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Lender of last resort
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A lender of last resort (LOLR) is the lender (provider of liquidity), which since the beginning of the 20th century has usually been a central bank, that supplies liquidity to a financial institution or to the financial market in general when it is lacking. The goal is to prevent financial panics and bank runs spreading from one bank to the next from a lack of liquidity. Different definitions of the lender of last resort exist in the literature. A comprehensive one is the following: "the discretionary provision of liquidity to a financial institution (or the market as a whole) by the central bank in reaction to an adverse shock which causes an abnormal increase in demand for liquidity which cannot be met from an alternative source".[1]
The term originates from the French expression dernier ressort. While the concept itself had been used previously, the term "lender of last resort" was supposedly first used in its current context by Sir Francis Baring, in his Observations on the Establishment of the Bank of England, which was published in 1797.[2] In 1763, the king was the lender of last resort in Prussia.[3]
Contents
[hide]
1 Classical theory
1.1 Thornton's foundations
1.2 Bagehot's contribution
1.3 Summary of the classical theory
2 Bank runs and contagion
3 Disputed areas
3.1 Moral hazard
3.2 Macro or micro responsibility
3.3 Distinction between illiquid and insolvent
3.4 Penalty rate and collateral requirement
3.5 Announcement in advance and too big to fail
3.6 Private alternatives
4 Historical experience
4.1 Bank of England
4.2 Federal Reserve System
5 International lender of last resort
6 In government bond markets
7 References
Classical theory[edit]
Although Alexander Hamilton,[4] in 1792, was the first policymaker to explicate and implement a lender of last resort policy, the classical theory of the lender of last resort was mostly developed by two Englishmen in the 19th century: Henry Thornton and Walter Bagehot.[5] Although some of the details remain controversial, their general theory is still widely acknowledged in modern research and provides a suitable benchmark. Thornton and Bagehot were mostly concerned with the reduction of the money stock. That was because they feared that the deflationary tendency caused by a reduction of the money stock could reduce the level of economic activity. If prices did not adjust quickly, it would lead to unemployment and a reduction in output. By keeping the money stock constant, the purchasing power remains stable during shocks. When there is a shock induced panic, two things happen:
The depositors fear that they will not be able to convert their deposits into high-powered money: in 19th-century Britain, that meant gold or Bank of England notes. They increase the amount of cash they hold relative to deposits.
Banks, on the other hand, afraid of becoming illiquid, increase their reserves. Taken together, it reduces the money multiplier which, multiplied by the amount of base money, gives the money stock.[5] This equation shows the relation:
M = [ 1 + C D C D + R D ] B {\displaystyle M=\quad \left\lbrack {\frac {1+{\frac {C}{D}}}{{\frac {C}{D}}+{\frac {R}{D}}}}\right\rbrack B}
where M is the money stock, B is the money base, C/D is the ratio of cash to deposits held by the public, and R/D is the ratio of reserves to deposits held by the banks.[6] If the multiplier is reduced from a shock and the amount of base money is constant, the money stock will decrease as a consequence. Thornton and Bagehot, therefore, suggested that the lender of last resort should increase the money base to offset the reduction of the multiplier. That was meant to keep the money stock constant and prevent an economic contraction.
Thornton's foundations[edit]
Thornton first published An Enquiry into the Nature and Effects of the Paper Credit of Great Britain in 1802. His starting point was that only a central bank could perform the task of lender of last resort because it holds a monopoly in issuing bank notes. Unlike any other bank, the central bank has a responsibility towards the public to keep the money stock constant, thereby preventing negative externalities of monetary instability.[7]
Bagehot's contribution[edit]
Bagehot was the second important contributor to the classical theory.[8] In his book Lombard Street (1873), he mostly agreed with Thornton without ever mentioning him but also develops some new points and emphases. Bagehot advocates: "Very large loans at very high rates are the best remedy for the worst malady of the money market when a foreign drain is added to a domestic drain."[9] His main points can be summarized by his famous rule: lend "it most freely... to merchants, to minor bankers, to 'this and that man', whenever the security is good".[10]
Summary of the classical theory[edit]
Thomas M. Humphrey,[7] who has done extensive research on Thornton's and Bagehot's works, summarizes their main proposals as follows: (1) protect the money stock instead of saving individual institutions; (2) rescue solvent institutions only; (3) let insolvent institutions default; (4) charge penalty rates; (5) require good collateral; and (6) announce the conditions before a crisis so that the market knows exactly what to expect.
Many of the points remain controversial today but it seems to be accepted that the Bank of England strictly followed these rules during the last third of the 19th century.[7]
Bank runs and contagion[edit]
Most industrialized countries have had a lender of last resort for many years. Why it is done can be explained by different models. The various models propose that a bank run or bank panic can arise in any fractional reserve banking system and that the lender of last resort function is a way of preventing panics from happening. The Diamond and Dybvig model of bank runs has two Nash equilibria: one in which welfare is optimal and one where there is a bank run. The bank run equilibrium is an infamously self-fulfilling prophecy: if individuals expect a run to happen, it is rational for them to withdraw their deposits early: before they actually need it. That makes them lose some interest, but that is better than losing everything from a bank run.
