Not to be outdone by new-money entrepreneurs like Cybercash and Digicash, Citicorp is getting set to promote its own version of electronic currency for cyberspace.
Known inside the banking company as the Electronic Monetary System, it is the result of four years of mostly top-secret toil by a team of technical wizards who report to Colin Crook, the New York money-center's chief technology officer.
The system is still in a prototype stage and probably years away from full-scale operation. But Mr. Crook and other officials are removing some of the wraps to stake a bold claim: that the ultimate future of money is within their grasp.
Coming from what might be the most technology-savvy bank in the world, such a statement will raise eyebrows - and perhaps hackles - the virtual world around.
Some skeptics remain suspicious of Citicorp's empire-building instincts, despite the company's recent efforts to bury what Mr. Crook has described as organizational hubris. He points specifically to the Financial Services Technology Consortium and Smart Card Forum - association-like initiatives launched by his own office but governed cooperatively and democratically.
The Citicorp people say they have developed not just another Internet payment scheme or digital cash similar to some of the systems recently put on the market by a new breed of cybermoney developers.
The Electronic Monetary System is described as fully equivalent to cash, but residing on software and a computer's hard drive. Citicorp sees it as a facilitator or electronic commerce that could be readily adopted by individuals, businesses, and governments.
"I think we've got the most advanced system in the world here," Mr. Crook said in a recent interview.
While Citicorp, in its benevolent pose, intends to offer its payment technology to the world, the system is the result of internal research and development that Mr. Crook calls "radical, breakthrough stuff."
At the same time, Mr. Crook said, the company will continue to work on cooperative industry projects with the two multilateral educational organizations, the technology consortium and Smart Card Forum.
For a recent demonstration, Mr. Crook's project team set up their system on a clutch of laptop computers in one of the company's midtown Manhattan conference rooms.
One of six IBM Thinkpads was programmed to contain the functions of two banks, with icons representing tellers, safes, security, and other features.
The other terminals were set up to display "electronic wallets" that individuals can use to withdraw money from the virtual bank, to exchange money with one another, and perform a variety of other sophisticated transactions.
For example, a customer on one laptop can transfer $100 and 50 British pounds from his bank account to his or her electronic wallet. The cash then exists in digital form on the individual's computer hardware.
Another customer at a separate laptop, communicating by line-of-sight, can receive a cash payment from the first, or exchange cash - pounds for dollars, for instance. Security and nonrepudiation - in other words, a safeguard against cheating - are built into the system.
"Our system does not depend on any network mechanism for security," said project manager Sholom Rosen, vice president of emerging technology for Citibank. "The security is between the two devices. They have their own cryptography and security."
Mr. Rosen is a former mathematics professor who joined the Citicorp subsidiary 12 years ago. Eight years ago he became part of a group that was studying the shortcomings of home banking. While some bankers were joking that the only thing missing from in-home banking was an automated teller machine, Mr. Rosen was trying to do something about it.
"We thought at that time that having a way of getting cash electronically into the home and electronically transacting would be one solution to that problem," Mr. Rosen said.
Gradually, the project's boundaries widened into pursuit of a comprehensive, end-to-end cash system.
"When we started doing this, it became clear that this might be applicable to more than just looking at the retail marketplace, and that if we developed technology that was sufficiently secure, we could look at the corporate and interbank marketplace," Mr. Rosen said.
Bank officials said they expect to apply the technology first in wholesale functions, with retail uses still far in the future.
But they said if the system continues to prove its mettle, it could become a key technology building block affecting numerous initiatives.
"If you accept the fact that we can move money securely, the possibilities are absolutely endless," Mr. Rosen said.
"It could be shopping on the Internet," he added. "It could be an application for a Fortune 1000 company to concentrate all their money on a global basis. It could be an application for paying bills, either for the consumer, or for a company like Checkfree, or for a Fortune 1000."
But Citicorp officials are tempering their visionary enthusiasm with extreme caution, and not rushing their technology to market.
Mr. Crook said the bank intends to monitor the numerous electronic experiments on the Internet, as well as the banks that are dabbling in them.
Mark Twain Bancshares of St. Louis, for example, has hooked up with the Dutch firm Digicash Corp. to issue digital cash for shopping on the Internet. Unlike Citicorp's digital cash, which would be tracked by the bank and could be recovered in case of computer failure, Mark Twain's cybermoney is right now as untraceable and unrecoverable as coins lost through a sidewalk grating.
Another pioneering example is Cardinal Bancshares of Lexington, Ky., which has established Security First Network Bank, conducting its business exclusively on the Internet.
But Mr. Crook dismisses the available electronic cash offerings as "toy" programs fraught with security hazards.
"Are the current products being offered now going to be the ones that really dominate the market? I don't think so," Mr. Crook said.
"This is money," he said of the Electronic Monetary System. "Once you start to put real money out there, the temptation to mess about with it is going to be incredible. Unless this is really well thought through, I think we're going to have a lot of problems."
Saying the realm of the Internet is a "flaky world," Mr. Crook stressed that it would take both time and regulatory safeguards to ensure that a digital dollar was as trustworthy as a dollar bill.
He called it "inevitable" that "money is going to transform itself into electronic form. The only issue for me is, what is the form that we're all going to be comfortable with?"
Bernell Wright, an independent banking consultant who used to work at Citibank in an office next to Mr. Rosen's, said Citicorp "stands alone" in its commitment to offering a competitive solution.
"It is amazing the amount of sophisticated technology and technologists who have brought their good efforts and scrutiny" to the electronic money project, Mr. Wright said.
He said the technology is so leading-edge that no one can predict its eventual impact on electronic commerce. Because it addresses "a commercial environment that does not yet exist," Mr. Wright said, "it is a step out on the cutting edge where the razor blade may not yet be defined."
Citicorp has obtained patents on the technology, submitted it to review by an outside laboratory, and demonstrated it for Comptroller of the Currency Eugene Ludwig, who has made a point of monitoring new-money developments.
The national bank regulator has made no judgments of Citicorp's system or of competing ones, said agency spokesman Ed Alwood.
"For a long time, the banking industry would say the one thing they couldn't get the home computer or the telephone to do is spit out cash," Mr. Alwood said. "I don't know how long they'll be able to say that."