Who on earth is still linking to this thread?

Who cares?

HTFU and GTFO.

Ah - I see you are a veritable fountain of terrible ideas that demand unnecessary CCP interference in the game. I fully understand your attraction to this thread now.

As an economy nerd you just gave me an orgasm.
Realistically speaking tho, the system would not work well with the current eve framework. If you introduced some risks on those bonds however, interesting things could come out. Risk free bonds would be a disaster, but what if there was a risk ? It's politics, after all.

...

The major and minor factions all pay ISK to players via missions & bounty prizes and they receive ISK via transaction taxes, skill books etc. However they are running a deficit which is covered by "printing" ISK and hence increasing the money supply.

Instead of printing ISK...

With the recent development and expansions of EVE I believe its time to take the step to create a better capital market.


Creation of a "risk free" rate.

In order to value all other financial products in Eve, a risk free rate is essential.

The major and minor factions all pay ISK to players via missions & bounty prizes and they receive ISK via transaction taxes, skill books etc. However they are running a deficit which is covered by "printing" ISK and hence increasing the money supply.

Instead of printing ISK, CCP can create a risk free rate by selling bonds through EVE market (at NPC bank stations) to cover the defecit.

I suggest 3 types of bonds: 1 week, 1mth and 3mth bonds, which are sold every Sunday.

All bonds will have a notional of 10mio ISK and the rate determined by selling price. Players can enter market orders at fx 99.00 which means that the player pay 9.9mio for the bond and receive 10mio at maturity. CCP start filling highest bids first and fill them until the deficit have been covered. If rates get to high or market orders cannot cover the deficit , CCP central bank will buy the outstanding bonds by printing.


To make the system more realistic and incorporated with EVE universe the current currency ISK which is completely unrealistic need to be replaced. ( https://forums.eveonline.com/default.aspx?g=posts&m=2974285#post2974285 )


Instead of 1 currency (ISK) , 4 new currencies wud need to be created , each printed and regulated by the major factions: Caldari yen -Ñ , Gallente Mark , Minmatar pund -ú and Amarr franc Géú.


We need these changes to create a free banking system and later a efficient stock & bond market. I will create another thread on these topics later.


EDIT:
I have been criticised by some players not to outline the bigger picture, so I will try to outline it here:
(This thread is only based on step 1-5, but i hope we can discuss some of the next steps in other threads)

Step 1. Creation of 1 active central bank which issue fixed income securities based on the deficit.

2. Creation of a secondary market for state securities.

3. The One central bank is divided into 4 banks, each issuing securities within their respective area but in the same currency (ISK).

4. FX Market: 4 new currencies are introduced. To avoid distorting the market, NPC banks will act as FX Brokers and FX exchange rates are pegged to each and Plex. Bid-ask spread will be set at <0.5% keeping transaction costs very low in the beginning.

5. When players have gotten more use to the new concepts FX rates can be widen to a band of maybe 5-10% (later maybe even more). Players can then start acting as FX dealers and brokers.

6. When the first 5 steps have been implemented, the state securities will now hold both FX risk and Inflation Risk.

7. Creation of active NPC banks reporting to their respective central bank. NPC banks already exist in EVE, but they do not play any role.

Players would have to actively choose a banking relationship - as all the banks are NPCs no difference will exist and interest will not have to be paid on accounts.

8. Player Corporation debt issues. The framework for private debt issues have been created, however private issues are much more complex than the ones of the state and it raises following concerns which need to be dealt with:

A genuine need for public money are needed. Almost anything in EVE are not more expensive than a dedicated player can earn the money fairly easy.

In RL public money are needed because no single individual (excluding maybe the richest families on the planet) will be able to fund and operate their own car factory or large ship yard.

Covenants GÇô as it has been raised early in the thread, No investor protection exist in EVE. This will have to change.

9. Player corporation equity issues (IPOs).

10. Most of my ideas here are based on the foundation that Eve players (corps) should have the freedom to pursue the career they want.

Hence Player customers should always have a choice between expensive NPC goods and services or Player operated industries which can offer better and cheaper products if they are well managed.

Final remark will be that if a FX system gets to complicated to implement due to CCP programming costs or lack of liquidity the rest of the steps would be achievable anyhow.

Bonds become available by EVE bank, secured by CCP. There is no risk. The bond is for 1m each, with a payout of 1%.

I invest 100b into bonds immediately. This provides me with 100,000 bonds. Each one pays me 10,000 isk upon maturity. Each maturity date I earn 1% compounding, or 1b after the first one. Let's be generous using the OP's original numbers and say the maturity is for one month (a ridiculous ~12.5% per annum, risk-free). It is now possible for me to quit eve, sans logging in once a month, and continue to train my character and stay subscribed - indefinitely.

That is, of course, assuming PLEX prices stay the same. But why would they? There are EVE trillionaires. They're earning 10b/month. Do they plex 1 account? Do they plex 10 or less?