In the Diamond-Dybvig model, introducing a lender of last resort can prevent bank runs from happening so that only the optimal equilibrium remains. That is because individuals are no longer afraid of a liquidity shortage and so have no incentive to withdraw early. The lender of last resort will never come into action because the mere promise is enough to provide the confidence necessary to prevent a panic.[11]
Subsequently, the model has been extended to allow for contagion: the spreading of a panic from one bank to another, by Allen and Gale,[12] and Freixas, et al.[13] respectively.
Allen and Gale[12] introduced an interbank market into the Diamond-Dybvig model to study contagion of bank panics from one region to another. An interbank market is created by banks because it insures them against a lack of liquidity at certain banks as long as the overall amount of liquidity is sufficient. Liquidity is allocated by the interbank market so that banks that have excess liquidity can provide this to banks that lack liquidity. As long as the total demand for liquidity does not exceed the supply, the interbank market will allocate liquidity efficiently and banks will be better off. However, if demand exceeds supply, it can have disastrous consequences. The interregional cross-holdings of deposits cannot increase the total amount of liquidity. Thus, long-term assets have to be liquidated, which causes loss.
The degree of contagion depends on the interconnectedness of the banks in different regions. In an incomplete market (banks do not exchange deposits with all other banks), a high degree of interconnectedness causes contagion. Contagion is not caused if the market is either complete (banks have exchanged deposits with all other banks) or if the banks are little-connected. In Allen and Gale's model, the role of the central bank is to complete the markets to prevent contagion.[12]
Freixas, et al.'s[13] model is similar to the one by Allen and Gale, except that in Freixas, et al.'s model, individuals face uncertainty about where they will need their money. There is a fraction of individuals (travelers) who need their money in a region other than home. Without a payment system, an individual has to withdraw his deposit early (when he finds out that he will need the money in a different place in the next period) and simply take the money along. That is inefficient because of the foregone interest payment. Banks therefore establish credit lines to allow individuals to withdraw their deposits in different regions. In the good equilibrium, welfare is increased just as in the Diamond-Dybvig model, but again there is a bank run equilibrium, too. It can arise if some individuals expect too many others to want to withdraw money in the same region in the next period. It is then rational to withdraw money early instead of not receiving any in the next period. It can happen even if all banks are solvent.[13]
Disputed areas[edit]
The most relevant controversies will be discussed in this section. Depending on the view one favours for either of them, the design of the optimal lender of last resort will be rather different.
Moral hazard[edit]
Moral hazard has been an explicit concern in the context of the lender of last resort since the days of Thornton. Saving illiquid banks from liquidation by allowing them to borrow from a central bank can cause excessive risk taking by both bankers and investors. Therefore, the lender of last resort can alleviate current panics in exchange for increasing the likelihood of future panics by risk-taking induced by moral hazard.[14]
That is exactly what the Report of the International Financial Institution Advisory Commission accuses the IMF of doing when it lends to emerging economies: "By preventing or reducing losses by international lenders, the IMF had implicitly signalled that, if local banks and other institutions incurred large foreign liabilities and government guaranteed private debts, the IMF would provide the foreign exchange needed to honour the guarantees."[15] Investors are protected against the downside of their investment and, at the same time, receive higher interest rates to compensate them for their risk. That encourages risk-taking and reduces the necessary diversification and led the Commission to conclude, "The importance of the moral hazard problem cannot be overstated."[15]
However, not having a lender of last resort for fear of moral hazard may have worse consequences than moral hazard itself.[16] Consequently, many countries have a central bank that acts as lender of last resort. These countries then try to prevent moral hazard by other means such as suggested by Stern:[17] "official regulation; encouragement for private sector monitoring and self-regulation; and the imposition of costs on those who make mistakes, including enforcement of bankruptcy procedures when appropriate."[18] Some authors also suggest that moral hazard should not be a concern of the lender of last resort. The task of preventing it should be given to a supervisor or regulator that limits the amount of risk that can be taken.[19]
Macro or micro responsibility[edit]
Whether or not the lender of last resort has a responsibility for saving individual banks has been a very controversial topic. Does the lender of last resort provide liquidity to the market as a whole (through open market operations) or should it (also) make loans to individual banks (through discount window lending)?
There are two main views on this question, the money and the banking view: the money view, as argued, for example, by Goodfriend and King,[14] and Capie,[6] suggests, that the lender of last resort should provide liquidity to the market by open market operations only because it suffices to limit panics. What they call "banking policy" (discount window lending) may even be harmful because of moral hazard. The banking view finds that in reality the market does not allocate liquidity efficiently in times of crisis. Liquidity provided through open market operations is not efficiently distributed among banks in the interbank market, and there is a case for discount window lending. In a well-functioning interbank market only solvent banks can borrow. However, if the market is not functioning, even solvent banks may be unable to borrow, most likely because of asymmetric information.[1]
A model developed by Flannery[20] suggests that the private market for interbank loans can fail if banks face uncertainty about the risk involved in lending to other banks. In times of crisis with less certainty, however, discount window loans are the least costly way of solving the problem of uncertainty.
Rochet and Vives extend the traditional banking view to provide more evidence that interbank markets indeed do not function properly as Goodfriend and King had suggested. "The main contribution of our paper so far has been to show the theoretical possibility of a solvent bank being illiquid, due to a coordination failure on the interbank market."[21]
Goodhart[16] proposes that only discount window lending should be considered lending of last resort. The reason is that central banks' open market operations cannot be separated from regular open market operations.
