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Mortagnan
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Posted - 2009.11.18 17:43:00 -
[1]
I've read much of the analysis and post-game show posts following the DBANK and EBANK debacles. I've derived a simple concept from all of this:
All the ISK goes in a wallet and its very easy to make ISK disappear from wallets. Without fixing this or having consequences for doing so, banks are doomed.
There may be a solution though. If the bulk of ISK can be converted to a non-transferrable valuable item that is monitored and controlled by a large trusted group, then the majority of depositors funds could be secured.
I propose the creation of a corporation whose shares are immediately distributed to a board of trusted MD folks. This corporation is not a bank on its own, but an overseer of accountability for folks aspiring to open banks. A system could be built where large portions of held deposit are sent to this overseer corp, where it is held in value as bpo's. The bpo's are locked in a corp hangar, thus requiring the boards approval to move it. By diversifying the deposit base and keeping it non-liquid, this oversight should diminish and hopefully eliminate future bank fraud of large magnitude. Any bank that doesnt comply to this overseer's rules simply doesnt get a 'gold seal of approval' or some such.
Thoughts?
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Kalrand
Charles Ponzi School of Business GoonSwarm
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Posted - 2009.11.18 17:45:00 -
[2]
How do these locked down, valuable items make money to pay interest?
I guess that's a recipe for a BPO copying shop.
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Jovialmadness
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Posted - 2009.11.18 17:47:00 -
[3]
Possible, but tbh I hate it because if your "holding Corp " is holding say tech two bpo's that means I won't be able to get my greedy little hands on them. That would be totally uncool. |
SetrakDark
Caldari DarkCorp Technology and Finance
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Posted - 2009.11.18 17:54:00 -
[4]
Check out Eve Central Reserve
They have a proposed structure similar to this
You're right in the general idea, but the devil is in the details
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Roguehalo
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Posted - 2009.11.18 17:59:00 -
[5]
"a large trusted group"
Didn't Ebank used to be one of those?
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Dzil
Caldari Waffle Investment Fund
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Posted - 2009.11.18 18:03:00 -
[6]
I was just thinking how similar this sounds to the operation Bad Bobby is running in T4U right now.
If the locked down assets are converted to BPOs, there's a pretty good chance to create extra isk through research/copying. Not a ton, mind you - probably not the 4%/month paid out today by even the "blue chip" bond issuers, but perhaps enough to entice would be tellers/managers to set down collateral before taking control of vast bank assets.
Dzil's Corp Sales - 200m |
Mme Pinkerton
Caldari
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Posted - 2009.11.18 18:05:00 -
[7]
People use bank accounts (and don't buy bonds), because they can withdraw their deposits at virtually any time on very short notice.
" Credit is the economic judgement on the morality of a man. " |
RothimusPrime
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Posted - 2009.11.18 18:05:00 -
[8]
How would the "bank" then generate isk to cover interest payments and how would you pay withdrawals if the isk is locked down in a BPO?
It's a good idea, but it's not a bank.
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Dzil
Caldari Waffle Investment Fund
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Posted - 2009.11.18 18:30:00 -
[9]
Originally by: RothimusPrime How would the "bank" then generate isk to cover interest payments and how would you pay withdrawals if the isk is locked down in a BPO?
It's a good idea, but it's not a bank.
Missing the point, but I wasn't very clear. The operation would look something like this:
1) Trusted group created corp structure to control access to BPOs. Manage shares such that 3/5 members have to vote to release the BPO, or something similar. 2) Require deposits/collateral equal to the value of money to be managed from all BoD/tellers in the bank. 3) Convert this collateral into BPOs, and lock them down in the vault. Assign someone the role of making money with the BPOs. 4) NOW start accepting bank deposits from customers. 5) Release to tellers/managers isk equal to the collateral deposited. There is now very little risk they can "take the money and run", because their collateral is locked down.
In other words, this isn't the system to make money using bank deposits, this is a system to store collateral from bankers/tellers so they can't hit the bank the way Ricdic/Manalapan/Xavier did. I still think the guy at the top could ultimately take some money, but managed carefully losses could be better controlled.
Dzil's Corp Sales - 200m |
Mortagnan
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Posted - 2009.11.18 19:36:00 -
[10]
Dzil has expressed the basic concept very well. I envisioned this to be more of a...bank for banks. Similar to the Federal Reserve in the United States. As such, it wouldnt be holding all of the deposits, but it would hold the asset reserves (read: collateral) of participating banks. If it were to make money, this corporation would probably charge a maintenance fee to participating banks in exchange for its certification.
