We describe challenges in the risk management of smart card based electronic cash industry and describe a method to evaluate the effectiveness of distributed intelligence on the smart card. More specifically, we discuss the evaluation of distributed intelligence function called "on-chip risk management" of the smart card for the global electronic cash payment application using micro dynamic simulation. Handling of uncertainty related to future economic environment, various potential counterfeit

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... attack scenarios, requires simulation of such environment to evaluate on-chip performance. Creation of realistic simulation of electronic cash economy, transaction environment, consumers, merchants, banks are challenge themselves. In addition, we shows examples of detection capability of off-chip, host based counterfeit detection systems based on the micro dynamic simulation model generated data set.