Community Bank: Participants’ interactions
Introduction
The Community Bank Agency serves as the community’s retail bank, offering personal account services to participants. The bank also helps participants to save in a structured way so that they can accumulate their investment in the community.
The Community Bank also provides banking services to agencies in the first column. These are agencies that, in the NewVistas pattern, align not only in their physical location in the district buildings but also in terms of functions. There are three such columns. The first column, besides the Community Bank, consists of Human Relations (agency 1), Health and Nutrition (agency 4), Communication (agency 10), IP (agency 13), Accounting (agency 16), Business Planning (agency 19), and Cropland (agency 22).
The bank is also part of the community econosystem, an essential economic infrastructure through which the community achieves a significant part of its goal of sustainable prosperity. The three banks leverage investment, power economic activity, and create money through sound investment and access to credit.
Banking services in the community
The Community Bank is the sole retail bank in the community. All participants have their savings and checking accounts here, as well as term deposits. The bank’s monopoly ensures that it is possible to have extensive financial information about participants, and, by preventing leakage and hoarding of money, can ensure near-full employment of capital.
Once a limited partner has been admitted and invested at least one unit of partnership interest, worth $20,000 in the Capital Bank, they also open their personal checking and savings accounts with the Community Bank. Checking accounts are meant to hold funds that a participant needs for daily activities, such as food, personal effects, apartment rent, and recreation. The Community Bank employs algorithms that, using a participant’s spending habits, can determine how much they need at any given time.
Any excess funds are transferred to the participant’s savings account. Money in the savings account earns an interest. Savings are meant to handle more significant expenses, such as expensive vacations, medical expenses beyond what the community’s medical insurance covers, and business expenses that may arise from time to time, including import duties, and logistics, among others.
As with the checking account, The Community Bank also employs algorithms to determine the likelihood of some of these events occurring, current spending, and any other relevant information to determine how much a participant needs to have in their savings account. Surplus is transferred to the participant’s term deposits.
Term deposits attract more interest than savings, but less than partnership interest (investment in the community). They are meant to help a participant accumulate funds to either become a limited partner or to add to their partnership interest.
Term deposits mature at the end of a specific period, but on amount: when the amount in the term deposit reaches $30,000, $20,000 is transferred to the Capital Bank as that limited partner’s additional unit of partnership interest, leaving $10,000 in the term deposit that can be built up again. These funds can be used for personal emergencies and business needs.
While cash in the checking account is not subject to withdrawal controls, savings, and term deposits cannot be withdrawn beyond 2% per day, unless in the case of a specific emergency, such as medical grounds or a natural disaster. This measure helps protect the bank from runs. It also helps the bank to reasonably plan its affairs, without fearing that its current cash deposits can suddenly evaporate.
All money transacted in the community is virtual and banked. Hard cash, which can be hoarded or otherwise removed from circulation, is not available. This prevents leakages and facilitates an economy where all financial resources are fully employed.
All the services that the bank provides are available online. Participants do not interact with bank presidents, or any other officers acting on the bank’s behalf. The bank’s automated system is robust and extensive enough to handle all needs. In instances where a client is not able to navigate the system, they can seek assistance from their captain, who interfaces with the bank and other agencies in the branch.
The Community Bank can give personal loans to participants. These loans are strictly for personal emergencies, such as medical issues. The bank gives these loans using the participant’s investment in the community. It also gives loans to agencies in the first column, which the agencies use to acquire assets that they then use to serve participants.
The bank does not issue cards and similar identifiers. Instead, it uses advanced biometric identification to enable participants to interact with it. Therefore, virtually every interaction between participants and the bank is channeled through the automated system, with captains occasionally helping to ease interactions. Here, we illustrate some instances of interaction between the bank and participants.
Illustration 1: Carpenter
Caleb is a 35-year-old carpenter, with a certificate in carpentry from the Atlanta Technical College. For a few years after graduating, he worked as an apprentice for a limited partner who owned a furniture store in a community in Atlanta. Caleb has successfully set up his own furniture store in another part of the community, under the mentorship of this limited partner. He has also managed to become a limited partner and invested a minimum of $20,000.
Caleb met his wife, Ruth, at Atlanta Technical College, where she was pursuing a course in baking. She had been working in several bakeries, before she and Caleb decided to join the community, at which time she landed a contract baking at one of the delis in the same community. She is also a limited partner. The couple has 3 children, the oldest of whom is in grade 4, and the youngest is yet to start his education.
Caleb opens two accounts: checking and savings with the Community Bank. He also opens a business account with the Commercial Bank, which he will use for the majority of his business transactions. Caleb’s return from his community investment, as well as interest from his savings, are credited to the checking account. The account also has some of the profits that Caleb makes from his furniture business, with the rest being held in the business account to plow back and cater for business expenses, such as factoring fees, business premises rent, logistics, and others.
