Pending FRB FUNDING ROUND #5

[Stoppers]

A
MOTION
To

Provide Emergency Liquidity Support to Banks for Sector Stability and Broader Economic Health​

Submitted by: Stoppers
Date: 17 June 2025
Classification: Fiscal

1. Justification​

In light of the prolonged seizure of Vanguard National Bank, which has created systemic ripple effects throughout the financial sector, several banks are now facing acute liquidity shortages. These pressures, if left unaddressed, pose a risk to the broader economy including markets for real estate, commodities, securities, and consumer activity.

To prevent contagion and ensure financial stability, we propose minting $20,000,000 in new currency, to be distributed as short-term liquidity loans to eligible banks. This intervention will allow solvent institutions to maintain operations, meet obligations, and continue providing essential services to the economy.

This is not a bailout, it is a targeted, repayable facility with clear criteria and a sunset clause. Loans will be offered at an interest rate of 1% per month, with terms ranging from 1 week to a maximum of 30 days. The funds will not be granted unconditionally, but only to banks that meet strict eligibility standards:

1. Positive equity (i.e., assets exceeding liabilities) with capital representing at least 10% of total assets.
2. Liquid cash reserves covering less than 10% of total customer deposits, indicating a genuine short-term liquidity need, not a solvency issue.

This ensures only sound, under-liquid banks receive support, preserving market integrity and preventing moral hazard.

Furthermore, to mitigate any inflationary impact or long-term distortion to the money supply, all $20 million will be withdrawn from the financial system within 90 days. This will be done by effectively burning or locking the funds, with assistance from server staff. In other words, this is a temporary, closed-loop operation designed purely for sector stabilization.

The loan market remains small, and these funds are not meant for widespread circulation. Instead, this policy supports orderly short-term liquidity without flooding the economy. It also reinforces confidence in the financial system, helping to restore trust and market function without unfairly advantaging any institution.

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2. Implementation​

• $20,000,000 in new currency will be minted and deposited into the in-game Federal Reserve Bank business account.
• The Federal Reserve Board, in coordination with the Department of Commerce, will manage disbursement to banks meeting eligibility criteria.
• Loan terms:
  • Interest: 1% per month
  • Duration: 1 to 4 weeks (7–30 days)
• All funds must be repaid by recipients within the loan term. Late payments will incur additional penalties and may result in DOC intervention.
• After 90 days, any remaining funds in the facility will be locked or burned, removing them from circulation entirely to prevent inflation or misuse.

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3. Oversight & Monitoring​

• The Department of Commerce and Federal Reserve will jointly track usage, repayment status, and compliance.
• Public, transparent reporting will be provided weekly to Congress and relevant committees.
• Staff will assist in the secure removal of funds post-program to ensure the full wind-down is enforced.

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4. Effective Date​

Immediately upon passage by the Federal Reserve Board.

 

[Stoppers]

Accepted

Motion Passed - Vote: 4 AYE