COMMUNITY - FORUMS - SOULBORN ENGINE
Banking System

Banking System

I went through all the information we have (official and not on NDA) on Chronicles of Elyria to gather what I needed to understand what can be done with currencies and banking systems. There’s not much. I visited organizations interested in some banking, but most want to keep information for themselves as a strategic advantage. I understand.

So, I decided to put my ideas here so that people can tell me if this is possible.

First, I’ll use the concepts of IOUs and fractional reserve. If you need, please lookup these terms so it’s easier to discuss. If I define them here, the post will be too long.

Now, let’s say I have a small bank. People come to me for deposits. In exchange, I write them IOUs that they put in their inventory. These IOUs can be exchanged in town for the value written on them (same as dollar bills). An IOU of 50 copper pieces or whatever the currency is can be used to purchase items in the community.

These IOUs can be redeemed at all time at the bank. IOUs can also be redeemed by anybody. There is no name attached to is just like there is no name on dollar bills.

If someone comes for a loan, I create a contract with an interest rate and I give them an IOU of the corresponding amount. Doing this, just like in real life in most countries, I create money for the community and make money for the bank from the interests.

The customer can now take the IOU and purchase whatever they want using it as money.

Normally, in real life, people won’t disappear. So loans are usually paid back. With this in mind, the reserve in banks is usually around 10% of the total money to ensure when people come back to withdraw their money, the bank can give it to them.

In Elyria, with 10% reserve, I think a bank or the economy would crash since too many players could borrow, transfer the IOU to an alt and never come back again. This would lead to an amount of reserve smaller and smaller and eventually, the bank wouldn’t be able to purchase the IOUs back. We could also restrict loans to knows characters and have credit ratings, but this is another issue. In real life, this happens too. Many people won’t pay back the loans and just declare bankruptcy. The laws allow it and most bank will get over it.

I think contracts will allow this in Chronicles of Elyria. Loan contracts should be in the game at launch. I also think scribes will be able to write IOUs. These are small paper and should not be too hard to craft. We now only need to know how legit crafters can sign for a banking institution so that people on the street just don’t copy them or create fake ones.

All this is possible from my understanding.

The next part is regarding a way to monitor the economy to ensure the value of the currency remains the same. Inflation is known to be an issue in MMORPG and the banks will probably need central banks to store money when inflation gets too high or lower the rates when the economy lacks money to grow at an interesting pace. I don’t want to go too deep into this, but if there is no tool to monitor the economy, I don’t think any banking system is viable.

(If you didn’t see the videos on inflation or hyperinflation in game economies from Extra Credits, now would be a good time!)

Usually, in-game economies are regulated with a third party currency usually known as premium currency. People buy these with real money and can sell them to players for in-game money. As the amount of in-game currency raises, so the price of the premium currency so there is a certain balance achieved if the laws of supply and demand works (which is not always the case, needless to day!) Since CoE will not allow these kind of things, the economy will need to be regulated from within. I don’t know if there is a central banker on the Soulbound studios’ staff, but this might be an issue.

Anyway, this is already too long. What do you think?


1/16/2018 11:27:12 PM #16

in this world nothing will stop us from burning your temple of capitalism. the revolution is here.


carnead Die Entdecker und Verteidiger Avagasts suchen DICH! Egal welcher Berufsstand in unserer Stadt ist für jeden platz! [Geselle dich zu uns!] https://discord.gg/Sc6TyGR

1/16/2018 11:38:04 PM #17

Better make sure you've got some very capable security Grostotem. We forgot to mention the Bolsheviks are here.


1/16/2018 11:40:22 PM #18

trade rule. with pvp system and pvp loot, i will los my money or your paper so in the end all the same. for a bank, any one can raid it like they wan. money have no power in game


Je suis un adventurier artisan, si vous voulez en savoir plus, vous n'avez qu'a me trouver!!!!!

1/17/2018 1:00:34 AM #19

I already knew people would like to crucify me for this. I also know full loot is dangerous.

These aside, I still didn't read anything regarding inflation and how the economy would remain stable without any help from outside the game.