Caleb uses this money to pay rent for the apartment he lives in, food, recreation, and basic necessities. The bank’s system closely monitors Caleb’s spending habits. It sets a figure that should be in the account at all times to comfortably cover Caleb’s expenses. Any surplus is transferred to his savings account.
The savings account is meant to cover Caleb and his dependents’ medical expenses that may go beyond what the Health and Nutrition Agency’s cover offers. It also covers his children’s school fees and family vacations. The bank considers the fact that Caleb and Ruth, by the nature of their profession, are more prone to accidents than various other professions, and therefore need a bigger provision for any eventuality. Their children are also younger, which means they are more susceptible to higher medical bills than the general population. The bank also reviews their lifestyle and general spending habits.
The agency analyses this information to determine how much money Caleb should have in their savings account. This money can be accessed easily, though it cannot be transferred to accounts outside the bank, except at a rate of 2% per day. It earns interest and is important for the bank as it uses customers’ deposits as one way of calculating how much it can loan and meeting regulators’ demands.
Suppose, in the case of Caleb, the algorithm determines that he needs $10,000 to take care of these needs. It will transfer any amount beyond this to a term deposit, still held in the Community Bank. The term deposit does not mature when a certain period elapses. Instead, it matures when the money deposited from savings reaches $20,000. As the term deposit grows, it will earn a more attractive interest than the term deposit, but still inferior to the return on investment offered by the Capital Bank.
Limited partners can only increase their investment by multiples of 20,000. Therefore, when Caleb’s term deposit matures by hitting $20,000, it is transferred to the Capital Bank, as an additional unit of their partnership interest.
More income from the investment means that Caleb is potentially able to spend less of his business profits, enabling him to plow in more and expand his business. He can also afford more and better vacations, and improve his expertise in carpentry.
Illustration 2: Lawyer
Simon is a lawyer. Before joining the community, he worked as an associate at a law firm in Kansas City. He specialized in land conveyancing, while also dealing with other types of property transfer. After securing a part-time contract with a limited partner who hired him for a few tasks, the two parties agreed the relationship was fruitful, and decided to make it permanent. Simon thereafter terminated his employment at the law firm and started the process of joining the community, in the meantime working full-time with the limited partner who had initially hired him.
Simon has successfully completed the process of joining the community. This has been after reskilling and moving away from land conveyancing to other aspects of commercial law, under the mentorship of other lawyers in the community. He has managed to start a successful business, where he helps limited, partners enter into agreements with each other on business and social affairs. He also helps the Legal Agency in responding to participants’ needs from its automated system. The engagement is based on short contracts for specific tasks.
After depositing his initial partnership interest (investment in the community of a minimum of $20,000), Simon also opened checking and savings accounts with the Community Bank. He uses the savings account for his basic needs, recreation, and minor expenses. The checking account also receives his weekly return on investment in the community and a proportion of the profits he makes in his practice. Any money that the bank’s algorithm deems surplus to daily needs is transferred to his savings account.
He uses the savings account to save any money that he is only likely to use for emergencies, significant expenses to gain more expertise, vacations, and possible expansion of his business. In addition, the savings account is a great way to build up eventual partnership interest while earning interest at the same time.
When his savings reach a level that can comfortably cater for any immediate eventualities, the balance is automatically transferred to a term deposit. The term deposit pays better interest than the savings account, though lower than the partnership interest investment. Simon aims to build up the term deposit to $30,000. Thereafter, the Community Bank’s automated system will automatically transfer $20,000 to the Capital Bank as an additional unit of partnership interest.
This allows Simon to always have at least $10,000 in savings that he can fall back on when faced with a financial challenge. Even then, the savings can only be withdrawn at a rate of 2% per day, unless the money is for a serious emergency.
With the Commercial Bank, he maintains his business account, as well as clients’ accounts. The bank can give him initial loans to start his business, besides the accounts receivable factoring that he will access after invoicing his clients.
Other functions of the Community Bank
Besides working with participants in the scenarios described here, the Community Bank, as part of the Economic Bureau, helps develop the storehouse. This complex, which hosts various recreational facilities, stores, a farmers’ market, and a stadium, is built with loans from both the Community and Commercial Banks, with down payment being provided by the Capital Bank.
The Community Bank builds the stadium and the farmers’ market. These facilities have more of a community, rather than a commercial focus. The Commercial Bank builds the various recreational facilities at each of the four corners, as well as buildings that host retail stores.
The Health and Nutrition Agency invests the premiums that it charges for its health and life insurance policies with the Community Bank. The Community Bank in turn invests the funds in other endeavors and pays the Health and Nutrition Agency an annuity for its investment. The Health and Nutrition Agency uses this income to repay any loans owed to the bank and to pay the Capital Bank a return on the capital invested in the agency.