The need of a bank for Yliakum's wealthy: The shopping center example

[Davigetto]

Hello everyone,

I am Ayvlis Azshara, High Priestess of the Temple of Laanx. Attending to the Octarch Socierty of Progress last week and talking about Tolian's bank [I have heard that he has been banned but I don't know why nor what happened], I have been thinking in an idea that can change some concepts in Yliakum.

First, I will say which is my idea: My idea is creating a popular bank. I will explain it further afterwards when have explained with detail first why we need a bank.

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

Everyone in Yliakum has thousands of tria in their pockets. Some few thousands, some LOTS of thousands. That money does not flow, and the flowing of money is necessary in order to bring wealthy to a country, thanks to the concept of INVESTMENT. If all money is pooled and spent wisely, the money can grow in more money in time. In order to explain that, I will use two examples of Investments: A shopping center in Hydlaa and a Platinum melter.

People in a bank can make 3 operations: Deposit money, withdraw money and loan money. If anyone deposits money, it will be deposited for instance at 2% interest per year (2 months in RL); that will motivate people to deposit their tria in the bank. The loan will be made in base who is the one who asks for the money and the amount of tria deposited by citizens. Except the loaning task, deposit and withdraw operations can be performed by Chorind. All the money deposited can be collected by specially designed-by-Octarch people (the investors). All money movements should be controlled by Octarchs, so there would be no way for corruption. Of course, the bank will be popular, so there will not exist an owner, only the Octarchs. All the profits of the bank would be invested in improve the cities, no one will take benefit of the bank.

EXAMPLE 1:

Now let's imagine with an example an Ylian who wants to be a platinum melter in order to make money faster than mining all day. The training in order to achieve that is around 350.000 tria. But the poor Ylian has not enough money, so he has to spend his time at Gugrontid to get the money. But... what about if the bank loans him the 350.000 tria immediatelly (at 6% interest to return in a year, for example)? He could begin immediatelly his training, and once he becomes a platinum melter, he will be able to generate more money in less time. One point for the bank

EXAMPLE 2:

Now let's imagine a guy who has 1.000.000 tria in his pockets. He deposits his money in the bank and he will recive 20.000 tria in a year (2%) and contribute for improvements in Hydlaa. Two points for the bank.

EXAMPLE 3:

There exist a good and wise investor, and after making a good analysis, he has come to the conclusion that Hydlaa needs a Shopping center. The shopping center would be a public building where people can make stands and shops in there. Weapon shops, armor shops, restaurants, beer stores... A complete and nice-looking bazaar (with several floors if possible) where everyone can sell and buy in the same place. After asking the octarchs, the construction of the building requires 3 million tria.

In Chorind's we see that people has deposit a total amount of 5M tria (cool!). Then we can retrieve 3 Million and give them to the octarchs who will order the construction of the building. Once we have it, everyone who wants to build a store or shop in there must pay a fee and he will have a reservated space for his shop (the fees would be the way to recover the investment). Also a little % of sales could be retrieved in order to reciver the investment, and after the investment has been returned, the that % could be deleted.

What have we won?

1- A place where merchants and customers can buy with peace, relaxed, and enjoy more the act of shopping.
2- A public and social space.
3- A good point of money flow.

Three points for the bank

EXAMPLE 4:

Now the guy who deposited the 1.000.000 tria wants to retrieve the money, but the desposits in total in the bank are 5.000.000 and the has been an investment of 4.5 million. What happens? The total amount requires some time to be retrieved of course. However, with a good amount of loans, there would not be any problem and Hydlaa would be wealthy and could be recovered without problems.

[like in real life, banks just keep 2% of the money (which can be changed to a 10% in PS). To recover such amount of tria requires some time. Also if everyone decides to withdraw his money, all will be a total chaos, but this chance is not concerned in Yliakum.]

EXAMPLE 5:

What about if someone does not return the loan?

Well, in that case authorities must act.

[Now, what do you think about being implemented such a system in Yliakum? Is it viable? How can this idea be improved? This is just an idea and should be maturated]

Greetings and may Laanx bless you.

