The Fall of Banks in Second Life

If you haven't read it yet - go read this post from the LL official blog.

Initial reactions, to be updated later:

• Expect a market panic and a drop in security prices across the board, whether or not the exchange qualifies as a bank or not.
  
• Bank panics will abound. Smart banks will take their ATMs offline before they run out of deposits. Dumb ones will not, and will run out of cash as investors panic and withdraw.
• This is the time to see if CEOs are honorable or crooks. Don't expect to get all your money back, but expect to get some - and most of the cash portion.

More as I think of them. Comment away.

Update: Reports are coming in of the Linden dollar falling in price. Can't confirm it right now.

Update: Lots of people at JTF complaining. Please don't panic, everyone...unless you don't trust your CEOs

Arbitrage Wise Reaction: LINK
WSE Reaction: LINK
ISE Reaction: LINK
VSTEX Reaction: LINK
Virtually Blind Reaction: LINK
Robert Bloomfield Reaction: LINK

Questions still to be answered:

• Are exchanges paying no interest exempted from this ban?
• If exchanges are permitted, are "bonds" now banned, or are they also treated as equity?
• Which companies will honor (as best they are able) their depositors and/or shareholders?