Being a modern bank, it conducts business principally on the Internet. IIB has a series of quite attractive Internet pages where its products are offered. These pages spell out the products, deposit terms and interest rates, and loan terms and interest rates. All agreements are governed by the law of Atlantis. All deposits are deemed received over IIB’s “counters” in Atlantis, and all loans are paid out of Atlantis. Atlantis has an enjoyable ambiance even exceeding that of Nice and Saint Paul de Vence; therefore, I see no need to leave the island. I do receive and entertain customers when they visit Atlantis. I do place telephone calls to customers who have responded to my Internet page, but I do not make cold calls to customers. Communications with customers over the Internet are state-of-the-art secure. Customers receive account statements over the Internet, issue payment instruments to IIB over the Internet, and request loans over the Internet. All payments to and from accounts are made by wire transfer to IIB’s correspondent account maintained on the books of Atlantis Bank, the only bank chartered under Atlantis law authorized to engage in banking transactions with Atlantis residents. Customers may instruct IIB to make payments for their account. These too are consummated by means of payments out of IIB’s account at Atlantis Bank. Loans are disbursed and paid the same way. The question presented is whether IIB is violating the law of the countries in which its customers are located.
The key questions here are related to amount and velocity -- that is, (1) how would digital bills or notes, or digital coins, be represented on the books of a bank or depository institution; and (2) how many times would this electronic coin or bill circulate in the general economy without somehow being processed and recorded by a bank? In this regard, the October 1996 Bank for International Settlements report “Implications for Central Banks of the Development of Electronic Money” states “E-money could lead to shifts in the velocity of money which might temporarily reduce the usefulness of the monetary aggregates, especially narrower ones, for countries that rely on them as targets or indicators.” In a June 1996 speech before a cyber-payments conference, Governor Edward Kelley of the Board of Governors stated that, with respect to a bank’s liabilities incurred through issuing stored-value cards, such liabilities should be included in the statistical reports that banks must currently submit to the Board of Governors.3 It is difficult to argue that bank liabilities resulting from the issuance of electronic “coins” or electronic “bills and notes” should be reported any differently. A more problematic question arises when considering the matter of nonbank issuance of electronic coins or bills. Currently, the largest nonbank issuers of travelers checks are not required, but do volunteer to the Fed, the outstanding balances of their travelers checks, so that this information can be statistically recorded and reported in United States monetary aggregates by the Fed.