[zanzibar]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[Investors can enable entrepreneurs to acquire capital so that they can produce.  When others consume the produce of that capital, the money is then returned to the investors.  The loop is not infinite - it is limited by consumption, unless it's capital itself that is being produced, in which case investors are actually speculating on the future values of investments.  Then you have a more infinite loop, where investors are buying and selling the same investments to eachother.  But that's called a bubble, and the bubble pops once people realize that the investments only have value because other people think they have value.  But nowhere is money being created.  Value is being created, and it's based on speculation of future values.]

[Dermathil]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[Investors can enable entrepreneurs to acquire capital so that they can produce.  When others consume the produce of that capital, the money is then returned to the investors.  The loop is not infinite - it is limited by consumption, unless it's capital itself that is being produced, in which case investors are actually speculating on the future values of investments.  Then you have a more infinite loop, where investors are buying and selling the same investments to eachother.  But that's called a bubble, and the bubble pops once people realize that the investments only have value because other people think they have value.  But nowhere is money being created.  Value is being created, and it's based on speculation of future values.]

[... and the current economical crisis is caused by several bubbles popping at once.]

[zanzibar]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[Investors can enable entrepreneurs to acquire capital so that they can produce.  When others consume the produce of that capital, the money is then returned to the investors.  The loop is not infinite - it is limited by consumption, unless it's capital itself that is being produced, in which case investors are actually speculating on the future values of investments.  Then you have a more infinite loop, where investors are buying and selling the same investments to eachother.  But that's called a bubble, and the bubble pops once people realize that the investments only have value because other people think they have value.  But nowhere is money being created.  Value is being created, and it's based on speculation of future values.]

... and the current economical crisis is caused by several bubbles popping at once.

[Plus people bought all sorts of things on easy credit, our retirement savings were foolishly placed in stocks, we have significant trade deficits with foreign countries, and our manufacturing base has left the country.  So we spent a lot of money, the money left the country, we don't have as good jobs to make the money back, and we aren't buying as much because we either already have it or we need to save our money for necessities or retirement.

The thing with a bubble is that it doesn't eliminate wealth.  It just moves it around.  Those who get in at the right time and get out at the right time make a killing.]

[Dermathil]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[Investors can enable entrepreneurs to acquire capital so that they can produce.  When others consume the produce of that capital, the money is then returned to the investors.  The loop is not infinite - it is limited by consumption, unless it's capital itself that is being produced, in which case investors are actually speculating on the future values of investments.  Then you have a more infinite loop, where investors are buying and selling the same investments to eachother.  But that's called a bubble, and the bubble pops once people realize that the investments only have value because other people think they have value.  But nowhere is money being created.  Value is being created, and it's based on speculation of future values.]

... and the current economical crisis is caused by several bubbles popping at once.

[Plus people bought all sorts of things on easy credit, our retirement savings were foolishly placed in stocks, we have significant trade deficits with foreign countries, and our manufacturing base has left the country.  So we spent a lot of money, the money left the country, we don't have as good jobs to make the money back, and we aren't buying as much because we either already have it or we need to save our money for necessities or retirement.

The thing with a bubble is that it doesn't eliminate wealth.  It just moves it around.  Those who get in at the right time and get out at the right time make a killing.]

[Yep. Luckily, my parents are psychologists, so they are quite out of the grasp of the economical crisis.]

[Donari Tyndale]

[I knew why Tolain chose Ayvlis as his successor , great idea.]

[Bguy]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[PS isn't real life. All money comes from ncps who have an unlimited source of specific resources and tria, and goes back to npcs where it finds itself lost in the unlimited supply. This is a good idea, but don't call it a good idea because it works in RL.]

[Davigetto]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[PS isn't real life. All money comes from ncps who have an unlimited source of specific resources and tria, and goes back to npcs where it finds itself lost in the unlimited supply. This is a good idea, but don't call it a good idea because it works in RL.]

[IC wise, unlimited tria do not exist , so if we want more buildings in hydlaa, the money for the building does not appear "magically"]

[Dermathil]

[In real life, the economy works and grows up thanks to the flowing money and good investments (without corruption, the current economic crysis would have not existed). Investments create more money, and the money created can be used to make more investments and this is an infinite loop].

[PS isn't real life. All money comes from ncps who have an unlimited source of specific resources and tria, and goes back to npcs where it finds itself lost in the unlimited supply. This is a good idea, but don't call it a good idea because it works in RL.]