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Capitalist Swineherder
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Posted - 2009.11.18 20:14:00 -
[11]
Banks don't need fixed. It would be very Un-Eve to be able to give your money to somebody else and not have the risk of them running off with it.
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Kiva Aharan
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Posted - 2009.11.18 20:16:00 -
[12]
I always assume that if I send isk to someone it is gone.
The numerous banking and investment scams have done nothing but prove me right.
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Mortagnan
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Posted - 2009.11.18 20:19:00 -
[13]
Originally by: Kiva Aharan I always assume that if I send isk to someone it is gone.
The numerous banking and investment scams have done nothing but prove me right.
It's a wise philosophy to have in general, but there's no reason the market community cant come together and build a structure to help stabilise the financial services market. Right now, consumers have no confidence. See above.
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Kiva Aharan
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Posted - 2009.11.18 20:30:00 -
[14]
Originally by: Mortagnan
Originally by: Kiva Aharan I always assume that if I send isk to someone it is gone.
The numerous banking and investment scams have done nothing but prove me right.
It's a wise philosophy to have in general, but there's no reason the market community cant come together and build a structure to help stabilise the financial services market. Right now, consumers have no confidence. See above.
Indeed. The ultimate failure of the banking system comes down to a matter of trusting other players. If we're going to see this fixed I think banking has to be built in to the game. Just imagine the market if the market interface didn't handle the transactions and make sure that when you send isk you get something in return as a buyer.
In the end any operation in Eve that requires trust is going to fail often enough to make most pilots suspicious.
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Liberty Eternal
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Posted - 2009.11.18 20:56:00 -
[15]
Edited by: Liberty Eternal on 18/11/2009 21:01:29
This is a good idea - putting your money into a secure asset management program that is backing up a bank is just a genius idea.
You would have 2 corporations - one corporation would be the bank, holding a small percentage of the total capital, for daily transactions and operations. The second system would be the asset management system - transferring 80-90% of the bank's monetary value into a secure asset management system.
This secure asset management system could be used to stabilise and prop up several different banks. Indeed, an entire banking/asset management system could be developed in this way, with competing banks and asset management systems on the market.
With such systems on the market, banks can demonstrate their credentials by putting their holdings into such systems thus demonstrating the security of their system.
By tying into BPOs and industrial goods, the asset management system would not only prop up banks and allow for the formation of a financial services industry, it would also be a "library" for industrial corporations seeking BPOs - just like pension funds or investment portfolios, it would become a major financial instrument in its own right.
Indeed, just about anyone looking to start up a bank could do so with such a scheme in place. This could be the start of something beautiful.
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Vaerah Vahrokha
Minmatar Dark-Rising IT Alliance
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Posted - 2009.11.18 21:14:00 -
[16]
Quote:
I always assume that if I send isk to someone it is gone.
The numerous banking and investment scams have done nothing but prove me right.
Of course, if you only consider failure, you'll always and only see failure.
Banks might suck, but there are a great number of successful other investments.
- Auditing and consulting
Before asking for investors, please read http://tinyurl.com/n5ys4h and http://tinyurl.com/lrg4oz
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Captain Tardbar
State Protectorate
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Posted - 2009.11.18 23:05:00 -
[17]
Originally by: Kiva Aharan
Originally by: Mortagnan
Originally by: Kiva Aharan I always assume that if I send isk to someone it is gone.
The numerous banking and investment scams have done nothing but prove me right.
It's a wise philosophy to have in general, but there's no reason the market community cant come together and build a structure to help stabilise the financial services market. Right now, consumers have no confidence. See above.
Indeed. The ultimate failure of the banking system comes down to a matter of trusting other players. If we're going to see this fixed I think banking has to be built in to the game. Just imagine the market if the market interface didn't handle the transactions and make sure that when you send isk you get something in return as a buyer.
In the end any operation in Eve that requires trust is going to fail often enough to make most pilots suspicious.
Its not really trust but fear that would be the motivating factor.
As in there is no fear of retaliation for breaking that trust.
I have a simple solution.
Negative ISK contracts that can cripple a character.
Ex.
I create a contract to loan you 100 mill isk that will be paid back in 12 weeks. You don't pay that back and transfer your money to another alt. Then when the contract expires and you fail to pay back, your character will be hit with a negative isk bill to their bank account. If you transfered that money to an alt then you get a negative balance, but that does not create money for me (that could be abused to generate isk out of thin air). So yeah... Your alt has my 100 million but the character you used now gets no isk til the balance is paid of (i would make it so the money doesn't come back to me as that would be too gamey)
And with proper use of viewing a bankers API key you will now if they have a negative balance.
