How close the game mechanics are to greatly expanding the financial environment such as banking and derivatives

The game mechanics today don't allow lending or shorting prices without using a trusted third party that is also willing to manually monitor it all.

But, with one small step within the contract mechanics we could be right there.

The simple change needed to set up a lending system within the contract mechanics

. . . . . basically, issuing a contract within a contract is what needs to be coded in.

OK, stick with me for these steps.

Player A wants to borrow 10 billion isk from Player B for 4 weeks and is willing to pay 1 billion isk in interest and give 12 billion in collateral.

All contracts set up by Player B (the lender):

Contract 1 = Player B buys 12 billion of items (say Plex, this is the collateral) for 10 billion isk +  Contract 2 (this is the issuing of a contact within a contract part and needs CCP to make this change to the Contract mechanics)

Contract 2 = Player B has a private sale of the items back to whoever accepted Contract 1 for 11 billion isk in 4 weeks time.  This will automatically put the items (collateral) into escrow.

So, how does this work for Player A (the borrower) if they pay the loan + interest back?

On day 1 Player A will get 10 billion isk in exchange for 12 billion Plex and will be holding Contact 2.

In 4 weeks time Player A will pay Player B 11 billion isk and get their 12 billion of Plex back.

And how does this work for Player B (the lender) if Player A pays the loan + interest?

On day 1 Player B pays 10 billion of isk and receives 12 billion of plex and Contract 2 will force that 12 billion of Plex to be put immediately into escrow.

In 4 weeks time Player B will receive 11 billion isk in exchange for the 12 billion of Plex.

So, how does this work for Player A (the borrower) if they DONT pay the loan + interest back?

On day 1 Player A will get 10 billion isk in exchange for 12 billion Plex and will be holding Contact 2.

In 4 weeks time if Player A defaults then they keep the 10 billion isk but lose their 12 billion Plex.

And how does this work for Player B (the lender) if Player A DOES NOT pay the loan + interest?

On day 1 Player B pays 10 billion of isk and receives 12 billion of plex and Contract 2 will force that 12 billion of Plex to be put immediately into escrow.

In 4 weeks time Player B will keep the 12 billion of Plex.

4 weeks is a short time, could this be set up for a longer time period?

4 weeks is the maximum time currently allowed in contracts.

The simplest way would be for CCP to add more time options in the contract mechanism.

The other way would be to issue Contract 2 within another Contract that ended in 4 weeks time.  That would increase the length of the loan to 8 weeks.  And this could keep on going for longer time periods.

The potential here is massive

I could use the same system to enter into a derivative contract.  But lets leave it at lending for now.