Central Banks

Each active country has a central bank with an appointed Central Bank Chair, a player-held position that controls the country's prime interest rate. The prime rate ripples through bond prices, corporate margins, exchange rates, and inflation.

Fully command economies run a passive monobank instead: the automatic rate setter does not fire. See Planned / Command Economies.

The Central Bank Chair role#

The Chair is the most economically powerful non-executive position in the game. Unlike elected offices, it is an appointed position with a 4-year term (192 turns).

Benefits of holding the Chair:

• +0.5 national political influence per turn
• +3 actions per turn (the "chairActionBonus")
• A platform to set monetary policy

Drawbacks:

• Chair infamy (scrutiny) rises when inflation or GDP growth deviate from targets
• High infamy halves your NPI bonus and costs 1.5 actions per turn
• Poor monetary policy is politically visible: it affects your favorability

How infamy works#

The Chair's infamy (scrutiny) tracks how well you are managing the economy. Each turn:

scrutinyDelta = (inflationRate − targetInflation) × 0.5
              + (2.0 − gdpGrowth) × 0.5           // slow growth → more scrutiny

The GDP growth target is 2.0%. Inflation targets are country-specific monetary baselines; most developed markets target 2.0%, while countries such as Japan, Brazil, and Nigeria use different baselines. Every 1% deviation from either target moves infamy by 0.5 points per turn.

Natural decay is 5% per turn (same as character infamy). Good economic conditions let infamy fall naturally; bad conditions push it up faster than decay.

Positive effects (infamy reduction) are dampened at high scrutiny:

dampener = max(0.1, 1 − chairInfamy / 150)

At infamy 75, positive effects are cut in half. At infamy 150+, they are reduced to 10%. Once scrutiny climbs, it is hard to shed.

Infamy penalty threshold: Above 25 infamy, chair bonuses are halved (+0.25 NPI instead of +0.5) and 1.5 actions are debited each turn.

Scrutiny gain is capped at 8 per turn. One catastrophic print cannot take a clean bank to ruin. A bad record has to be earned over time, and you can see it coming.

What scrutiny costs the economy#

Scrutiny is not only a tax on the Chair's standing. It changes how much a rate move is believed.

A rate change shifts inflation expectations by a multiplier of 0.6 + 0.4 x credibility, where credibility is 1 - scrutiny/100. A spotless bank gets the full effect. A completely discredited one still gets 60% of it.

The floor is deliberate, and so is the narrowness. Loan rates, corporate cost of capital and bond pricing are untouched by scrutiny: a discredited bank can still cause a recession with a big enough hike. What it has lost is the ability to talk inflation down cheaply. Policy always works. It just costs more to be believed.

Buying your way back: resolve#

The way out is not results. It is nerve.

Each turn the bank's stance is checked against the rate corridor: above-target inflation calls for a restrictive stance, below-target for accommodative, inside the band for neutral. Hold the correct stance for 3 consecutive turns and scrutiny falls by 6, whether or not inflation has responded yet. Then the clock restarts.

This is the escape hatch, and it is deliberately an action you control rather than an outcome you do not. A Chair willing to hold an unpopular line can always climb out. Break the stance and the streak resets to zero, and the relief has to be earned again.

Independence, and what it costs to take it#

A government can take control of its central bank. Each route has a price, paid in scrutiny by the institution, not the person.

The ladder is ordered by how far the act goes. Overriding one decision is a disagreement. Removing the person who makes them is a statement about who the bank answers to. A statute outlasts the government that passed it.

Chair turnover is not a laundromat. When a term expires, or a Chair resigns, the institution keeps 75% of its scrutiny: the new Chair inherits most of the record, and gets a modest honeymoon. A dismissal keeps all of it and adds 18 on top, so firing the Chair is always worse than waiting them out. There is no arrangement of people that erases what the bank did.

