Market Discussions

I believe it would be possible to make a NPC bank work if you follow some basic principles.


1. Interest rate must correlate to risk.
The interest a bank pays is (more or less) a payment for the risk you take when you deposit funds in that institution. This risk is the risk of losing some or all of your deposits in case of an imbalance of the bank.

In terms of game mechanics there could be a complex formula that checks on a daily basis whether the bank gets into financial distress. This formula should take into account all the significant operating numbers of the bank (in a simplistic approach probably only total amount of deposits and loans at first), the political situation of the empire where the bank is authorized or has its headquarters respectively (i.e. if the Amarr Empire loses a solar system, that could have a negative impact on bank institutions that are based in the Amarr Empire), the business model of the bank (NPC banks should have some kind of a business model at least for role playing purposes, i.e. the business model could be to invest in NPC mining operations which could affect the bank if mineral prices change significantly) and maybe other things.

If the bank gets into financial distress a second formula could then determine the amount of loss for depositors – a haircut of 30% or 40% would not be unrealistic.

This also includes an opportunity to create a new ISK sink. To protect depositors from potential losses you could implement a bank deposit guarantee scheme that protects some of your deposits at a cost (like ship insurances).


2. Bank loans must be covered by capital held by the bank and collateralized by the debtor.
Bank institutions need to have capital (of a certain quality) to cover their risks so that (minor) setbacks to their business scheme don’t threaten the institution itself. Considering this is EVE Online I’d suggest to set the capital ratio to 100% or at least close to 100% (meaning the bank could only give ISK as a loan to a player, if other players gave the ISK to the bank in the first place).

Collateral could be a problem as others already said.
I believe it could work if the bank only accepted items that are traded in larger quantities and not at the full market value of that item (I would make it a function i.e. 70% of the lower of the current market value and the median value over the last 3 months).

If you think about it, you’ll even find good reasons for investors to not sell an item but use it as collateral instead. Let’s assume you invested 2 Bn ISK in Megacyte at 2,000 ISK/unit because you believe the price will go up to 2,800 or even 3,000 in 6 to 9 months. If you use your stack of 1,000,000 units of Megacyte as collateral, the bank would give you a loan of 1.4 Bn ISK for example at a cost of 7% interest (assuming you have good standings towards the bank – maybe this even gives an opportunity to introduce a new social skill if you want: “boot licking” raises the chance to get a loan for low interest rates ). You could use that money for short term investments while you wait for the price of Megacyte to go up. Or you take that money and deposit it in that other bank institution in that contested border system that currently offers 12% to depositors and hope that your side will win and that the bank survives.

To increase complexity you could start by accepting X% of the value of items taken as collateral to count towards own funds requirements of the bank, where X% is a value that takes into consideration the risks inherent in liquidating assets on a gone concern basis as opposed to the going concern value of those assets. (Note: I wouldn't suggest that the bank actually sells these items on the market, because otherwise the bank would compete with players which could have an undesireable impact on the ingame economy. Instead said items should just be removed from the game after a grace period in which the player can try to pay off the loan so he gets the collateral item back. And if the market value of the item declined and is suddenly not covering the loan anymore, the player might choose to keep the loan which might destabilze the bank which in turn might endanger the deposits of the depositors of that bank.)

I didn't lose anything. I saw the signs and pulled out two days before he robbed his own bank.

For several reasons I think it wouldn't be that simple.

1. The bank in my suggestion can only lend out money it got from players. ISK is not created, just redistributed - it should be obvious why this is very important (actually you'll find a possible exception to this rule towards the end of my suggestion).
2. The formula to determine the value of the item you want to use as collateral was meant as an example. I would expect something more sophisticated if such a system goes life (like taking into account price spikes, trading volume, volatility). But even this very simple approach uses the lower value from current value and median value over the last 3 months. Sure, it's possible to manipulate the market even on a 3 month scale. But with an item that's traded by many it will cost you a LOT of ISK. Add to this the fact that you only get 70% of the items value (in my example) and it gets even harder.
3. If you remove money from the bank you'll affect the banks operational numbers. In my suggestion I mentioned the total amount of loans and deposits. Even if we assume that we forgot to implement safeguards, like increasing interest rates when the total loans/total deposits ratio shifts in an undesirable direction or like a stop of lending out ISK when a certain threshold is reached you still risk to crash the bank, losing access to your collateral items before you even closed the difference between the reduced value and the actual value.

I'm not saying that it would be impossible to abuse such a system. But at least it wouldn't be easy. (Besides, I'm just saying such a system could work. I'm not saying that we really need NPC banks.)

Characters are disposable, so characters cannot be punished. Accounts cannot be punished because those are also disposable.

Without a way to punish, there is no hope of a real bank. There needs to be a way to tie debt to a real person, not characters and accounts.

The only other way is to require some sort of collateral, but this method would need to be well thought out to keep the system from being gamed.

Well said.
I wish I would be able to grow into such a position of trust one day. I'm probably to low-key, though.

every one starts at zero, work to get to 100 instead of spending time complaining.

Because thats how real banks work?

You want a loan you need assets to back it up. As in collateral.

I would picture this working in EVE as the character or corp having assets as collateral.

A ship would provide collateral up to the platinum insurance value of the ship. You must maintain the insurance on the ship or it will be impounded, you can not refit or undock it while impounded. if you use it and it gets popped the insurance goes to the bank to pay the loan. just like in the real world if you wreck your car the insurance money goes first to pay off the car loan. You get whats left if anything.

If you have a jump freighter sitting in a hanger unused you can get a loan against it equal to the value of its current insurance value without needing to sell it to raise the isk. You pay the loan back in monthly or weekly installments. As long as you keep the ship insured you can use it on the basis that if it gets destroyed the insurance pays off the loan first before awarding you any returns.

Other uninsurable assets in your hanger used as collateral would simply be locked down. You can not consume them or move them. Stuff like BPO's could still be used but not moved or sold while being used as collateral.

It would be a cool mechanic if done right.

Sod having a bank,

Just give everyone another wallet division so we can put isk in, so it would act as say a savings wallet so we can separate disposable isk from saving isk.

ISK is easy enough to come by in game..

Just something as simple as another wallet division in every ones wallet would help many of us..

bank sounds nice for people with billions and billions to sit in a bank account and collect interest, <--- that part is not needed, as to loans in my opinion just mission, rat, mine a couple of hours more you will soon get your isk..


O and yes I know this wallet division thing has been around for some years, I remember posting on a similar forum post approx in 2007.