Virtual Money, Vanishing Law: Dematerialisation in Electronic Funds Transfer, Financial Wrongs and Doctrinal Makeshifts in English Legal Structures

DOIhttps://doi.org/10.1108/eb027167
Publication Date01 Mar 1998
Pages22-32
AuthorRobin Mackenzie
SubjectAccounting & finance
Journal of Money Laundering Control
Vol.
2 No. 1
Virtual Money, Vanishing Law: Dematerialisation in
Electronic Funds Transfer, Financial Wrongs and
Doctrinal Makeshifts in English Legal Structures
Robin Mackenzie
In this article the author proposes to traverse
various views on money in order to contend that
while antiquated notions of its materiality continue
to bedevil English legal structures, the law will fail
to keep up with current commercial practices, and,
equally seriously, fail to detect, prevent or punish
coming criminal practices as well. The thrust of
the argument is that how money is perceived, and
what is conceived of as constituting it, together
determine how laws deal with the cultural and
commercial need for consensus on what might
function as a medium of exchange and a store of
value. As a consequence, if the perception of
money is locked into its historically contingent
aspects, legal structures will become increasingly
marginalised by the superior resources and sophis-
tication of contemporary organised crime.
Both monetary and legal forms are constrained
by historical accretions here. The origins of money
are simple. Barter is inconvenient. If
a
man wishes
to exchange eggs for seed, he needs to know that
he can trust the seed owner not to cheat him by
giving bad seed, that the seed can. be used to trade
with if wished at some time in the future and that
the trade is desired by both parties. The time it
takes to ascertain this information can be saved if
there is a switch to monetary exchange. Instead of
having to seek out a trustworthy co-transactor, a
price can simply be accepted for eggs from anyone
who wishes to buy them, then the money used to
buy seed. Economic uncertainties are thus
resolved. Trust is no longer needed, although cer-
tain things must be believed about the money: that
it will maintain its value, that it is able to be re-
used and that it will be accepted as a means of
settling debts by others in a social group.
How is this trust in money to be built up?
Dodd argues that what is distinctive about money
is not the object exchanged nor the relationship
between those exchanging but the network of
social relationships which makes the exchange pos-
sible.
In his view, a monetary network must incor-
porate five basic characteristics without which trust
in money's abstract qualities cannot arise.
First, the network will contain a standardised
accounting system into which each monetary form
within the network is divisible, enabling its
exchange with anything priced in terms of that
system. Secondly, the network will rely on infor-
mation from which expectations regarding the
future, or more accurately money's relationship
with the continuity of
time,
can be derived: money
is accepted as payment almost solely on the
assumption that it can be re-used later on. Thirdly,
the network will depend on information regarding
its spatial characteristics: limits placed on the terri-
tory in which specific monetary forms may be
used will probably derive initially from measures
designed to prevent counterfeiting, although they
will eventually refer to the institutional framework
governing the operation of a payments system.
Fourthly, the network wil be based on legalistic
information, usually in the form of rules, concern-
ing the status of contractual relationships which
are fleeting and conclusive: to pay with money is
literally to pay up. Finally, the operation of the
network presupposes knowledge of the behaviour
and expectations of others. This is usually derived
from experience, but can also be sought out and
even paid for. Anyone in possession of money
must be able to anticipate, as a matter of routine,
its re-use with other transactors within a specific
social group or across a pre-defined territory.1
HISTORIC ACCRETIONS AND
MONETARY FORM
A consequence of accepting that monetary net-
works are generated by the social, political and
cultural factors which guarantee economic uncer-
tainty is the recognition that anything can function
as money. Indeed, history tells us that this is so. A
respected body of anthropological opinion suggests
that the reason that the Neanderthals died out and
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