Wednesday, 22 August 2007

Ditching the second one to get a first one?

I know that the subject of this post is a few days old, I meant to write about it earlier but I've had too much other stuff to write about with trips to A&E and all the snorting of live earwigs to be able to cover this topic. (Alright, I promise I'll stop going on about that soon, ok?)

There has been much coverage of the squeeze in the credit markets (it even crept into my last post) - an interesting and little known spillover effect happened online over the last week. Ginko Bank, the bank in Second Life, had a run on deposits as people rushed to withdraw their Linden Dollars. The pictures are very funny - a whole load of people's avatars (including, in the picture that I saw, one that looked like a fox or squirrel or something) queued at the ATMs desperately trying to pull all of their cash out of Second Life for fear of Ginko Bank collapsing. The effect was so severe that the bank had to cease operations and convert deposits into perpetual bonds. So, in fact, the events mirrored how deposit runs work in real life.

There isn't a lot to comment on about this except that it's a quirky reminder of the inherent fragility of banks and the extent to which they rely on confidence.

And no, I don't use Second Life.

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