Distinction between illiquid and insolvent[edit]
According to Bagehot and, following him, many later writers the lender of last resort should not lend to insolvent banks. That is reasonable in particular because it would encourage moral hazard. The distinction seems logical and is helpful in theoretical models, but some authors find that in reality, it is difficult to apply. Especially in times of crisis, the distinction is difficult to make.[1]
When an illiquid bank approaches the lender of last resort, there should always be a suspicion of insolvency. However, according to Goodhart, it is a myth that the central bank can evaluate that the suspicions are untrue under the usual constraints of time for arriving at a decision.[16] Like Obstfeld[22] he considers insolvency a possibility that arises with a certain amount of probability, not something that is certain.
Penalty rate and collateral requirement[edit]
Bagehot's reasoning behind charging penalty rates (i.e. higher rates than are available in the market) was as follows: (1) it would really make the lender of last resort the very last resort and (2) it would encourage the prompt repayment of the debt.[5]
Some authors suggest that charging a higher rate does not serve the purpose of the lender of last resort because a higher rate could make it too expensive for banks to borrow. Flannery [20] and others mention that the Fed has neither asked for good collateral nor charged rates above the market, in recent years.[14]
Announcement in advance and too big to fail[edit]
If the central bank announces in advance that it will act as lender of last resort in future crises, it can be understood as a credible promise and prevent bank panics. At the same time, it may increase moral hazard. While Bagehot emphasized that the benefit of the promise outweighs the costs, many central banks have intentionally not promised anything.[7]
Private alternatives[edit]
Before the founding of the US Federal Reserve System as lender of last resort, its role had been assumed by private banks. Both the clearing-house system of New York [23] and the Suffolk Bank of Boston [24] had provided member banks with liquidity during crises. In the absence of a public solution a private alternative had developed. Advocates of the free banking view suggest that such examples show that there is no necessity for government intervention.[25]
The Suffolk Bank acted as lender of last resort during the Panic of 1837–39. Rolnick, Smith and Weber "argue that the Suffolk Bank's provision of note-clearing and lender of last resort services (via the Suffolk Banking System) lessened the effects of the Panic of 1837 in New England relative to the rest of the country, where no bank provided such services."[26]
During the Panic of 1857, a policy committee of the New York Clearing House Association (NYCHA) allowed the issuance of the so-called clearing-house loan certificates. While their legality was controversial at the time, the idea of providing additional liquidity eventually led to a public provision of this service that was to be performed by the central bank, founded in 1913.[27]
Some authors view the establishment of clearing-houses as proof that the lender of last resort does not have to be provided by the central bank.[25] Bordo agrees that it does not have to be a central bank. However, historical experience (mainly Canada and US) suggested to him that it has to be a public authority and not a private clearing-house association that provides the service.[28]
Historical experience[edit]
Miron,[25] Bordo,[28] Wood[29] and Goodhart[30] show that the existence of central banks has reduced the frequency of bank runs.[1]
Miron uses data on the crises between 1890 and 1908 and compares it to the period of 1915 to 1933. That allows him to reject the hypothesis that after the new Federal Reserve acted as lender of last resort, the frequency of panics observed did not change. The conclusion of his discussion is that the "effects of monetary policy... that anticipated open market operations by the Fed probably had real effects."[25]
Bordo analyses historical data by Schwartz and Kindleberger to determine whether a lender of last resort can prevent or reduce the effect of a panic or crisis. Bordo finds that Britain's last panic happened in 1866. Afterwards the Bank of England provided the necessary liquidity. According to Bordo, acting as a lender of last resort prevented panics in 1878, 1890, and 1914. Bordo concludes: "Successful lender of last resort actions prevented panics on numerous occasions. On those occasions when panics were not prevented, either the requisite institutions did not exist, or the authorities did not understand the proper actions to take. Most countries developed an effective LLR mechanism by the last one-third of the nineteenth century. The U.S. was the principal exception. Some public authority must provide the lender of last resort function.... Such an authority does not have to be a central bank. This is evident from the experience of Canada and other countries."[31]
Wood compares the reaction of central banks to different crises in England, France, and Italy. When a lender of last resort existed, panics did not turn into crises. When the central bank failed to act, crises such as in France in 1848, however, happened. He concludes "that LOLR action contains a crisis, while absence of such action allows a localized panic to turn into a widespread banking crisis."[32] More recent examples are the crises in Argentina, Mexico and Southeastern Asia. There, central banks could not provide liquidity because banks had been borrowing in foreign currencies, which the central bank was unable to provide.[29]
Bank of England[edit]
The Bank of England is often considered the model lender of last resort because it acted according to the classical rules of Thornton and Bagehot. "Banking scholars agree that the Bank of England in the last third of the nineteenth century was the lender of last resort par excellence. More than any central bank before or since, it adhered to the strict classical or Thornton-Bagehot version of the LLR concept."[33]
Federal Reserve System[edit]
The Federal Reserve System in the United States acts very differently and at least in some ways not in accordance with Bagehot's advice.[14] Humphrey has identified several ways in which the modern Fed deviates from the classical rules: (1) "Emphasis on Credit (Loans) as Opposed to Money," (2) "Taking Junk Collateral," (3) "Charging Subsidy Rates," (4) "Rescuing Insolvent Firms Too Big and Interconnected to Fail," (5) "Extension of Loan Repayment Deadlines," (6) "No Pre-announced Commitment."[34]
Overall, the Federal Reserve has hardly ever acted as the lender of last resort it was meant to be. Some say its lender of last resort policies have jeopardized its operational independence and have put taxpayers at risk. Norbert J. Michel, a financial researcher, even goes as far as saying that the Federal Reserve made the Great Depression worse by failing to fulfill its role of lender of last resort.[35]
International lender of last resort[edit]
The discussion on the need for an international lender of last resort is more controversial than for the domestic function. While most authors agree that there is a need for a national lender of last resort and argue only about the specific set-up, there is no agreement about the basic question of whether there can be an international lender of last resort. There are mainly two opposing groups: one group (Capie and Schwartz) says that an international lender of last resort (ILOLR) is technically impossible, but the other group (Fischer, Obstfeld,[22] Goodhardt and Huang) wants a modified International Monetary Fund (IMF) to assume this role.