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ddooxx
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Posted - 2009.11.18 23:07:00 -
[18]
Originally by: Capitalist Swineherder Banks don't need fixed. It would be very Un-Eve to be able to give your money to somebody else and not have the risk of them running off with it.
CCP has already created three mechanisms - markets, contracts, and trades - that insures there is zero risk you don't get what you were promised. ( It might not be what you expected *cough* CNR contracts *cough* but it is what you clicked on. ) So some bank equivalent of BPO lockdown or guaranteed transactions would not be unprecedented.
Perhaps banks could or should be fixed, but it is not clear. My guess is there will never be a viable bank. |
Liberty Eternal
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Posted - 2009.11.18 23:59:00 -
[19]
Edited by: Liberty Eternal on 19/11/2009 00:00:52 The original reason for banks was a secure place to store assets and money. That is the first and most essential step that has not been re-created in Eve.
Any extra services such as loans and investments are simply financial services that real-world banks have taken on over time - but it was their capacity for secure asset holding that put them in the position to do this.
Using contracts, blueprints, ships, raw materials, commodities and isk, it should be possible for a creative person to think of a method of storing and transferring deposits that is 100% secure.
That is the first step - never mind whether it is profitable. Once we have theorised various secure methods, we can start to think of ways to make them profitable.
A secure asset management system could work by a corporation collectively owning anything - BPOs, ships, stock, isk, future contracts, POS - which it can take into protected ownership as an asset for account holders. Just having an organisation in the game - even if it doesn't make a profit - whose ability to store and deliver on "promisory notes" would make an enormous difference.
Such an asset system could be set up by a few dozen wealthier players and corporations, who would be rewarded with voting rights in return. This organisation would be a kind of Central Bank for Eve - non-profit, but 100% secure and a promisory note issued by such a bank would be the equivalent of real money.
With such a central bank in place, it will then be possible for other banks and financial institutions to set themselves up by securing their stock in the central bank. Players can then deposit cash in a bank with the absolute certainty that their cash will immediately be converted into secure assets held by the central bank. The central bank will not need to buy up new assets to secure these deposits - it can simply return isk to its original investors while transferring the promisory note covering the amount to the depositor.
The important point is, that with such a system, there will exist a rapid - instantaneous - method of securing accounts and deposits. This is the first step in creating a banking/financial services system.
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Jimnoo
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Posted - 2009.11.19 00:19:00 -
[20]
Originally by: Liberty Eternal The original reason for banks was a secure place to store assets and money. That is the first and most essential step that has not been re-created in Eve.
That's the problem with banking in Eve. Through our wallets we already have a completely secure way of holding money. We can also tranfer money from our wallets for free, simply, securely and quickly.
Banks in Eve are mainly about making a return on assets people aren't currently using - that seems to require that the deposited assets are in a liquid form, so that the bank can generate a good return on it.
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Liberty Eternal
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Posted - 2009.11.19 02:51:00 -
[21]
Edited by: Liberty Eternal on 19/11/2009 02:52:04 There is a way to make this work. The essential idea of a bank is you take something of value, drop it off securely, then come back some time later and it is worth a little more. Or alternatively, you borrow something of value and pay it back later when it is more valuable.
If you can secure the material stocks, then you have the framework for a secure banking mechanism.
for example, you can have a bank of tritanium, a bank of shipping, a bank of ammunition. Customers can deposit 1 billion units of tritanium and the bank can agree to pay them back 1.1 billion units in 3 months. The bank secures that tritanium through the secure holdings coporation, then makes arrangements to lend the 1 billion tritanium units to third parties (industrialists) who agree to pay back 1.3 billion units of tritanium in 3 months.
3 months pass, and the "Tritanium Bank" gets its 1.3 billion units of tritanium, pays back the 1.1 billion, and holds 200 million tritanium as profit in the secure corporation on behalf of its investors.
The stock is never risked, the bank is just a broker it's the secure holding company that carries out the actual transactions - and the investors know the bank is secure because its assets are never converted to isk - no-one can run off with them. Yet nonetheless the bank makes a profit.
Of course, there are risks and speculations in involved, but there is NO RISK OF FRAUD.
A bank can be opened for every type of stock or industrial area - a Tritanium bank, a minerals bank, a shipping bank and so on. In each case, a variety of customers who are industrialists, speculators, military corporations, can invest their material assets in a secure vault, at a fixed rate of return, without the risk of fraud.
You can also add mechanisms to insure against stock movements, speculation, isk conversion and so on.
The point about the EVE economy is that it is not the real economy; if you want banking in EVE, you have to get outside the box and re-invent it from the ground up.