Granting independence refunds nothing. Otherwise granting and revoking in a loop would launder scrutiny. The only way down is resolve.

Some countries start with the government in charge. The Bank of England had no operational independence until 1997, so a British world starting before then opens with the Treasury setting Bank Rate, and Parliament can legislate the transfer either way. The calendar never does it for you: a 1953 world played past 1997 still needs the statute.

A bank shared across countries, like the European Central Bank, cannot have its independence legislated by one member's parliament.

Exchange-rate regimes and the impossible trinity#

The Chair declares the currency's regime: float, band, or peg. The choice is not a label. It is governed by the impossible trinity, and it costs something.

A country cannot have all three of:

1. a fixed exchange rate,
2. free movement of capital,
3. an independent monetary policy.

Pick any two.

Peg your currency with an open capital account and the policy rate is no longer yours. Attempts to change it are refused, because the rate is whatever defending the peg requires. Two ways back: float the currency, or impose capital controls and accept what that does to your economy. Both are moves you can make the same turn, and the refusal names them.

A band counts as a commitment. A Chair who has promised to defend a corridor has promised to spend reserves defending it, and cannot also claim the rate is free. Treating a band as a float would make it a free option: commit publicly, defend nothing.

Floating with capital controls is a waste, and the game says so. You give up a stable rate and free capital to buy an independence a float already gave you for nothing. It is a legal configuration, just a bad one, and the card names it rather than dressing it up as a trade.

A regime cannot be changed more than once a game year. A regime nobody believes is not a regime.

Declaring a float cancels any standing intervention band. They are contradictory promises, and leaving the band behind would keep the constraint binding against a commitment the Chair just withdrew.

Chair selection#

When a term expires, a new Chair is selected from a single pool: characters nominated by the country's executives (President/PM/Chancellor). An earlier version of this system also drew 30% of picks from a wealth pool (the nation's richest players); that pool has been removed, a Chair is now always someone the executive put forward, not whoever the leaderboard says is rich this turn.

Lobbying funds shift weights within the pool: spending ₳500,000 on lobbying doubles your selection weight.

The selected candidate must accept the offer. If they decline, the next eligible candidate is offered the post. Political pool declines re-run the weighted draw with decliners excluded.

Term length: 192 turns (4 game years) Nomination window: Opens during the last 48 turns of the current term

Setting the prime rate#

The Chair sets monetary policy by adjusting the prime rate. The prime rate can be set between 0% and 25% in 0.25% increments (e.g., 2.00%, 2.25%, 2.50%). This is done through the character's available actions on the Central Bank page. The prime rate affects:

1. Corporate bond costs#

Coupon rates on new corporate bonds = prime rate + credit spread. Raising rates makes borrowing more expensive for corporations, reducing expansion capacity. Lower rates make bonds cheap and encourage investment.

2. Sovereign bond coupon rate#

Sovereign bonds pay the prime rate plus a term premium for longer maturities, plus any central-bank credibility spread the issuing bank has accumulated: coupon = primeRate + termPremium + credibilitySpread. New bond issuances each quarter carry whatever that combined rate works out to. Higher rates, longer terms, or a discredited bank all mean the government pays more interest, widening the deficit.

3. Exchange rates#

The prime rate is one of four macro factors that drive the exchange rate target each turn. The full macro target formula is:

macroTarget = baseRate × multiplier

multiplier = 1
  − (primeRate − baselinePrime) × 0.02
  + (inflation − baselineInflation) × 0.015
  − (gdpGrowth − baselineGdpGrowth) × 0.01
  − (tradeGrowth − baselineTradeGrowth) × 0.005

• Prime rate: higher rates strengthen currency (lower target rate); sensitivity 0.02
• Inflation: higher inflation weakens currency (higher target rate); sensitivity 0.015
• GDP growth: stronger growth strengthens currency; sensitivity 0.01
• Trade growth: trade surplus strengthens currency; sensitivity 0.005

The actual rate converges toward this target at 5% per turn (DRIFT_SPEED), so a full rate shock takes roughly one game year (~48 turns) to work through. On top of macro drift, two additional forces apply each turn:

• Volume pressure: net buy/sell activity creates a short-term offset capped at ±5% per turn. Volume accounts for 20% of rate direction; macro fundamentals account for 80%.
• Random noise: ±0.4% per-turn jitter prevents perfectly predictable movement.