Fischer argues that financial crises have become more interconnected, which requires an international lender of last resort because domestic lenders cannot create foreign currency. Fischer says this role can and should be taken by the IMF even if it is not a central bank since it has the ability to provide credit to the market even though it cannot by itself print new money since there is no international currency.[36] Fischer's central argument, that the ability to create money is not a necessary attribute of the lender of last resort, is highly controversial, and both Capie and Schwartz argue the opposite.[36]
Goodhart[16] developed a model which they summarize as follows: "the international contagious risk is much higher when there is an international interbank market than otherwise. Our analysis has indicated that an ILOLR can play a useful role in providing international liquidity and reducing such international contagion."[37]
"A lender-of-last-resort is what it is by virtue of the fact that it alone provides the ultimate means of payment. There is no international money and so there can be no international lender-of-last-resort."[38] That is the most prominent argument put against the international lender of last resort. Besides this point (considered "semantic" by opposing authors), Capie and Schwartz provide arguments for why the IMF is not fit to be an international lender of last resort.[39]
Schwartz[40] explains that the lender of last resort is not the optimal solution to the crises of today, and the IMF cannot replace the necessary government agencies. Schwartz considers a domestic lender of last resort suitable to stabilize the international financial system, but the IMF lacks the properties necessary for the role of an international lender of last resort.[40]
In government bond markets[edit]
Although the European Central Bank (ECB) has supplied large amounts of liquidity through both open market operations and lending to individual banks in 2008, it was hesitant to supply liquidity during the sovereign crisis of 2010.[41] According to Paul De Grauwe,[41] the ECB should be the lender of last resort in the government bond market and supply liquidity to its member countries just as it does to the financial sector. That is because the reasons that the lender of last resort is necessary in the banking sector can be applied to the government bond market analogously. Just like banks that lend long-term while borrowing short-term, governments have highly illiquid assets like infrastructure and maturing debt. If they do not succeed in rolling over their debt, they become illiquid just as banks that run out of liquidity and are not supported by a lender of last resort. The distrust of investors can then increase the rates the government has to pay on its debt, which, in a self-fulfilling way, leads to a solvency crisis. Because banks hold the greatest proportion of government debt, not saving the government may make it necessary to save the banks, in turn. "The single most important argument for mandating the ECB to be a lender of last resort in the government bond markets is to prevent countries from being pushed into a bad equilibrium."[42]
Arguments put forth against a lender of last resort in the government bond market are the following: (1) inflation risk from an increase in the money stock; (2) losses to taxpayers because in the end they bear the losses of the ECB; (3) moral hazard: governments have an incentive to take more risk; (4) Bagehot's rule of not lending to insolvent institutions; and (5) violation of the statutes of the ECB, which do not allow the ECB to buy government bonds directly.[43]
According to De Grauwe, none of the arguments is valid for the following reason: (1) The money stock does not necessarily increase if the money base is increased. (2) All open market operations generate taxpayer risk, and if the lender of last resort is successful in preventing countries from moving into the bad equilibrium, it will not suffer any losses. (3) The risk of moral hazard is identical to the moral hazard in the financial market and should be overcome by risk-limiting regulation. (4) If the distinction between illiquid and insolvent were possible, the market would not need the support of the lender of last resort, but in practice, the distinction cannot be made. (5) While Article 21 of the treaty prohibits buying debt from national governments directly because it "implies a monetary financing of the government budget deficit," Article 18 allows the ECB to buy and sell "marketable instruments," and government bonds are marketable instruments.[19] Finally, De Grauwe[43] asserts that only the central bank itself has the necessary credibility to act as a lender of last resort and so it should replace the European Financial Stability Facility (and its successor, the European Stability Mechanism). The two institutions cannot guarantee that they will always possess enough liquidity or "fire power" to buy debt from sovereign bond holders.
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^ Jump up to: a b Schwartz, A. (2002). "Earmarks of a Lender of Last Resort". In Goodhart, C.; Illing, G. Financial Crises, Contagion, and the Lender of Last Resort. Oxford University Press. pp. 449–60.
^ Jump up to: a b De Grauwe, P. (2012). Economics of monetary union (9th ed.). Oxford University Press. ISBN 9780199605576.
