The Research on Network Virtual Money Supply Model

In this paper, two virtual money supply models are set up: Virtual Money Supply Model with No Virtual Banks and Virtual Money Supply Model with Virtual Banks. In the virtual community without any financial institutions,the quantity of virtual money supply strongly depends on the player's total on-line time, which is decided by the virtual money's exchange rate and the in-game attractiveness. In the virtual community with financial institutions, it depend son the player's total on-line time, virtual bank’s reserve rate and virtual player’s cash ratio. Furthermore, the player's total on-line time is decided by the virtual money’s exchange rate, interest rate and the in-game attractiveness, the virtual bank's reserve rate and virtual player’s cash ratio by the virtual money’s interest rate. Both the survey results of China and the empirical model of U.S. Second Life verified the conclusion in this paper.