Guardrails clamp the final rate to ±50% of the base rate (floor = 0.5× base, ceiling = 1.5× base).

4. Inflation#

The prime rate is a direct inflation management tool. High rates dampen borrowing and spending, reducing inflationary pressure. This relationship is captured in the per-turn inflation recalculation, which feeds GDP growth data and prime rate into an inflation model that updates every turn.

5. Corporate profit margins (via inflation)#

Inflation affects all corporate sector margins:

Below the 2% target, the bonus scales linearly from 0% at target to +2% at 0% inflation. Above target, the penalty scales linearly to −8% at 10% inflation, then caps.

6. Corporate growth costs#

Revenue growth costs scale with the prime rate. Higher rates increase the cost of growing each sector's revenue, slowing organic expansion across all corporations.

Central bank and fiscal policy#

The Chair does not control fiscal policy: that requires legislation passed through the legislature. But monetary and fiscal policy interact:

• High deficit spending stimulates the economy (boosting growth and margins) but can fuel inflation
• High inflation forces the Chair to raise rates, which raises borrowing costs, which can slow growth
• High national debt crowds out private investment, reducing margins across all sectors

A Chair who raises rates aggressively to fight inflation may tip the economy into a slowdown, but a Chair too slow to act lets inflation compound. Both mistakes play out in real time, across every active country at once.

FX intervention (standing band policy)#

The Chair can post a soft-band intervention policy: a floor and ceiling around the current exchange rate. When the market rate moves outside this band, the central bank automatically defends it by injecting synthetic trade volume, drawing on reserves to push the rate back toward the band.

Setting the band#

Access the Central Bank page and set:

• Floor: minimum acceptable rate (stronger than this triggers selling)
• Ceiling: maximum acceptable rate (weaker than this triggers buying)

Policy change rules:

• Widening the band (making it looser) is free: do it any time.
• Narrowing or cancelling the band requires a 6-turn cooldown after the last policy change. This mirrors the prime-rate cadence and prevents rapid-fire policy whipsawing.

The band persists across chair transitions. A new chair inherits the previous band and must wait out any active cooldown before tightening it.

How defense works#

Each turn, if the published rate is outside the band:

1. The game computes the breach distance (how far outside the band the rate sits, as a fraction of the breached edge).
2. It calculates desired spend as |breachDistance| × aggressiveness, in internal FX-volume units.
3. Actual spend is capped by available reserves.
4. The synthetic volume is folded into the same volume-pressure channel that organic trades use, so intervention obeys the same ±5% per-turn cap.
5. The rate is recomputed with the synthetic volume included.

Reserve draw order for sell-side defense:

• The currency-specific spread-fee reserve pool is spent first.
• Forex Revenue is spent next.
• The general Reserve Balance is tapped last.

Reserve pools#

Spread fee split: On every currency trade, 25% of the spread is destroyed. Another 25% becomes forex revenue, and 50% enters the currency-specific spreadFeeReserveBalances pool.

Treasury → FX Reserve Transfer: The Finance Minister (US Secretary of the Treasury, UK Chancellor, JP/DE Finance Minister) can move federal surplus into the reserve balance. This action is capped at 0.5% of annual federal revenue per turn and rate-limited to once per turn. It is config-driven via financeMinisterCabinetId, so future countries wire up automatically by setting that field.

