Linden Labs is to ban virtual banks from the virtual playground, the operator said in a statement yesterday. The problem is that the virtual money-lenders operate rather too much like their real world counterparts. wrote Ken D., yesterday

“Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world ‘banks’ defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized…

“Linden Lab isn’t, and can’t start acting as, a banking regulator”

Linden Labs’ CEO Philip Rosedale once compared Ginko Financial (surely a name you can trust) to the Nobel Prize-winning microcredit bank Grameen.

Ginko Financial was one of around 30 virtual finance houses operating in Sadville. Ginko offered a 44 per cent yield rate – but even this improbable promise didn’t deter Sad investors – until a run on the bank. Investors lost around $700,000 in real dollars in the crash.

Linden Labs has requested that the virtual banks settle up with investors by January 22, honoring withdrawals. That should be interesting.

Lenders with a real-world license may continue to practice their usurious trade in Sadville.

The collapse of virtual banks in Second Life has led participants to label them as Ponzi schemes. But then the entire operation is a Ponzi scheme, as Shaun Rolph pointed out here a year ago, drawing attention to a little-noticed disclaimer from the operator:

“Linden Dollars are not money, they are neither funds nor credit for funds. Linden Dollars represent a limited license right to use a feature of the simulated environment. Linden Lab does not offer any right of redemption for any sum of money, or any other guarantee of monetary value, for Linden Dollars.”

The government is hiring Byron to tout a “Live Consultation”, soliciting views on how the internet might affect children. That’s your taxes at work, Part One.

How odd then that the BBC, while making deep cuts in real current affairs coverage, is investing heavily in “virtual worlds”. That’s your taxes at work, Part Two.

Yesterday one of the Beeb’s champions of Sadville hit back.

“The social footprint of kids is diminishing year on year,” said Marc Goodchild [real name]. “They are allowed less distance from the front gate all the time.” The Duke of Sadville, the BBC reports, defended virtual worlds by saying that they allowed children to play with their existing friends, “and have some of those shared experiences they would otherwise miss”.

Experiences such as… being attacked by a squadron of flying penises.

That’s great news for pervs everywhere, who’ll no doubt be renewing their TV licenses with renewed enthusiasm, while looking forward to seeking out children in their (now) virtual allergy isolation wards.

But we merely note the observation that at the BBC today, as if you hadn’t already noticed, that the answer to every question is “Technology!!!“. Now what are the odds of some bright spark in the Cabinet Office engaging in some “joined-up” thinking – and actually noticing the contradiction?