text: abanker's chequeorbanker's payment. Ifthiscomparison ismade,other consequences associated withfinality mayhethought tooccurarising out.ofa guarantee ofhonour, suchasthattheamountinthetransferor's account subject toattachment wouldhereduced bytheamountoftheguaranteed transfer, evertthoughtheaccount hadnotyetbeendebited.• •• •A/CN.9!266/Add.1 English Page13 6.Microcircuit cards 44.Sincemicrocircuit cardsarenotyetingeneral useforfundstransfers, theeffectofthisnewtechnology onfinality rulesmustbepurely speculative. However, itwouldseemthatifthecardsareusedmerelytogive amoresecuremeansofidentifying thetransferor thaniscurrently available, thelawgoverning fundstransfers, including thefinality rules,willnotbe directly affected. Thiswouldbetruewhether thefundstransfer wason-line oroff-line. Similarly, ifanoff-line systemisusedandthecardis programmed toauthorize agivenamountofpurchases (undoubtedly witha guarantee ofhonour bythetransferor bank)butthedebittotheaccount of thetransferor, andthecredittotheaccount ofthetransferee, areentered onlyafterthepurchase hasbeenmade,thefinality ruleswouldseemtobe thoseotherwise applicable wherethereisguarantee ofhonour. 45.Athirdfundstransfer pr.ocedure usingmicrocircuit cardsraisesmore difficult questions inregardtotheappropriate finality rules. Underthis procedure thecardischarged withacertain valuebythetransferor bank. Thetransferor mayremitcashtothetransferor bank,butusually his account isdebited forthat.amountatthetimewhenthecardischarged. As thecardisusedtopurchase goodsorservices, theamountofvalueavailable onthecardisreduced bythemerchants' point-of-sale terminals. The transferee (merchant) iscredited bythetransferee bankeitheron-·line or, morelikely, off-line fortheamountofthepurchase. Underthisprocedure, therefore, theentirefundstransfer consists oftwostages, thecharging of thecardwithvalueandtheuseofthevalueinthecardtopurchase goodsand services. Thesetwostagesmay be viewed as twoseparate transactions oras onetransaction takingplaceattwodifferent times. Undereither viewthe credittothetransferee's account wouldbecomefinalatthesametime,i.e. onlyatthetimeof orafterthepurchase ofthegoodsorservices. However, thedebittothetransferor's account couldbeconsidered finaleitheratthe timewhenthecardwascharged withvalueandtheaccount wasdebited orat thetimewhenthecardwasusedtopurchase thegoodsorservices. 46.Ontheonehandthedebittothetransferor's account. couldbeconsidered tobecomefinalwithout regardtohisuseofthecardifthecharging ofthe cardbythetransferor bankandtherelated debiting ofthetransferor's account wereconsidered tobetheequivalent ofawithdrawal ofcashbythe transferor orofasaletohimoftraveler's cheques ornon-monetary tokens foruseinpublictransportation orpublictelephones. Although the transferor retains thesameamountofmonetary value,itisinadifferent form. 47.Ontheotherhandthecardcouldbeconsidered toconstitute anaccount ofthetransferor withthetransferor bankinaspecial form.Ift.hisviewof thetransac~ion istaken,thecardcouldbeconsidered toconstitute either a separate account oraspecial formoft.heoriginal account. Ifthecard constitutesasepar.ate account, thedebittotheoriginal account wouldbecome finaluponthecharging ofthecard.Thedebittotheaccount contained in thecardarising outofthepurchase ofgoodsorservices wouldprobably becomefinalatthetimeofpurchase whenthevalueremaining inthecard available forusebythetransferor wasreduced bythepoint-or-sale terminal. Ifthecardconstitutesaspecial formoftheoriginal account, the debittotheoriginal account wouldbecomefinalatthetimeofpurchase. InA/CN.91266/Add.1 English Page14 eithercasetheunusedvalueinthecardwouldconstitute aclaimofthe customer against thebank.Itwouldseemthatthebankcouldexercise set-off foritsclaimsagainst thatvalue. Furthermore, thatvaluewouldseemtobe included inanyattachment ofthecustomer's claimsagainst thebankandthe bankwould,therefore, beobligated totakestepstoprevent further useof thecard. 7.Computer-to-computer telecommunication offundstransfer instructions 48.Thefactthatfundstransfer instructions aretransmitted between banks bycomputer-ta-computer telecommunication doesnotbyitselfaffectthe appropri ateness ofrulesonfinality.However, theincreasi ngavailability and decreasing costofcomputer-to-computer telecommunication hasbeenoneofthe causesofthelargeincrease inthevolumeoffundsbeingtransferred, especially bythelarge-value networks. Customer useofcashmanagement services, forexample, creates fundstransfers thatwouldnothaveoccurred at anearlier time.As aresult, thereisincreased risktothebanking system • andtotheentire economy arising outofthelargenumberoffundstransfers
analysis: The text discusses the impact of new technologies and procedures on the finality rules in banking, specifically in the context of fund transfers. It explores the implications of microcircuit cards, computer-to-computer telecommunication, and other innovations on the banking system and the economy.