Please wait till launch before invading the bank. There nothing inside yet.

And just to clarify, if you raid a bank with only 10% reserve, you actually only loot a maximum of 10% of the money. I understand you're warriors, but may I speak with your clever side?


1/17/2018 5:22:34 AM #20


1/17/2018 9:06:06 AM #21

People can't help but be corrupt. No matter the origin or intent, none can escape the sirens call of greed. These banks, while well intended will be one of the early breeding grounds of the scum that will pray on the people.

In the shadows is your salvation. Seek not the protection of your lords, they are too corrupt. Those who have your best interest in mind do not need your loyalty. Know that we are watching, and even now are working to stop these evils from enslaving you.

Expect us.


1/17/2018 9:17:43 PM #22

Yea I’m not sure how stable the economy will be if it’s truly dynamic and entirely player based.

I would hope SBS implents a safety net. Not to the extent that it micromanages everything, we still want a dynamic economy. I just think it needs to prevent Worst Case scenarios that will ruin game play. A safety net.

I know SBS likes to build off of realism, but playability has to be taken into consideration.

So I would hope the economy will stabilize itself. Otherwise it seems like an unnecessary burden.

As far as investment banking, I think that’ll be a guild operation, as someone mentioned earlier. I highly doubt someone is going to loan a fortune to a stranger. And at that point, it prolly isn’t even investment banking. It’s just investing in your organization.

From what I’ve seen, this game seems to be centered on a group dynamic, such as families or guilds. I’m not even sure if investment banking will be necessary, if your group pools resources together.

As far as solo players go...well best of luck to you. Like I said, I doubt someone will loan a fortune to a stranger. Tho I suppose this could change if you’re a reputable player. But even then, with no affiliation or loyalty to the group, I would imagine it’d be unlikely.


1/18/2018 7:16:30 AM #23

Currency will be general in all ways in all nations. Any nation that decides to implement a bank or banking system will ultimately see it fail and I can demonstrate how:

1) Banking systems rely heavily on structure of protection. Safes to hold revenue and guards to protect said safes. To that point I say, that won't exist. You have to understand, this is a game. There will not be thousands of people in a single town, there will be more like hundreds at most. This means for ANY organization planning tens of different positions, you will find yourself sadly failing. There simply won't be enough active players to keep things safe if stored in large valuable quantities. People will learn about the OPC behaviors and how the OPC guards work, and will find loopholes to exploit and rob the bank blind with no witnesses. By the time it's investigated, they could be in another county entirely.

2) Banks historically aren't that old of a concept when considering holding currency. Historically, banks are about 4,000 years old, but in those times they were primarily sources of loans, not a place to keep your wealth. It was unsafe to store wealth without much more than people to protect it. Doing anything more requires more technology than what will exist for a while. Even then, since it's a game, it's easier to exploit, and safer to exploit , any system of protection put into place. After all, it's just a game. If my character goes to jail, I'll just go play another game for a while, minimal risk.

3) Banks require trust from population to function. If I don't trust your bank notes, I simply won't use them. I won't accept them for my goods and I won't spend them. The problem is, say you live in a town with 500 people in it. Out of those 500 people, 20 don't believe in the bank and refuse to use it, 30 don't care, but know gold works everywhere and just use that, and 50 don't spend enough money or make enough for it to matter, poppers. That means 1/5 of society isn't using that money, but everyone can and will see value in the basic game currency. Would you rather use the currency that works 4/5 of the time, or the one that works 5/5 of the time?

4) Government controls money values Contrary to your thoughts, you won't be able to make money more or less valuable unless you have a say in government. How is this possible? Simple, governments can subsidize and tax things to regulate who is GETTING the money and who is SPENDING the money. Think about USA, corn is subsidized. That means the value of corn is high, because we pay taxes on it, but when the average person buys corn, it sells at a low price. This means that people who DON'T buy corn or corn based products, have allocated some of their yearly earnings to a product they do not purchase. Say one of those people is a smoker. Cigarettes are taxed HIGHLY. This means they ALSO pay extra money for cigarettes that comes out of the economy and goes to government to be reallocated to other companies. Ultimately the value of the coin is based on how the government spends/taxes it. If they tax the HELL out of people, a single gold is worth a lot, if they are really lax and let people fin for themselves, the gold is worthless as everyone has it, and values it differently.

