathematics.
Intangible cryptocurrency has an advantage compared to gold (Vlasov, 2015).
According to the Bitcoin algorithm, the total number of bitcoins is limited, which
does not allow infinitely increasing their number to carry out a policy of inflation.
This is a significant advantage of this currency, including in relation to gold for
instance.

So far, a way hasn't yet been found to break the algorithms and the functioning of the
system of cryptocurrency. It remains an open question as to whether cryptocurrency is
able to compete with gold for the status of money, because gold cannot largely fulfill
the function of money due to risk of government intervention. While the State is
attempting to fight cryptocurrency, it does not have, at present, any effective means of
combating this phenomenon that gives cryptocurrency advantage over gold.
Page |7

CHAPTER NO. 3 : LITERATURE REVIEW

In examining the literature, previous studies have determined that the effects of
electronic money on the role of central banks in their management of monetary policy
(Zine El-Din, 2003; Ahmed, 2014; Galí, 2015; Weale et al., 2015; Qin, 2017; Rogoff,
2017; Berentsen, 1998). In that regard, an enhancement of the functions of the central
bank and monetary policy will have an added impact.

Durgun and Timur (2015) defined the possible effects of electronic payments, which
are distinct from conventional payment systems, on central banks and their policies.

A noticeable number of research has investigated electronic money from the

consumer acceptances perspectives (Singh, 1999; Miliani et al, 2013; Fijiki & Tanaka,
2014; Salsabila & Giri, 2015; Priambodo & Prabawani, 2016; Ramadani, 2016;
Wulandari et al., 2016; Djamaluddin et al., 2016). Based on those previous studies,
the factors in influencing perception of e-money are proposed. Djamaluddin et al.
(2016) found that perception of beneficiaries towards e-money is relatively high,
whist Alriani et al. (2017) remarked that the advantages by using e-money provides
the happy feeling and the satisfaction for users.
Page |8

CHAPTER NO. 5 : CONCLUSIONS & SUGGESTIONS

CONCLUSION
 Amongst all, the most recent installment tool is e-money, gradually fabricating
the way to its monstrous use.
 Up until this point, the start of this way is clear in the created nations, where
the mechanical advancement, as well as instruction and information are at the
most significant level.
 In the non-industrial nations, the electronic financial issues will require the
sanctioning and authorization of new e-cash regulation.
 The ability of e-money to substitute currency in circulation, however,
illustrates its influence on monetary policy. It is still unclear if e-money will
have an impact on monetary policy in the future due to its small use.
 We can anticipate that e-money will become a regular payment method in the
future, given that every innovation takes time to penetrate the market.
 It will then become more influential on monetary policy (depending on how
much it substitutes for the current currency).
 The development and use of e-money by institutions and clients should be
monitored by developed and developing countries..

SUGGESTIONS
 The significance of planning the viability of a system within the instrument of
financial approach transmission, particularly in synchronizing the course of
action of intrigued rate instruments so that there's no trade-off among money
related approach and budgetary soundness. The significance of cooperative
energy among financial arrangement, monetary approach, and largescale
prudential arrangement in responding to the flow of computerized change
that's progressively without boundaries in both the measurements of space and
time.
 The significance of organization courses of action for the utilize of electronic-
based budgetary items and the significance of a lawful umbrella in moderating
the chance of money related extortion.
Page |9

 This inquire about is as it were constrained to the impact or effect of e-money,

it is anticipated to advance investigate with more complex pointers and
modelling and calculate the ideal financial monetary arrangement reaction.
P a g e | 10

CHAPTER NO. 6 : REFERENCES

www.jstor.org

www.proquest.com

www.scholar.google.com

www.federalreserve.gov

www.imf.org

www.hbr.org

www.ft.com