James Wilson, June 2012

Monopoly: Financial Edition I originally created this edition with the 2008 financial crisis in mind. I quickly found that I was unable to think of brief ways to describe how players might package their monopoly properties into Mortgage Backed Securities, or arrange Credit Default Swaps. Such descriptions quickly ran into paragraphs, thus I quickly abandoned them. This edition is far from perfect. I would love to have allowed the banker to set monetary policy, to have more than one currency in the game, and to even separate the roles of banker and real estate agent. Alas, I fear that somehow such complexity may have ruined the fun of Monopoly more so than I already have, and reminded people as to why they hate the world of finance. As it is, some may recognize the small influence of Basel III, and the FDIC resolution regimes in the edition. Enjoy, or rather, tear your hair out in frustration.

Section 1: Definitions 1. Monopoly Central Bank (MCB) - the banker 2. Banks - players 3. Assets - value of cash on hand, plus mortgage value of owned properties/houses/hotels, plus loans outstanding from other banks 4. Liabilities - debt outstanding to the MCB or other banks 5. Payments - rent/taxation/any other transfer that must be immediately made by a bank Section 2: Lending 1. Banks may request a loan from the MCB at the beginning of their respective turns 2. Loan lengths must be either 5 or 10 turns, negotiated between the bank and the MCB 2.1.Loans can be paid back before the end of the loan period, but interest must be paid for the length of the loan period 3. This formula is used to calculate the interest rate payable on loans 3.1.R=(Borrowed amount)/(value of assets)/20 4. Loans from the MCB are secured loans 4.1.If a bank does not pay back the loan on time, the MCB must seize the assets of the bank to the amount owing to the MBC Section 3: Bankruptcy Should a bank be unable to pay back a loan, or is unable to meet other payments, the bank enters the Bank Resolution Regime 1. Bankrupt banks must raise enough cash off the auction of its property to meets it payments, or the solvent banks/MCB must provide the banks with emergency funding

James Wilson, June 2012

1.1.Should the MCB provide an emergency loan, it retains preferred creditor status, and the loan retains a 5% interest rate until the loan is fully repaid by the bankrupt party 2. Alternatively, a solvent bank may agree to take over the bankrupt bank, incurring all of the bankrupt banks liabilities and assets 2.1.Outstanding liabilities and payments must be paid immediately by the acquiring bank before a take over may occur 2.2.Following the take over, both banks continue to play as separate entities (as before the take over), but share a balance sheet. The acquiring bank has ultimate authority over the acquired bank. 3. If solvent banks and the MCB fail to save the bankrupt bank, the following occurs 3.1.Property/houses/hotels lose half their mortgage value for ten turns 3.2.Interest rates double for ten turns 3.3.Loans may be called in at any time by the MCB for ten turns Section 4: MCB 1. MCB starts with $3000 funding at the beginning of the game 2. After all banks have completed one turn each, the MCB collects 10% of the current value of its balance sheet from the remaining money not dealt out at the beginning of the game 2.1.This process repeats until all money is in play 3. At any time, the MCB may demand to see the balance sheets of any bank, at the beginning of that banks turn 4. The MCB must maintain a tier one capital ratio of 4% calculated using: 4.1.(cash on hand)/(total value of all MCB loans)=0.04 5. The MCB may call in notes of any denomination (and reimburse banks the value in notes of other denominations) if bank stock is running low 6. The MCB may issue bonds of up to $1000 in value to banks, with a 5% interest rate 7. The MCB may create money as it sees fit, but the prices of housing and property purchases from the MCB must rise at the rate of the money supply 7.1.For example, the game originally contains $15,140. If the MCB creates money equal to 5% of the existing money supply, the prices of housing and property purchases from the bank must also rise by 5% Section 5: Banks 1. All banks start with the normal $1500 2. All banks must have a tier one capital ratio of 8% before making a purchase calculated using 2.1.(assets)/(debt outstanding)=0.08

James Wilson, June 2012

3. All banks must maintain an up to date balance sheet, detailing their assets and liabilities 3.1.No bank is required to disclose their balance sheet to any other bank 3.2.The MCB may imposed fines of $100 on banks who have been shown to not have an up to date balance sheet Section 6: Taxation 1. Any money designated for Free Parking goes to the MCB 2. Banks pay taxation to the MCB as they pass tax squares, whether they land on them or not

Section 7: Financial Products 1. Banks at their desecration may trade financial products with each other, with conditions set by the parties to the trade 1.1.Financial products may take the form of securitized products, derivatives, loans, asset trades 2. Each separate trade may only be between two banks 3. Financial products between banks have no restrictions except those agreed to by the parties 4. The MCB has no powers over activity between banks, unless deals are worth more than 100% of the assets of any party involved in the trade 4.1.In this case, the MCB has the power to terminate the deal, or force involved parties to renegotiate the deal 5. The MCB has power of arbitration over bank disputes Section 8: Miscellaneous 1. The jail is not in play. Youre in finance, youll never be sent to prison 2. Chance cards should be rewritten to be more in-keeping with the spirit of this edition 2.1.For example, any card that rewards a player with money should be labeled as tax cuts, bailouts et cetera