Borrowing/Investing L$

Could you tell me if you think it's interesting an in-world market of money?
I'm saying about people borrowing money, people investing money in funds, funds investing money in different enterprises and activities, well, a more sofisticated money market than the one that exists today in SL?

Do you think its interesting to take some loans in L$? Would you take a loan?
Do you think its interesting investing L$ to receive interest in L$?

I thank you for your replies.

A while back I was thinking about starting a bank of my own with all of the suggestions you mentioned. It would have savings accounts, financing and loans. Then I thought about the residents of SL: Would they trust me with their L as some residents create alts to store funds they are saving or don't need at the moment. Most importantly would I trust them to pay me back the loan that I had given and so on and so forth. I would consider investing in L or any business for that matter if I found it to be a smart calculated money market decision. I think alot of thought and research will have to go into creating such a venture. It is still one of my dreams here in SL.

Ahhh well.... maybe one day

why not take collateral, like anything with transfer rights that would be resellable in case of default on a loan? May not be the best solution, but a possible avenue to think about

That is a very good idea Dragon. When I think of collateral I lean towards property as that would tie into the financing thing. Although, in not sure that it would fly with some residents.

Several residents have been very successful in getting others to loan them money (called "deposits" by starting unregulated "banks" in SL. Some have even started stock companies that sell stock for Lindens, and supposedly invest the capital raised in land or businesses (usually casinos and night clubs).

There are multiple threads on the pros and cons of this. Just search the forums for "bank" and you'll find them, ranging back for years. Some are about particular in-game banks, others about the theory. That should give you plenty to think about.

Because SL banks are not regulated, audited or otherwise controlled, opening a "bank" is a good way to take others' money, convert it into US dollars and then leave the game. If you search in the forums on "Ponzi", you'll find many threads warning of this risk. A fellow named Ponzi is famous for the original "Ponzi scheme" in which a fraudster promises people high returns on their investments, and pays the dividends out of money received from the latest suckers. Eventually, the string plays out and the fraudster has to leave town in a hurry (with the money, of course).

Collateral is challenging, because the only thing in game that has real value is land, which has high carry costs. Various "land barons" sell parcels "on credit," using the same method as car dealers ... if you don't make the payments, I take the car back. For third parties wanting to be banks, the technical issues are daunting, and the carry cost that must be paid to LL for holding collateral is high.

For an extensive discussion of the issues of enforcing contracts (a loan is just that, of course) and potential solutions, there is a white paper and discussion in the Political Science forum, "Towards a Theory of Enforcing Contracts, Resolving Disputes and Incorporation," at: /148/86/78317/1.html

Of course, you may not like doing 'homework' in SL. If so, you are welcome to make the same mistakes others have done.

~ Frank ~

Well according to Second Life stats the total money supply in platform is $L800,152,584.

Ginko, the major Second Life bank has around $L55,992,438

To put it another way that equals about 7.15% of all the Second Life money supply or economy.

They have around 9176 clients.

Hope that answers your questions