5) Why? No really, why? What benefit do I have giving you all my gold only for you to give me paper in return? What magical protection do you think you have that I can't get just as easily? Lockpicks don't care if they're in a bank or a house, so unless you invest TONS of money building INSANELY hard to break into institutions, I don't think my money is safer there. Banks now-a-days have millions of dollars spent yearly to make sure stealing from them is absolutely crazy. Those who do steal almost always get caught. That won't be the case in a medieval environment, so that money might as well go up in smoke. It's actually safer to hold on to your own money because you can bet the bank will be targeted before the tiny house will be.


1/20/2018 3:19:40 AM #24

After some thoughts, I got two main things from this conversation.

First, banks are an evil that must not exist.

Second, what the soulborn engine can or cannot do is of no importance to most of you.

By chance, some people were very interesting and their ideas helped me to have a clearer idea of possible bank projects.

I'd like to take a minute to answer Korinra's fifth point. The "Why? No really, why?"

Who among you hoards money in banks? Who decided that it would be better to have all their money in a bank instead of under their bed.

I'm pretty sure nobody did that. You have a bank account because you have no choice. Either because your paycheck needs to go somewhere or because it's easier to pay the electricity bill, everybody has some kind of bank account.

And most of us probably have more debts than money so we don't use bank to hoard money, but to get loans and mortgages.

Back to CoE now. The purpose of a bank is not to store big amounts of money in a secured vault that anybody can steal because NPC guards are retards. The purpose of the bank is to loan money and accelerate economic growth in the region.

This may be hard to believe, but investing is more lucrative than working and this will be the same in CoE.

If you want to make money doing planks of wood, you'll start with an axe and cut wood to raise the skill. Then you'll try to sell the wood for some money to buy food and survive. Maybe, over time, you'll have enough money to rent a room where you'll put a crafting station. With this, you'll be able to generate twice as much money per day. Even hire people. This took you 2 months.

Now let's look at the real purpose of a bank. You start cutting wood until you can use the crafting station. You go to the bank and get a mortgage on a workshop and a crafting station. You start making big money on week 2 and by the time you reach 2 months of playtime, You own the crafting station and half the workshop. You have two employees and decide to expand. You pay more taxes and make a lot more money.

The bank did not store your money, it helped you get started. And when thieves got to the bank, there was almost nothing to steal because almost all the money was already invested into the community.

You may try to go without a bank in your kingdom, but you'll never be able to keep up with those who decided to invest early in the development of their community.

P.S. Let's not get into cutting wood is gathering and crafting planks of wood is crafting so these are two totally different skills and one is not the other's prerequisite.


1/20/2018 6:57:18 AM #25

A bank initially needs to have the money it loans. It needs to collect it from somewhere to begin with. Since there is something around to collect, why wouldn't that money be loaned out and invested to businesses even without a bank? What is this extra benefit you suggets your bank would bring, other than your own cut and the intrests you would get?

Wealthy counts can loan money to their subjects, guilds can do that, pawn brokers can do that. Why would your bank be so special in a medieval town? You cannot make money from thin air like banks and countries can nowadays in RL.

If you have lots of money in the game, why not, start investing and loaning it around :)


1/20/2018 10:54:37 AM #26

making a bank will be kinda impossible for the sole reason that its impossible to make people trust you with their money especially in a game

here is why: how do we know that after 1000 people give their hard earn gold to you you wont transfer it to a new account and disappear ?

gold from 1000 people > 50 euro a new account gonna cost

leaving the above aside for a moment there is also 1 more problem you will have

here is how banks works:

they take your money from deposits and give you 1% interest

then they loan the money they took with 5% interest

that 4% difference is the banks profit

how will you guarantee to yourself that you will get the money you lend back ? so that you can make that 4% profit?

solve this and you might have a chance


1/20/2018 12:16:48 PM #27

Posted By Kurko at 01:57 AM - Sat Jan 20 2018

If you have lots of money in the game, why not, start investing and loaning it around :)

You are right with that post. There is absolutely no reason for a bank if noble and rich people help new or poor people to start. That's for sure. The only thing personnal loan cannot achieve would be the fractionnal reserve part, but maybe it wouldn't be necessary if lords loan a lot of money, Doesn't work IRL, but could work in a game.

