Electronic Money

DEFINITION of 'Electronic Money'

Electronic money is money which exists only in banking computer systems and is not held in any physical form. In the United States, only a small fraction of the currency in circulation exists in physical form. The need for physical currency has declined as more and more citizens use electronic alternatives to physical currency.

BREAKING DOWN 'Electronic Money'

In the U.S. many people receive their paychecks through direct deposit, move money with electronic fund transfers, and spend money with credit and debit cards. While physical currency still has advantages in certain situations, its role has gradually diminished. While it might seem to be a worrying thought that your bank account balance is nothing but an entry in a computer system, it is really nothing new. Fiat paper currency has no inherent worth either.

RELATED TERMS
  1. Currency In Circulation

    Currency that is physically used to conduct transactions between ...
  2. Actuals

    The physical commodity that underlies a futures contract or is ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but ...
  4. Electronic Currency Trading

    A method of trading currencies through an online brokerage account. ...
  5. Currency

    Currency is a generally accepted form of money, including coins ...
  6. Secure Electronic Transaction - ...

    A form of protocol for electronic credit card payments. As the ...
Related Articles
  1. Mutual Funds & ETFs

    3 Physically Backed ETFs Worth Your While (GLD, SLV)

    Learn about physically backed ETFs, what they are and how they can help provide your portfolio with pure precious metals exposure.
  2. Economics

    How Currency Works

    Currency offers key advantages over economies based on direct trade. It provides sellers with a broader market for their goods and services, and provides a durable asset with which people can ...
  3. Mutual Funds & ETFs

    The Most Affordable Way to Buy Gold: Physical Gold or ETFs?

    Investing in gold has never been easier than it is today. Check out this article to learn more about gold ETFs and other ways that you can add gold to your portfolio.
  4. Economics

    What Is Money?

    It's a part of everyone's life, and we all want it, but do you know how it gains value and how it is created?
  5. Investing News

    Why the War on Cash?

    Recently, the European Central Bank (ECB) announced that it intends to stop minting €500 notes, in a move that they say is meant to curb fraud and money laundering.
  6. Personal Finance

    The Most Affordable Precious Metals ETFs

    Precious metals ETFs invest in both physical commodities and futures contracts for precious metals.
  7. Trading Systems & Software

    The Death Of The Trading Floor

    Electronic trading has almost completely replaced face-to-face human trading.
  8. Retirement

    Electronic Trading: Introduction

    When it comes to electronic trading, for most individual investors, taking a long-term buy-and-hold approach is probably the best strategy. Most of us simply don't have the time or the expertise ...
  9. Personal Finance

    The Currency Board: Understanding The Government's Bank

    Currency board, central bank - what's the difference? Find out more about this little-known monetary authority.
  10. Investing Basics

    Old Stock Certificates: Lost Treasure?

    Today, most stocks reside electronically in a broker’s computer. But it is possible to stumble across a physical stock certificate.
RELATED FAQS
  1. What exactly is being done when shares are bought and sold?

    Most stocks are traded on physical or virtual exchanges. The New York Stock Exchange (NYSE), for example, is a physical exchange ... Read Answer >>
  2. Is all paper money fiat money?

    Learn how the United States has converted from a gold-backed money system to a fiat one. Learn what is considered fiat money ... Read Answer >>
  3. What economic indicators are important to monitor when investing in the electronics ...

    Learn about what economic indicators are best to examine when investing in the electronics sectors. This group is very leveraged ... Read Answer >>
  4. Why would growth investors be attracted to the electronics sector?

    Learn why growth investors gravitate to the two segments of the electronics sector, both of which exhibit greater volatility ... Read Answer >>
  5. What are the key barriers to entry for companies in the electronics sector?

    Learn how the entry barriers of economies of scale and scope, research and development, capital and brand loyalty affect ... Read Answer >>
  6. What are the best mutual funds for investing in the electronics sector?

    Learn which mutual funds are popular among investors interested in the electronics industry and how these mutual funds add ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center