[IC wise, unlimited tria do not exist , so if we want more buildings in hydlaa, the money for the building does not appear "magically"]

[Supposedly, Hydlaa is in its final form, and won't get bigger.]
[P.S: Move this to another forum, as In-Game event isn't the place in my opinion. Wishlist would be better...]

[carua]

well,IC it would be a decent idea
[but for OOC reasons it wouldn't work,lets say I borrow 500,000 tria the quit playing PS,then what?
and RL banking began as blacksmiths keeping items for people and handing out gold coins in there place for practicality terms,so item banking would/shoould be the first stop on the ladder]

[Elady]

[ In real life it is natural for the economy to go through boom and bust cycles. No economy has ever kept growing without going through recessions on a fairly regular basis. Also it is quite normal to have bubbles where people drive up prices of an object to stupidly highly levels only to have the bubble burst and have the prices of said object fall to really low levels before recovering back to where the price level of said object should have been. In the U.S.A the current example of a bubble is housing prices. One of the original examples of a bubble is tulips dating back to the 1600s.

Sorry but I can see a lot of potential headaches  if there was a PC run bank in the game. For example what happens during the next house auction and guilds can take out loans from the bank in an effort to win a house in an auction? A couple of guilds take out large loans in order to try and be ready to  win a house in an auction. The bank loans out most of their money to these loans. Then just before the auction several of the large depositors in the bank want to withdraw their trias from the bank so they can be ready for the auction. The only problem is that bank can't cover the  withdrawal requests because they have already loaned out the money and don't have enough trias on hand. In real life banks have reserve requirements to help prevent this kind of over loaning situation. Also in real life banks can take out short term loans ( like over night loans) from other banks in order to help meet these reserve requirements.

Also what happens if the bank makes a loan to a guild, so the guild can buy a house, and then the guild can't pay back the loan. Dod the bank get the guild house in foreclosure ? If so does the bank get to keep the house to do with as they wish? Could the bank end up owning several houses at once due to foreclosure?

LIke wise what happens if an individual takes out a large loan and then has to stop playing for what ever reason and is never able to repay the large loan? There are lots of details that would have to be worked out before  a PC controlled bank should be allowed. Until that time there is nothing to stop those PCs who have spare trias from acting as a private bank and making loans. Heck I recently made a short term loan to a friend whom I trusted. I was ready to accept the consequences  if this friend didn't repay the amount I had leant. In the end my friend did repay me and with a nice amount of interest ( even though I never asked for expected any kind of interest payment when I made the loan.]

[zanzibar]

[I had actually thought about running a scam with Donari that involved trading stocks.

Basically, we would invent a company.  Then we would divide it into 1000 shares.  We'd sell 500 of the shares at 10 trias each.  Then we would buy back 100 of the shares at 100 trias each.  Then we would buy back 150 of the shares at 500 trias each.  Then we would make an announcement like "We are announcing that we will be buying back our shares at 5k per share in one week."  At that moment, we would sell our 750 shares to the public for 1k each.  Then when a week passed, we'd declare bankruptcy and avoid paying anyone anything.  Net profit would be 830.000, using the numbers I gave.  If we did it with ten times as many stocks, the profit would be over 8 million.

Of course, it would be a mean thing to do, we'd have to use alts, the GMs would frown on it, and I don't really need trias that badly anyway.  In fact I gave away all my money and items, including my entire rare glyph collection.  All I have left are a pair of daggers I believe.]

[Elady]

[ I think a more full service bank in game would be a good idea, if it was owned by the Octarchy and backed by it but maybe had PCs who were hired to run it. The Octarchy could set the bank rules ( like lending to deposit ratios) and could provide the backing to prevent a run on the bank. PCs could then get loans to support their activities. I think something like this could open up lots of RP opportunities but have the regulation that a bank would need so that the problems I mentioned above are avoided.]

[verden]

If there is a bank, it should be hard-coded into the game. For obvious reasons. No player involvement. The Ochtarchy should stamp out any independent banking entities. Never mind that running "banking" in game is painfully boring and doesn't make any sense as to why people would want to do it... *unless* there is some sort of scam aspect to it.

[Addeline]

What is wrong with the current in-game banking system?