Posted By elesk at 05:54 AM - Sat Jan 20 2018

making a bank will be kinda impossible for the sole reason that its impossible to make people trust you with their money especially in a game

here is why: how do we know that after 1000 people give their hard earn gold to you you wont transfer it to a new account and disappear ?

gold from 1000 people > 50 euro a new account gonna cost

leaving the above aside for a moment there is also 1 more problem you will have

here is how banks works:

they take your money from deposits and give you 1% interest

then they loan the money they took with 5% interest

that 4% difference is the banks profit

how will you guarantee to yourself that you will get the money you lend back ? so that you can make that 4% profit?

solve this and you might have a chance

These are real issues. I also doubt a one man bank would work. This needs to be a network or at least an organization managed by many players in which running with the money would be very hard. This solution can only be brought by the engine as there is almost no trust in a game.

As for the percentage difference, it's not exactly the way it works.

First, you need to loan to people as per their implication level in the community, their wealth, etc. You canot loan too much to a new character you don't know.

Next, you loan more money than you own (refer to fractionnal reserve) so with 10% fractionnal reserve, you should make 5% (your number) on 10 times the amount you store (and need to pay the 1% interest rate on.)

So if the loans come back, you're doing good, but if no loan comes back, you go bankrupt. But some loan can be lost by not returning or by bankruptcy of the loaner. This falls in the normal losses of a bank.

On a side note, if this was an organization post, I would understand some comments, but since it's a discussion on the soulborn engine, I wonder why people insist on the fact that I'll be building a bank and ripping people off their money. My main project was a school. I'm not into taking money off off others.


1/23/2018 6:53:16 AM #28

Historically, nobles and especially monarchs were the main users of banks. This is because they needed to borrow money to finance their wars (hint, hint). Often, when the wars didn't work out so well, the monarchs threw the bankers out of the country (cough Jews cough) or killed them (cough Templars cough). If that pattern plays out in this game, banks will happen because nobles will charter them for their own purposes, and merchants will back the nobles by providing the money in hopes of getting it back with interest.

So, the rich merchants' money will actually be in the possession of nobles, unless the nobles have used it to buy goods from the rich merchants. Most money in transit will be in the possession of the nobles, who can be expected to use some of that money to hire the most nasty characters they can find to guard it.

Here's to oppressive monarchy. I'm all for it if it lets most people just get on with their ways of life without being constant victims of theft and violence. Taxes may be theft, but they are predictable theft, and that is better for business than opportunistic, hence unpredictable, theft.


1/23/2018 8:11:04 AM #29

There's a lot of good idea over there, but there's a point few people seem to forget. Nobles do have money, but they may not have the time, would you meet 50 guys everyday because they need money + all the obligations of your title ? I dont think any of us will have that amount of time. I think a bank may be a good idea if they are workings with states / nobles.

Thats nice to see many players giving their minds on this idea. I think every right minded people will look for a good Security Company before opening a bank lol.

Guess a bank making money is part of the life, why would the blacksmith be allowed to sell his stuff 3 x the price of the materials he used but the bank would be the devil making a small cut of 4-5% ? I mean you are asking them for a service its legit that they ask you for a small fee since they are giving you something that it would take you lot of time to acquire.


2/4/2018 8:32:15 PM #30

I guess the questions comes to what you do with your gold when it becomes to much for you to personally protect. Lets say I make 10 gold a day and I have no problem keeping 100-200 gold in my little shack. After doing some quick one time trades and I bump up my gold to 1,000. Now my wooden shack seems kinda risky for my 1K gold. If someone breaks in it will take me 100 days to get the money back. So maybe it would be better to look into the local bank who job is to provide the security. Maybe they can afford the safes that cant be looted in a quick random smash and grab.