New business sectors?

[David]

Also, agree w Arcnor that this similar concept could be useful for utilities/power plants. Given the regulated nature of utilities and the service requirements, you could use the same type of wireless / influence area concept. The "towers" would be akin to power transformer stations covering a region.

I have just got some new design details from the dev team regarding the power plants and I have post it on the City simulation expansion pack forum. If you are interested, you may read it at: http://www.capitalismlab.com/forum/view ... 779#p10779

[torpedo_1]

1=>2=>3

1. Central Bank can issue Bond, traded in the existing financial market (just a special stock). It will have quite stable price and a fixed and low rate (or link to CB interest rate) payable at the end of each year (just like dividend). It can expire, just every 5 year give the holder a choice whether to redeem it at face value or the Central Bank will issue a new batch of bond to redeem the old one (so, no change).

2. Companies in the stock market can issue private bonds (just like another kind of share, just that it doesn't lose control, has relatively stable price [unless the company is dying, then it will drop like crazy] and cost you interest every month/ year). Issuing bong will be like issuing new shares, restricted amount, if you are willing to pay more interest, you can issue more. Interest should normally be higher than CB bond rate but lower than CB lending rate. When the company is failing (but not really dying tomorrow) then you can only issue bond at a very high interest rate, like 20% p.a.. And then the failing company will find itself unable to finance and go busted.

3. Central bank become a government firm (obviously you can't buy it), it is controlled by one of the AI characters (having individual personality on setting interest rate, issuing bond and make investment with CB money). Central bank make profit by issuing CB bonds and then use the money to invest or borrow to other companies. It has a profit or loss, but it won't go busted (just every time in need of money, "foreign countries" will bail it out and sack the AI bank CEO). Or just sack the CEO when he makes a unacceptable loss.

4. Then there is private banks. Everything is the same with Central bank just that it can be acquire by user or other companies. It cannot set the CB rate but can sent its own lend rate maybe +-1 to 2% of the CB rate. Monthly maintenance fee in return for a lower rate of inter-bank loan from central bank (perhaps?), more flexible to issue bonds (or simply take saving) and lend it to other companies (other the general public). When it is falling and your group has no money to support it instead of "demolishing it" you can choose to announce that it is dying and request government bail out. If government choose to bail out the bank, they takes it away from you, inject money in it and it become state owned again.

[kmarano]

I think this is a really interesting topic. And could be a great new addition to the game. As funding for poor performing or new companies can be difficult to come by. Conversely, cash flow for a well performing company often sits unused unless buying stock or land.

I would envision a market place similar to the Stock Market, where companies in need of cash could determine the bond amount, length and interest rate they are willing to pay. (it would need to be at or above current rates). A rating agency would need to assign a rating based on the company’s ability to pay. A well performing company with excess cash looking to invest could look over the bonds in the market and choose a bond amount, length, interest rate, and credit rating they are comfortable with. Additionally, I think it would be interesting if the parties could decide on either a fixed rate or floating rate.

Once the foundation of the above market is created, the Investment Bank in each city could be utilized. The Investment Bank could act as a clearing house of sorts providing an additional market for companies engaged in the Bond Market to perform Interest Rate and Credit Default Swaps.

I'll quit rambling now and see what others think.

[azxcvbnm321]

I think the bond market is too complex for this game to handle, it's incredibly complex in real life and is used by companies for other reasons than just raising capital. For example Microsoft issued bonds even though they had a stockpile of cash. I think a bond market could easily be manipulated by the player, especially if they have control over production and operations of a subsidiary or otherwise. The financing system in the game already works like the bond market, with interest rates tied to the central bank's rates and the amount of money that can be borrowed dependent upon the firm's own finances, I'm not sure adding a bond market would improve the game all that much.

Many people have no where they can reinvest their profits once they are deep into their game and are producing every product possible. In that case, perhaps a simpler system could be created where firms can put their cash into a money market fund or CDs with varying terms of length. This would be very much like the bond market, except that the money is absorbed by the central bank/banks and doesn't go to another firm. I know it wouldn't reflect reality, but the rates on money market accounts and CDs should be lower than the bank central rate and substantially so for short term or on demand accounts like money market. That's only for game balance and to prevent the player from making lots and lots of money with only cash with no risk. The central bank frequently sets rates above 10% in my game and if I were paid more than 10% or even near 10%, I could make hundreds of millions per year doing nothing.