Failure and infamy#

If the rate is still outside the band after spending all available reserves, the seated Chair receives an intervention failure:

• +15 infamy charged once per breach cycle (deduped so you don't get stacked penalties every turn)
• A system mail notifies the Chair that reserves are depleted
• The band remains posted; the Chair must either restore reserves (via treasury transfer or waiting for forex revenue to accumulate) or widen the band

If no reserves are available at all when the breach occurs, failure infamy still fires: the band was undefended.

IMF lock: If the country is under an IMF bailout (chairControlsLocked is true), the Chair cannot change the intervention policy, but ongoing defense continues to fire if a band was already posted.

Intervention history#

The Central Bank page shows a running log of recent interventions:

• Turn number
• Direction (buy / sell)
• Reserves spent
• Funding source (forex revenue, reserve balance, or mixed)
• Rate before and after

History is retained for the last 24 intervention events per currency.

The reserve requirement#

Where Private Banking is enabled, the rate and QE are not the Chair's only levers. The central bank also sets a reserve requirement: the fraction of deposits every private bank in the currency must hold back instead of lending.

The Chair (or an admin) sets it from the Reserve tab on the Central Bank page. It can be set anywhere between 5% and 95%; out-of-range values are refused rather than clamped. Until a Chair touches it, the era default applies: 10% in modern worlds, 20% in historical ones.

The mechanic is exactly what it sounds like. A private bank's lendable headroom is:

headroom = max(0, totalDeposits × (1 − reserveRatio) − totalLoans)

Raise the ratio and every bank in the currency has less room to lend against the same deposit base; banks already at the old limit are frozen out of new lending until deposits grow or loans run off. Lower it and headroom opens up at once. This makes the requirement the third monetary lever next to the prime rate and QE: the rate prices credit, QE moves the money stock, the reserve requirement caps how much private credit the deposit base can carry at all.

It also feeds insurance pricing: a bank holding thin reserves against the requirement pays a higher deposit-insurance premium (see below), so the ratio disciplines banks even before it binds them.

The deposit insurance fund#

Each currency with private banking carries a national deposit insurance fund. It is premium-funded, not appropriated: no money sits in it that banks did not pay in.

Premiums. Every turn, each chartered bank pays a premium on its insured deposits. The base rate is 0.4% annually, split across the turns of the game year, then risk-weighted by reserve cover:

riskWeight = clamp(2 − actualReserveRatio / requiredReserveRatio, 0.5, 3)

A bank holding exactly its required reserves pays the base rate. Thin reserves pay up to 3x; a heavily reserved bank pays as little as 0.5x. Running your bank hot is legal, but it is not free.

The insured cap. Deposits are insured up to a per-depositor cap, anchored at ₳5,000,000 in modern USD reference terms and scaled to each currency and era the same way charter capital is. Balances above the cap are not the fund's problem.

When a bank fails. The failed bank's remaining cash and posted capital form a recovery pool. Insured balances are kept whole; excess above the cap is paid pro rata from whatever recovery remains, and the unpaid part is a haircut the depositor eats. The bill for the kept balances is funded in strict order: recovery pool first, then the insurance fund, then a Treasury backstop. The backstop is unconditional and lands in the federal budget as a depositInsurance spending line, pushing the treasury into debt if it must. A country whose banks fail bigger than the fund pays for it in fiscal terms, in public.

The Central Bank page's Insurance tab surfaces the fund: its balance, lifetime premiums collected, payouts, and how much the Treasury has ever been made to cover.

Savings and credit lines#

The central bank system also manages player savings accounts and lines of credit. Central-bank savings interest is created onto externalBroadMoney and netMoneyCreatedLifetime; it is not paid from reserveBalance. The savings APY is half the real rate (prime rate minus inflation), with the real rate floored at 0.5 percentage points so it can never go negative or near zero.

See also: Currency Exchange, National Metrics, Sovereign Bonds, Corporate Bonds, Private Banking, Government Approval, Planned / Command Economies, FOMC / Rate-Setting Board