Jump up ^ De Grauwe, P. (2011). "The European Central Bank: Lender of Last Resort in the Government Bond Markets?". CESifo Working Paper Series No. 3569: 3.
^ Jump up to: a b De Grauwe, P. (2011). "The European Central Bank: Lender of Last Resort in the Government Bond Markets?". CESifo Working Paper Series No. 3569.
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Need for Speed: Most Wanted (2005 video game)
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Not to be confused with Need for Speed: Most Wanted (2012 video game).
Need for Speed: Most Wanted
Cover art featuring BMW M3 (E46) GTR
Developer(s)
EA Canada
Publisher(s)
Electronic Arts
Composer(s)
Paul Linford
Series
Need for Speed
Engine
EAGL
Platform(s)
Nintendo DS, Game Boy Advance, GameCube, Microsoft Windows, PlayStation 2, PlayStation Portable, Xbox, Xbox 360
Release
Nintendo DS
EU: November 11, 2005
NA: November 15, 2005
Game Boy Advance, GameCube, Microsoft Windows, PlayStation 2, PlayStation Portable, & Xbox
NA: November 15, 2005
EU: November 25, 2005
Xbox 360
NA: November 22, 2005[1]
EU: December 2, 2005
Genre(s)
Racing
Mode(s)
Single-player, multiplayer
Need for Speed: Most Wanted is a 2005 racing video game developed by EA Canada and published by Electronic Arts. It is the ninth installment in the Need for Speed series. The game features street racing-oriented game play, with certain customization options from the Need for Speed: Underground series. The game is succeeded by Need for Speed: Carbon, which serves as a sequel to Most Wanted.
Most Wanted has been released for Nintendo DS, Microsoft Windows, PlayStation 2, Xbox, GameCube, Game Boy Advance and is the first Need for Speed game released for the seventh generation console, the Xbox 360, as one of the system's launch titles. Another version of Most Wanted, titled Need for Speed: Most Wanted 5-1-0 has been released for the PlayStation Portable. In May 2012, the PlayStation 2 version was released on the online virtual market, PlayStation Store, for the PlayStation 3, but was removed from the storefront later that year - due to an announcement on June 1, 2012, a reboot of the game, also called Need for Speed: Most Wanted, was under development by the British developing team Criterion Games and was released on October 30, 2012.
Need for Speed: Most Wanted received positive reviews and was a commercial success; it sold 16 million copies worldwide, making it the best-selling title in the series.
Contents
[hide]
1 Gameplay
1.1 Modes
1.2 Pursuit system
1.3 Multiplayer
1.4 Cars
2 Plot
3 Development and release
4 Reception
5 Reboot
6 References
7 External links
Gameplay[edit]
Most Wanted is like other Need for Speed games, where the player selects one car and races against a time limit or other racers to reach a destination. Police chases have once again been integrated into certain racing sessions, in which the police employ vehicles and tactics to stop the player's car and arrest the player, like Need for Speed III: Hot Pursuit and Need for Speed: Hot Pursuit 2. As players take control of faster cars and increasingly rely on nitrous oxide speed boosts, the oxide meter now refills automatically for the first time since its introduction in Underground, and driving sequences become fast-paced and intense similar to the Burnout series.
Three distinct regions are offered in the city of Rockport, along with cycling weather. Racing events take place between sunrise and sunset, unlike in the Underground where the events took place at night. A Grand Theft Auto-like Free Roam mode is provided as in Need for Speed: Underground 2, but is still limited to Career mode, as well as pursuit-based events in other modes.
Brand promotion previously seen in Underground 2, is present here as well, with Old Spice, Burger King restaurants, Castrol oil, Axe Unlimited and Edge shaving gel featured. The Cingular logo is still visible in the game's wireless communication system. Performance, body and visual parts that can be bought in the game are also from real life companies. However, Best Buy stores did not return from Underground 2.
Modes[edit]
The game provides players with three game modes. The Quick Race mode allows the player to select a car and an event and immediately start racing. The available cars and events are unlocked as the player progresses through the storyline in the Career mode. Achieving goals by winning races and performing a finishing of actions, dubbed "Milestones", during police pursuits, as well as a minimum Bounty are needed to advance in the storyline and race against any of the mode's 15 Blacklist racers. In the Xbox 360 version, the player is awarded with achievements each time a Blacklist opponent is defeated. Career mode introduces a new feature – the ability to win a Blacklist opponent's car ("pink slip"), bonus functions, extra cash or car parts and decors, after defeating the opponent in question. These come in the form of six markers – the rival's pink slip (which is concealed as a bonus marker), two bonus function markers, and three custom backroom parts markers of which there is a body part, visual upgrade, and performance marker ("Junkman Marker") that the player can select – of which the player can choose only two. New cars and parts are also unlocked as the player progresses through Career mode by beating Blacklist racers.
In addition to the Quick Race and Career modes, there is also a "Challenge Series" mode involving 69 progressively difficult challenges where players are required to successfully complete Tollbooth races and pursuit challenges, such as tagging a number of police cars. The pre-tuned cars used in each Challenge is fixed, ranging from mostly Career cars with poor handling to traffic vehicles such as a dump truck or police cars. Additional bonus cars may be unlocked as the player progresses through Challenge mode. The Challenge mode also has a cheat; by entering the words 'burgerking', or for consoles by pressing a certain code on the d-pad, at the start of the game, the player can avail the exclusive Burger King challenge. Once successfully completed, the game will reward you with something, such as "Junkman" parts. You can equip these parts to your vehicles in the "My Cars" menu to provide extra performance to your car. These parts are not available in "Career Mode".