Let's say this EVE trillionaire, named Chribbbbbba, who does not own several titans, decides to invest half of his wealth to forever play this game. He no longer has to do any work to stay in the game, nor pay money from his bank account. Every month he pulls a magical 5b out of his ass. Within two years he can afford an extra titan at pre-bond prices. He's earning a spank ~7% per annum for doing nothing. Oh and did we mention this scales infinitely?

But wait! OP says! We'll just double isk bounties, PVE will be revived!

Laying out bait to get the thread closed, eh?

Bye bye now.

ISK seems to be balanced, thus your rational for change doesn't seem to exist.

---

CSM8 - August 2013 Summit Minutes


Dr. EyjoG said...


The next graph showed the money supply. Overall, the money supply is evening out--changes to systems have reduced the ISK supply, so average ISK in active wallets is stable as of November 2012 and the maximum amount may even be peaking. While Mike points out that the leveling-out at the top of the graph is very short, Dr. EyjoG responded that it was the first plateau visible at all. Sinks and faucets are fairly balanced right now, with a bit more faucet than sink to allow for economic growth.

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Creation of a "risk free" rate.

In order to value all other financial products in Eve, a risk free rate is essential.

Sorry, after the first paragraph or two, I didn't see any mention of what purpose they serve. Who is the large organization seeking to take on debt in order to finance short term? who has the ability to control money supply to pay back the bonds?

This looks like a solution without a problem. If you really wanted to try it, having the NPC corps offer you the chance to buy bonds, pay dividends based on taxes, and have it take from the same pool bounties do (which there isnt one ATM) etc. and recirculate the money woul work, but you'd have to have a group basically act like a central bank, setting the payout.

And the best part? None of this encourages gameplay on any level at all.

So let me ask those people, do you find it fair, not to get compensated for not having access to your money for a period of time? and do you not believe in Cost of Capital?


The real world works this way and I believe it would be beneficial to Eve if they adopted similar standards. Communism is gone so lets adopt the economic principles from the free world.


If we in the future would like to see a liberalised EVE banking sector, maybe even private player operated banks and free economy standards this suggestion is one small step in the right direction.

It will set standards for cost of capital and bring awareness to players of financial issues into the game.

I want to create the foundation for a functioning private debt market.
And since one of the best ways to value debt is: "Risk-free" index + Risks (credit risk, liquidity risk, covenants, market risk etc)
It would be natural to create the risk-free index first.

This is literally nonsense.

I like the idea of adding a bond market to the game.

I don't like the concept of "risk free."

You can't have EVE without risk. Substantial risk. Sometimes even losing all your ISK risk.

What are the ways you can think of that players can influence--even temporarily halt--the bond market you're proposing?

Should the value of bonds instead be tied to stations? Such that the value of a bond is linked to the "value" of a station in terms of market activity in and out, ore reprocessing and all other activities where players pay a fee to the station and otherwise conduct their business there?

If players don't invest in bonds in an NPC station, could a station degrade over time (i.e. start to lose or close services like Medical Facilities)? Likewise if player activity is halted, for however long, could this have an effect on the station and its bonds?

Can there be bond rates based on other factors? The value of a solar system, constellation, region?

It seems to me that the wider the area the more reliable a bond should be, whereas the smaller an area the less reliable.

Likewise, the rate of return should be smaller for a larger area, but bigger (and more volatile) for a smaller area.

Right before bonds are due, could there be mission arcs or faction warfare scenarios where players can try to sink the value of bonds "for the other side"?

Sort of a way for one large group to mess with the wallets (or rather, the bond returns) for other player's wallets?

Furthermore, why would i ever invest isk in a real person ie on this forum if I can get a risk free return somewhere else?

This is literally nonsense.

Claims to want to promote a private market for debt.

Proposes a system that would squeeze or obsolete player-offered bond offerings by having NPCs offer a zero-risk version of the same.

...The main retaional was to expand the sandbox and eventually allow a player operated debt market to function...

Isn't the biggest issue with player operated debt now accountability?

For example, if I started a 'bank' today; and had thousands of people invest trillions of ISK... tomorrow I could just steal it all. I could sell or recycle this character and disappear... or just keep this character and there wouldn't be any recourse for those cheated to recover their money.

In a game, like EvE, in which deceit and deception are such an integral parts... how do you overcome this issue?

A system like that can still be gamed, use a worthless figurehead CEO character, take down anything in space, etc. just before you default.

Let me first say that I admire you for your alternative career path in Eve. You create content and fun beyond the normal boundaries of the game.

But as stated earlier the GÇ£risk free index/rateGÇ¥ do not mean you avoid all risks. It simply refers to the fact that the security does not hold default Risk.

A form of asset backed municipal bond linked to faction ware fare is an interesting suggestion.

There is no such thing as bullet proof.
CCP will never behave as the SEC of EVE
No player organization will ever have the leverage to be the SEC either

All of this is a moot point IF we had a functional shares system