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Phoebe Halliwel
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Posted - 2009.11.19 05:27:00 -
[22]
Originally by: Liberty Eternal a bank of ammunition
The point about the EVE economy is that it is not the real economy; if you want banking in EVE, you have to get outside the box and re-invent it from the ground up.
A bank of... ammunition?
That last statement, umm. People who make remarks like that usually don't have any understanding of RL economics but claim to be Eve market gurus. It smacks of elitist snobbery, "eve is so different from other markets, we have squillions of pretend money, we can reinvent the wheel here, weee". Well, that went well.
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Isis Plissken
GoonFleet GoonSwarm
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Posted - 2009.11.19 07:51:00 -
[23]
I'm not 100% sure on the game mechanics, but what happens if the office where the BPOs are locked down is allowed to expire? Don't they get moved to the Deliverables and are now unlocked?
If this is the case then they you couldn't guarantee total security. |
destinationunreachable
Hello Kitty Fanclub
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Posted - 2009.11.19 10:01:00 -
[24]
I don't believe that a bank in EVE can operate safely without further in-game features (such as locking of ISK etc.)
We face the same problems as in real life banking where people with sufficient access rights can abuse this (think of all the rogue traders like Nick Leeson, Jeromel Kerviel, etc..). In real life you have usually: * locked accounts * mechanisms that need more than one person (or rather a group) to make larger transactions * automated audit systems * business ethnics * organizations not relying on one person * no alts and changing of identities
Until CCP fixes at least some of these issues, we will have more of ebanks, dbanks and whatnot
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Mortagnan
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Posted - 2009.11.19 15:47:00 -
[25]
Originally by: destinationunreachable I don't believe that a bank in EVE can operate safely without further in-game features (such as locking of ISK etc.)
...In real life you have usually: * locked accounts * mechanisms that need more than one person (or rather a group) to make larger transactions * automated audit systems * business ethnics * organizations not relying on one person * no alts and changing of identities
Until CCP fixes at least some of these issues, we will have more of ebanks, dbanks and whatnot
Stepping aside from the most recent suggestions of using minerals, ammunition etc. I'd like to redirect this back to the original proposal. Locking BPO's is the one feature within the game that is secure, requires multiple people to operate it and is actually foolproof from tampering.
Keep in mind the central bank isnt intended to be a profit-making entity. It's a body that allows banks to exist and restore confidence in the eve financial community.
If we dont do this, or something similar, we might as well trade space goats.
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Liberty Eternal
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Posted - 2009.11.19 15:52:00 -
[26]
Originally by: Mortagnan
Stepping aside from the most recent suggestions of using minerals, ammunition etc. I'd like to redirect this back to the original proposal. Locking BPO's is the one feature within the game that is secure, requires multiple people to operate it and is actually foolproof from tampering.
Keep in mind the central bank isnt intended to be a profit-making entity. It's a body that allows banks to exist and restore confidence in the eve financial community.
If we dont do this, or something similar, we might as well trade space goats.
This. For the time being, merchant/commodity banks will have to be put aside. For the purposes of banking, isk is only an unsecured stock. It will have to be BPOs.
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destinationunreachable
Hello Kitty Fanclub
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Posted - 2009.11.19 18:25:00 -
[27]
Originally by: Liberty Eternal
This. For the time being, merchant/commodity banks will have to be put aside. For the purposes of banking, isk is only an unsecured stock. It will have to be BPOs.
a) With the assets in BPOs I can't see a bank making any profit/interest for me. b) there is no use for a bank except of generating interest (and washing money ?) in EVE as the RL banking functions (money storage, money transfer) is already build-in
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Kuar Z'thain
Amok. Minor Threat.
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Posted - 2009.11.19 18:37:00 -
[28]
I swiftly clicked on the thread title expecting wonderful satire. Baby, am I disappointed.
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SetrakDark
Caldari DarkCorp Technology and Finance
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Posted - 2009.11.19 18:47:00 -
[29]
Originally by: destinationunreachable a) With the assets in BPOs I can't see a bank making any profit/interest for me.
The idea is that the bank founders already have a huge value in productive BPOs. They then lock these down jointly so no 1 person can do a runner. These locked down BPOs are then the security for depositors.
However, the fundamental idea of borrowing money to lend at a higher rate still seems flawed in Eve.
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Pax Empyrean
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Posted - 2009.11.19 18:59:00 -
[30]
Edited by: Pax Empyrean on 19/11/2009 19:00:01
Quote: How to fix banks - a modest proposal
I thought you were going to suggest we eat them when they're small.
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