In terms of actual variations of races, Most Wanted inherits several racing modes prevalent in its Underground predecessors. The game's four existing modes: Circuit races, point-to-point Sprint races, Lap Knockout races and Drag races, remain largely unchanged since the first iteration of Underground, while Drifting, Street X, Underground Racing League tournaments and Outrun racing are removed. Meanwhile, Most Wanted sees the introduction of two new racing variations, which places emphasis on speed. The first mode is known as Tollbooth, where a player races alone to designated checkpoints along a point-to-point route before time runs out; the more time a player has as they reach a toll booth, the more time they have to arrive at the next one. The second mode, dubbed Speedtrap, sees racers competing with each other to get the highest accumulated speed record at multiple traffic cameras. At a speed trap/traffic camera, players accelerate their car to aim for the highest possible speed. Accumulated speed is reduced over a period of time after an opponent crosses the finish line first.
Pursuit system[edit]
The player's car, a Porsche Carrera GT, is being pursued by several undercover state police cars and a police helicopter in Free Roam mode. This screen-shot also depicts the use of simulated HDRR on the sunny sky and surface lighting.
Most Wanted features pursuit evasion in the game for the first time in the series since Hot Pursuit 2. In Career mode, police pursuits may occur during a race or during free roaming through the city, depending on the frequency of the police units in the area and traffic offenses players have committed. The player can initiate a pursuit immediately from the game's safe house or menu by choosing an unfinished Milestone or a Bounty challenge. Pursuits can also be initiated by selecting an appropriate Challenge in the Challenge Series mode. Traffic offenses committed by the player are known in game as Infractions. These include speeding, excessive speeding, reckless driving, driving off roadway, damage to property, hit and run, ramming a police unit, and resisting arrest.
The system is significantly more complex than its previous Hot Pursuit incarnations. The manner in which the police handle a player is now determined by the "heat level" of the player's current car. Heat levels, which increase with the length of a police pursuit and the amount of damage caused by the player during the pursuit, add a twist to the pursuit. The higher the car's heat level, the more aggressive the police units are against the player, employing additional tactics and tools, such as roadblocks, spike strips, police helicopters and heavier and faster police cars such as police SUV's and Federal units.
In Career mode, pursuits are integrated into the game in such a way that it is necessary to participate in pursuit in order to be able to challenge Blacklist racers. The player must complete Milestones which involve committing at least a specified amount of traffic offenses or pursuit lengths during a pursuit, and collecting an amount of Bounty, a form of credit accumulated as players continue to evade the police or damage police units. A car's heat level may be reduced by changing the physical appearance of a car by changing body parts or paint color, or by using another purchased car with a lower heat level to race in the streets. If a car is not being used by the player its heat level will slowly lower over time. Rap sheets, with records such as the player's infractions, cost to state, deployed tactics and pursuit lengths, are also available for viewing by hacking into police records.
Players are provided with several additional features which are useful during pursuits. The Speedbreaker, provided within the driving interface, slows down time similar to bullet time also while momentarily adding weight to the player's car allowing it to become more difficult for other vehicles to push around, and induces a drift. This allows the player a limited amount of time to quickly maneuver the car out of difficult situations, or assess an escape route through a road block or spike strip blockade.[1] Another feature in Most Wanted are Pursuit Breakers, road-side objects which are designed to collapse when a player uses their car to knock down its support, either damaging or disabling following police cars (which can be visually seen in many cases). In one example, if a player smashes through a gas station, the roof of the station falls potentially crushing police units following them.[2]
Pursuits in the game are split into two main parts. The first part, which is the actual pursuit itself, occurs when the player is being actively chased by police. The second part, known as the "Cooldown" mode, occurs when the police have lost sight of the player and are conducting a search for him/her. During this period of time, the pursuit and its corresponding timer are temporarily paused and a Cooldown bar is enabled, which will slowly fill up as time passes. Once the bar fills up completely, the player is considered to have successfully evaded the pursuit. Conversely, if a police unit spots the player, the pursuit resumes. To evade the pursuit, it is necessary to enter Cooldown mode first. This is accomplished by getting a certain distance away from the police or by disabling police units. Cooldown spots, areas in the world usually not seen from the street or helicopters, can be used to hide from pursuers and aid in the player's escape. If the player finds a hiding spot and stops they will spend significantly less time in Cooldown mode.
