Market Discussions

I actually iterated on all of EBANK's functionality with proper financial accounting as part of the Insurance project that Sencnes and I tried to launch. I shut it down because the point was to run an insurance company, not a bank, and the insurance company had too few customers to continue.

Right now my focus is on semi-automated accounting in EVE using multiple characters with financial reporting. To be clear, right now I am not focusing on building a Bank.

You mean the insurance company? Sure. I didn't get into the Banking aspect of it too much on the forum however, hopefully my reasons for that are clear when you read through this thread. Banking was necessary to move money to buy policies and do withdraws when claims were filed. I built in, but never activated, monthly interest credits.

Launch thread:
http://community.eveonline.com/ingameboard.asp?a=topic&threadID=1515816&page=1#1

Discussion of business:
http://community.eveonline.com/ingameboard.asp?a=topic&threadID=1127759&page=1#1

Hexxx: In just glancing over that business idea, I was super impressed. For some reason I never even thought of player-based ship insurance, but it makes complete sense. Insurance should ideally be player run. There are so many financially possibilities that are prevented from developing because:



Vaerah: I take it that you are isolating the central problem, rather than proposing something CCP should add to the game?

See, I am usually for going directly and bust the bubo insted of running circles around it.

FIRST you place solid foundations then you chisel all sorts of embellishments and ideas around and over them.
For what I can imagine, I'd implement a system where individuals could file a special petition. They send proof of RL identity (driving license / id card + 1 recent phone bill or similar) and explicitly forfeit to their right to scam in EvE, on every and all of their accounts.

At this point their operation becomes exactly like my charity (by the way about it, please read the post I made few minutes ago, I could use ideas there).
That is, anyone caught trying to scam is perma banned and their stuff sent back to the investors.

Moreover, the guy has to hold a capital reserve and more assets than the risk capital (see it as a margin) held as reserve. Those will also be given away in case of scam or even just of default.

I am sure there may be more details to think about but that would be a beginning.

Never gonna happen.

I am going to stay FAR AWAY from the term "central bank" and all of the implications that term carries. Clearing House. :)

What I am suggesting a way to comoditize the bank credit (the debts the banks owe to their depositors) and create a standardized and managed system that allows the transfer of that commodity between the banks. How the players choose to utilize it is frankly up to them.

I'll do this by example and then try to draw some conclusions with out rambling, ... too much.

Player Bob deposits 100 million ISK in First Bank of Jita (FBJ). First Bank of Jita now credits the player with 100 million IBN. 1st bank of Jita registers this new deposit with the Clearing House.

The House records this data in the FBJ account. 100 Mil ISK and 100 Mil IBN. The balance at the House, for the FBJ, is zero.

First Bank of Jita goes off and does what ever it wants to do with that 100 million ISK. The management of the ISK is the responsibility of the commercial bank, the FBJ in this case, including its own reserves and reserve ratio.

A week or so later, Bob wishes to transfer 50 million of his IBN to another institution. "Jake's Mineral Fund", the JMF. Bob opens an account at the JMF and instead of opening the account with ISK, he opens it with IBN. He provides an account number (standarized across the system) a bank number coresponding to the 1st Bank of Jita and a password for the account.

JMF contacts the House who authenticates the data. The House subtracts 50 million IBN from the 1st Bank of Jita balance and adds it to the balance of the JMF. The FBJ now has a 50 millon debt on its account at the House and JMF has a 50 million credit on its account.

The JMF now has a new 50 million IBN account for Bob, although JMF as yet does not have the ISK, Jita Bank has it for the moment.

Upon the next settlement, the House sends a 50 million ISK request to the Jita Bank. Jita Bank transfers 50 million in ISK to the House, and the House then transfers this ISK to the JMF. The 50M from FBJ settles the FBJ account, and transfing the 50M to JMF settles the JMF account. The clearing house is in balance.

Now for the rambling ...

