from: http://www.32bitsonline.com/news.php3?news=news/200004/nb200004265&page=1 Click Here: <A HREF="http://www.32bitsonline.com/news.php3?news=news/200004/nb200004265&page= 1">32BitsOnline.com - In E-conomy, Fed Reserve's I�</A> ----- In E-conomy, Fed Reserve's Influence May Wane - Report By: Kevin Featherly Date: 04/26/00 Location: NEW YORK, NEW YORK, U.S.A. Outmoded by new technologies and new methods of payment, the influence of the Federal Reserve over national fiscal policy may, over the next several decades, begin to wane. That is the view expressed in a report by the New York-based Deutsche Banc Alex. Brown's e-finance team, the fourth in a series of reports published under the banner "Breaking Up the Financial Intermediary." It is the fourth in the series, and the first to address the Fed head on. The report, which is available online at http://equity.research.db.com/public/craft/ , draws on the work of Harvard University economist Benjamin Friedman, whose research anticipates waning influence of the Fed in the Digital Age. "He attributes this to new technologies, new payment types as well as the, at best, tenuous way in which the Fed controls monetary policy," the report states. "Thus, like a once necessary part of the human anatomy, perhaps our central bank, as well as others in the global economy, may become vestigial." The Federal Reserve faces three primary challenges to its fiscal policy dominance, according to the report. These involve high-tech, non-depository payment systems; extension of credit from non-bank balance sheets; and creation of "bank-like liabilities" on non-bank balance sheets. Because businesses commonly extend credit to one another, the Federal Reserve began dealing with the second of these issues prior to the Internet's arrival. But now that it's here, the Internet threatens to dismantle the Fed's self-protective bulwarks. "What if those trade receivables find immediate liquidity through networks like eCredit and the business practices of many new Internet start-ups that begin to include cross-supplier equity ownership and trade credit," the report says. "This sounds to us like a slippery slope." It's a slope, Harvard's Friedman has suggested, that could slide the Fed right into the sea inside of 25 years. The report's authors suggest it could be sooner than that. "We suspect that Friedman is correct in his thesis that the central bank is vulnerable to change and would encourage him to speed up his clock," the report says. But what could represent the Fed's downfall might also represent a boon to savvy financiers, the report states. "The opportunities for new Internet payment networks which compete with the established networks appear compelling," the report says. The report anticipates new electronic entrants into the world of traditional payments, singling out NextCard. The report also predicts the advent of "legacy payment processors," like Cybersource and Digital Courier, which understand and can operate comfortably in the Internet economy. And it points to the arrival of new payment-service providers like eCash Technologies, companies the authors say will know how to either work within existing monetary rules - or find ways around them. "What appears to be in the offing - the incremental disenfranchisement of the central bank from new payment settlement agents as well as new deposit creating and credit lending agents - will likely play right into the hands of the free banking school of thought," the report's authors state. Deutsche Banc Alex. Brown is a US subsidiary of Germany's Deutsche Bank AG. Deutsche Bank Global Equity Research is online at http://equity.research.db.com/ . Reported by Newsbytes.com, http://www.newsbytes.com 12:59 CST (20000426/Press contact: Christine Cortezi, 410-895-3418; e-mail, [EMAIL PROTECTED]/WIRES ONLINE, BUSINESS/) Copyright � 1997 - 2000 Medullas Publishing Company, Inc. All Rights Reserved. Medullas Publishing logo and the 32BitsOnline logo are trademarks of Medullas Publishing Company, Inc. Reproduction in whole or in part in any form or medium without express written permission of Medullas Publishing is prohibited. Please read our Disclaimers and Privacy Policy. ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! 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