Multiplayer[edit]
Online multiplayer was available on Xbox 360, Xbox, PC and PlayStation Portable. Up to 4 players can participate in an online race and can race in 4 game modes including circuit, sprint, lap knockout and speed trap. Furthermore, there is the option to enable Performance Matching in an online race. When performance matching is enabled, all cars in the race are automatically upgraded to match the performance (i.e. top speed, handling, etc.) of the fastest car in that particular race. However, as soon as the race is over, all modifications made to the cars by performance matching are removed. The online multiplayer lobby was shut down on August 1, 2011.[2]
Cars[edit]
There are a wide range of cars available for the main Career mode of the game. Cars such as the Fiat Punto and Cadillac CTS are only seen in Most Wanted and tuners return from Underground 2 (e.g. Toyota Supra, Mazda RX-7 and Mazda RX-8) but SUVs do not return except as non-playable police vehicles. Exotics like the Lotus Elise, Lamborghinis, Porsches make their first appearance since Need for Speed: Hot Pursuit 2 and classic muscle cars featured in the Black Edition (e.g. Chevrolet Camaro) are new to the series. As the game progresses, better and faster cars are unlocked and races get faster and more intense as the player makes his/her way through the game. Cars must either be purchased at car lots or won by getting the pink slip to a Blacklist Racer's car, as detailed in the Modes section. Cars can be purchased at car lots in stock condition with no enhancement whatsoever. Not all of them are available or affordable for purchase at the beginning stages of Career mode and must be unlocked by defeating a certain Blacklist member. The Blacklist members' cars can also be won for free after defeating him/her by choosing a pink slip hidden special cards providing 4 types of unknown and 2 known criteria, the two criteria being performance and visual upgrades with the other four containing slips to get out of jail for free, increasing the number of times a vehicle can be impounded before paying a fine to get it back, some extra money and of course, the pink slip to the Blacklist Members' car. These cars are unique in every way, already upgraded with the latest custom parts, therefore, making them the fastest vehicles available. While the game features police cars, Most Wanted does not allow players to play as a pursuing police in chases. However, players may drive several police cars in Challenge mode, but are solely used in checkpoint races and police pursuits, where the police are still pursuing the player.
As in the preceding Underground installments, the performance and physical appearance of the player's car can be extensively modified, but options for exterior and interior modifications have been significantly reduced to only the essentials. The customization of side mirrors, lights, exhausts and individual body kit pieces were dropped from body customization. However, instead of individual body kit pieces, up to 5 whole body kits can be chosen, some of which widen the car's stance. The "Car Specialties" customization (including neon, nitrous purge, hydraulics, spinners, doors, split hoods, and trunk audio) have been completely eliminated with the exception of window tint and custom gauges. Paint customization is limited to the main body color (with mirror, exhaust, spoiler, roof scoop, and brake color options gone) as well as player can apply only one vinyl as multi layer feature was absent. Unlike the Underground games, visual customization is used to lower the car's "heat level", instead of increasing the car's "visual rating". Additionally, players are allowed to assume a sleeper appearance (leaving the exterior of the car unmodified or barely modified) for cars without penalty in Most Wanted.
Plot[edit]
The player character arrives in Rockport City, driving a racing version of the BMW M3 GTR. Following Mia Townsend (Josie Maran), the player character proves their driving skill. However, when the duo stops at an intersection in Downtown Rockport, they draw the attention of a veteran police sergeant named Nathan Cross (Dean McKenzie), who blocks their path with his police issued Chevrolet Corvette C6. As Mia quickly flees, Cross and his female partner confront the player and his car, wanting to seize it, due to the fact that the car is not street legal, as well as informing the player that he's putting an end to street racing in Rockport. However, just before he can arrest the player, a call comes over the radio about a high speed pursuit nearby, and he is requested to assist the chase. Cross reluctantly lets the player go, but warns the player by saying "next time, you won't be so lucky", and scratches the side of the BMW with his car key as he leaves.[3]
Races seem to be in the player character's favor against the Blacklist, a group of the fifteen most notorious drivers wanted by the Rockport Police Department. That is, until their latest member, Clarence "Razor" Callahan (Derek Hamilton), sabotages the M3 GTR and wins the player character's car in a pink slip race.[4][5] After the M3 GTR is towed away, as Razor and the other blacklist members are mocking the player character, the Rockport PD arrives, forcing everyone to flee. Without a car to escape in, the player is arrested by Cross, but is later released due to a lack of evidence.[6] Mia picks up the player character and then informs them about Razor's new status as #1 on the Blacklist. She then helps by assisting in acquiring a new car and helping the player character work their way up the Blacklist.
Rivals are defeated one by one, and reputation, new vehicles, and upgrades are awarded with every Blacklist member taken down. As new boroughs are opened up throughout Rockport (Rosewood, Camden Beach, and Downtown Rockport), Mia also sets up safehouses for the player to hide out at and a rap sheet to keep track of how notorious they become, in exchange for placement of "side bets" on the player's races. In his quest to climb up the Blacklist, he's assisted by Rog, another street racer defeated by the player when he came into the city, who befriended the player. He provides the player with tips and updates about pursuit tactics, races, upgrades, cars etc. However, once time passes, Rog gets suspicious of Mia's great amounts of cash she earns out of the bets, learns that the RPD is monitoring her and advices the player to avoid her.
Once the player reaches the #2 spot, Rog informs the players that everyone calls out a race between him and Razor, and that even people from Bayview (the main location in Underground 2) are placing bets with odds in the player's favor. Afterwards, Razor calls and sets the location for the showdown. The final challenge for the top spot on the Blacklist puts the player character in a race against Razor, with the player emerging as the victor, thus reclaiming the BMW M3 GTR. Razor refuses to relinquish ownership of the car, but Mia subdues Razor and returns the keys to the player, revealing that she is an undercover police officer. At the same time, the Rockport PD arrives on the scene; Razor and all of the other blacklist members are arrested, and the player character is pursued by the entire Rockport Police Department under the command of Cross.[7] During the chase, Cross reveals that the player character actually assisted him in arresting the entire blacklist and tries to get them to surrender.[8] With Mia helping him one last time, the player character evades the police and escapes Rockport by driving the car over an old broken bridge.[9] In the end, Cross adds the player character to the National Most Wanted List.