[therealevan]

I'm glad other people here also think the banking/loaning system needs work (or a total overhaul)!

[Arcnor]

1=>2=>3

1. Central Bank can issue Bond, traded in the existing financial market (just a special stock). It will have quite stable price and a fixed and low rate (or link to CB interest rate) payable at the end of each year (just like dividend). It can expire, just every 5 year give the holder a choice whether to redeem it at face value or the Central Bank will issue a new batch of bond to redeem the old one (so, no change).

2. Companies in the stock market can issue private bonds (just like another kind of share, just that it doesn't lose control, has relatively stable price [unless the company is dying, then it will drop like crazy] and cost you interest every month/ year). Issuing bong will be like issuing new shares, restricted amount, if you are willing to pay more interest, you can issue more. Interest should normally be higher than CB bond rate but lower than CB lending rate. When the company is failing (but not really dying tomorrow) then you can only issue bond at a very high interest rate, like 20% p.a.. And then the failing company will find itself unable to finance and go busted.

3. Central bank become a government firm (obviously you can't buy it), it is controlled by one of the AI characters (having individual personality on setting interest rate, issuing bond and make investment with CB money). Central bank make profit by issuing CB bonds and then use the money to invest or borrow to other companies. It has a profit or loss, but it won't go busted (just every time in need of money, "foreign countries" will bail it out and sack the AI bank CEO). Or just sack the CEO when he makes a unacceptable loss.

4. Then there is private banks. Everything is the same with Central bank just that it can be acquire by user or other companies. It cannot set the CB rate but can sent its own lend rate maybe +-1 to 2% of the CB rate. Monthly maintenance fee in return for a lower rate of inter-bank loan from central bank (perhaps?), more flexible to issue bonds (or simply take saving) and lend it to other companies (other the general public). When it is falling and your group has no money to support it instead of "demolishing it" you can choose to announce that it is dying and request government bail out. If government choose to bail out the bank, they takes it away from you, inject money in it and it become state owned again.

I really like this idea and I think it would create all new levels of game play.

I also think for the private banks you should have some products that are tied to lending, i.e. autos, that will have increased demand when interest rates are low and just a set demand when rates are high.

[megapolis]

C'mon, guys, it's just a game. If you want to simulate a whole variety of banking products that are available in the market today, you will need a new game.

[therealevan]

C'mon, guys, it's just a game. If you want to simulate a whole variety of banking products that are available in the market today, you will need a new game.

That is a narrowminded statement. Banking and business goes hand and hand with each other.

[megapolis]

C'mon, guys, it's just a game. If you want to simulate a whole variety of banking products that are available in the market today, you will need a new game.

That is a narrowminded statement. Banking and business goes hand and hand with each other.

You're a messiah! You opened my eyes! In case you did not notice, we already have a bank in game. That's more than enough. Otherwise there should be dozens of banks that offer a whole variety of banking products. And insurance companies because for example Citibank (openminded person should have heard about it) in Russia does not offer a single investment product that is not bound with insurance. If we should have insurance then of course we should have reinsurance companies. I don't see insurance without reinsurance. Don't forget about debt collectors etc. etc.

[counting]

IMO, what's lack in current mechanism, isn't the lack of "banking" (honestly it's really shouldn't be called "banking"), but the lack of infrastructure for financial service "products". Whether loans, insurances, stocks, bonds, or even derivatives, they are all "financial services" packaged as "financial products" traded via "financial markets". Whatever they are called, these real life financial services all provide the most vital function in Capitalism - recycling and facilitate capital circulation.

Using common terms, it could be said that in current game, we only have pseudo artificially "priced"(interest rate) finance injection system - the "central banking". And a primary issuing + secondary artificially circulated (infinite liquidity) "global stock exchange". As far as I know, these two can both be treated as external factors and not directly affect the in-game economy. Players can artificially bloat their assets value to gain absurd amount of loans, or artificially bloat a company's stock price to gain absurd amount of cash by selling them to infinite liquid public shareholders. And the cash inside a player or AI company's account, just drop out of circulation from the "in-game financial world". Not build upon trading, nor closely integrated into the in-game economy mechanism.

I concur that there's no need for over-complicated financial products analog to everything to the real world, but the lack of fundamental financial infrastructure does make the game less realistic and create a lot of loopholes. For a game with "Capitalism" in its title, I think it does deserve better mechanics in the financial infrastructure department.