Back on January 8th, Linden Lab announced their ban on unregulated in world banking. This brought about many discussions. How big an impact would this have? Some people think banks are extraneous to Second Life. Others view them as an important part of capital creation.

My initial reaction was that it was a ill thought out reaction by Linden Lab that would have both a short term and a longer term negative impact on the Second Life economy.

Today is when the ban is supposed to take effect, and I must admit, I’ve been shocked by the reaction. The Federal Reserve Bank has reduced Fed Funds rate by 75 basis points. That is the largest single cut in interest rates since 1984, long before Second Life even existed.

Even with this intervention by the Federal Reserve Bank, the Dow Industrials dropped 465 before climbing back. Meanwhile, the markets in Second Life appeared stable today.