Since all funds are fungible, the House is only having to make as many ISK transfers as there are banks that have a positive balance with the House for any given settlement event. Only the banks that have a negative balance with the House have to do an ISK transfer to the House. (Obviously indebted banks must pay the House before the House can pay those with a positive balance.)

The House makes public which banks are responding to payment requests and which ones are not. This gives players some idea of the operation of the various banks. Who's doing what they're supposed to and who is a slacker. So not only does the House become the means to transfer the bank credits, the IBNs, and the ISK but also a reporting agency that players can use to guage the different banks. The House is also sharing some of the risk so needs to do a good job of who it allows to be a participating bank.

What this provides is a way for players to transfer their ISK from one institution to another, with out that player and both banks, having to deal with all the administrative over head. That overhead is being done by the House. And the house is providing some, though of course not all assurance of the different Banks. If the House is allowing in crappy banks, then the House is not going to make any money it self.

The House could charge a fee for initial audits and allowing a bank/institution to participate in the system. Also perhaps monthly fees and/or interest on negative balances or a tiny slice of transfered funds on settlement. These funds would be used to build up enough slush and buffer of ISK to mitigate some of the risk by allowing new banks into the system. All participating banks would have a vested interest in keeping all of the other banks honest and settling their House balances in a timely manner.

Casinos (most famously in Vegas and Atlantic City) have the 'Black Book' of blacklisted con men, thieves, and cheats who are no longer allowed to patronage their facility. This sounds similar.

Course, it would also be fun to employ a specialist group of player 'repomen' who track down the welcher and recover funds for the bank by introducing them to hard vacuum and then looting/salvaging their wreck for what can be sold off on the market (which might even turn a profit if hes carrying valuable drops/mods at the time.)

But thats my lowly .02

@ Adunh Slavy

The concept seems really interesting. However, there are some major hurdles to overcome if such a thing were to be introduced to EVE:

1. IBN could not be used on the EVE markets because CCP has not provided the infrastructure for ISK-alternative payments.
2. IBN would not be accepted by the majority of players, because it requires faith in the IBN House and system.
3. It relies on a pre-existing banking structure. As it is conceived now, when a bank fails that has IBN linked to it, the IBN for that bank becomes useless. The IBN House would essentially have to wipe that currency from the record. This lack of protection discourages the usage of IBN.
4. The IBN House itself is at risk for being scammed, because it would become a centralized source of ISK flow between the banks.

The more fundamental problem I see with this is that there is not a real need or desire for "commercial bank money" in EVE. In the real world, debit cards, credit cards and checks make the process of paying for goods and services easier for consumers and banks, because whenever something is paid for in cash, it has to be physically counted by the consumer and the business (in addition to making audits for businesses extremely painful). In EVE, ISK is already a digitized currency, so it has all the benefits of "commercial bank money" in the real world, like easy transactions and automated record keeping. Creating "commercial bank money" in EVE might be a step backward, because record keeping would become manual and transactions would become cumbersome.

They weren't particularly good at it.

@Adunh Slavy

I believe I am getting a bit more of an understanding of exactly what it is you are proposing. I believe your proposal was not meant merely to create "commercial bank money," as I original assumed. The positive aspects of the system that you are proposing:

1. The banking system would also allow players to diversify their risks by depositing ISK in various individuals banks, thereby encouraging banking in general. They would not have to deal with the cumbersome aspects of such diversification because their requests for withdrawals could go directly to the IBN House.
2. The banking system would be a solution in part to the problems of banking in EVE, because it would be establishing a way to have regulatory limits on individual bank's maximum global deposits. Fast growth is highly problematic for EVE banks because often that money is not allocated correctly.
3. Stock markets, casinos, and other secondary markets or services could more easily function because there would be pre-existing infrastructure (i.e. the IBN House) to send handle deposits made into these secondary service accounts.

I am unsure about some of the aspects and incentives of the idea as a whole, but I believe there are two ideas in it that are really good: it envisions a banking system with many smaller banks rather than a few huge banks, and it sets forward ideas for the small banks to form a regulatory committee for the banking system as a whole.