Development and release[edit]
Promotional screenshot of Rockport's fall foliage of Most Wanted for the Xbox 360 with Porsche 911 Turbo S.
Need for Speed: Most Wanted 'Black Edition', a collector's edition of Most Wanted, was released in celebration of the Need for Speed series' 10th anniversary and in conjunction with the release of Most Wanted. The Black Edition features additional races, bonus cars and other additional content. The Black Edition also comes with a special feature DVD that contains interviews and videos about the game. The Black Edition was released for Microsoft Windows, PlayStation 2 and Xbox in the United States and Australia;[10] only the PlayStation 2 version of Black Edition was released additionally for Europe.[10][11]
The cutscenes in the game are live-action videos shot with real actors and set pieces, and CGI effects are added to car exteriors and environments for extra visual flair. The videos are presented in a significantly different style from the Underground series, and this presentation of cut scenes is used again in Carbon and Undercover.
The depiction between all of the versions graphics-wise is not the same especially on portable versions. The Microsoft Windows version varies by hardware and can look better compared to the console versions. The recommended hardware or above has a similar frame rate to the Xbox 360 version. The game makes heavy use of the HDRR and motion blur effects to give a more realistic feel.
Need for Speed: Most Wanted 5-1-0 is a PlayStation Portable port of Most Wanted, released on the same day as its console and personal computer counterparts. Similar to Most Wanted, Most Wanted 5-1-0 features a similar Blacklist 15 listing and Career Mode, with the addition of "Tuner Takedown", a "Be the Cop" mode not featured on Most Wanted. Most Wanted 5-1-0 lacks many elements of its other console and PC counterparts, like cut scenes, a storyline and a free roam mode, and contains minor differences (including listing the real name of a Blacklist racer rather than his/her nickname). The title of the game is based on the numerals "5-1-0", which is the police code for street racing.
Most Wanted, like the Underground series, avoids the use of major vehicle damage on all racing models, with only scratched paint and heavily cracked windscreens comprising the whole of the racers' damage modeling. Police cars, however, are subject to extreme physical body damages. They can be immobilized if they flip over or have been heavily damaged by "pursuit breakers" and/or the player's car. EA ceased support to the Windows version of the game very early in its life cycle. The latest patch for the Windows version (1.3) was released on December 6, 2005.[12]
Reception[edit]
Reception
Aggregate scores
Aggregator
Score
GameRankings (X360) 83.05%[13]
(Xbox) 82.59%[14]
(PS2) 81.56%[15]
(PC) 81.50%[16]
(GC) 79.36%[17]
(GBA) 67.33%[18]
(NDS) 46.89%[19]
Metacritic (X360) 83/100[20]
(Xbox) 83/100[21]
(PS2) 82/100[22]
(PC) 82/100[23]
(GC) 80/100[24]
(NDS) 45/100[25]
Review scores
Publication
Score
1UP.com A-[26]
Game Informer 8.5/10[27]
Game Revolution B+[28]
GameSpot 8.4/10[29]
GameSpy [30]
IGN 8.5/10[31]
Need for Speed: Most Wanted was met with positive reviews. Aggregating review websites GameRankings and Metacritic gave the Xbox 360 version 83.05% and 83/100,[13][20] the Xbox version 82.59% and 83/100,[14][21] the PlayStation 2 version 81.56% and 82/100,[15][22] the PC version 81.50% and 82/100[16][23] and the GameCube version 79.36% and 80/100.[17][24] While the Game Boy Advance version was met with mixed reviews with a score of 67.33%[18] and the Nintendo DS version was met with negative reviews with a score of 46.89% and 45/100.[19][25] GameSpot gave the game an 8.4 out of 10, praising the game for its "sharp graphics" and "outstanding sound effects", but noted the AI for being "too easy at first, but too hard later on".[29] Need for Speed: Most Wanted was a commercial success; it sold 16 million copies worldwide and 3.9 million in the United States, making it the best-selling title in the series.[32]
IGN gave it an 8.5 out of 10 "great" rating, praising almost every element of the game. Praise was given to the map design, described as "a crazily chromed out, sepia-tone landscape of industrial structures", car modeling, saying "The car models are especially sleek looking too", the car line up and the return of exotics. Particularly strong praise was given to the police system, saying "The cops are never that smart, but they continually grow in aggressiveness and numbers." and "they add that very necessary component of challenge, annoyance, and heat that makes this game so fun". Praise even went to the cut scenes and their casting, which usually falls victim to critics, saying "this mixture of animated, highly colored FMV characters and stylized backgrounds is both imaginative and refreshing".[31]
The PlayStation 2 version of Most Wanted received a "Double Platinum" sales award from the Entertainment and Leisure Software Publishers Association (ELSPA),[33] indicating sales of at least 600,000 copies in the United Kingdom.[34]
Reboot[edit]
On April 18, 2012, South Africa-based online retailer BTGames, the retailer that listed the existence of Jak and Daxter Collection, listed both Need for Speed: Most Wanted 2 and Dead Space 3 for pre-order, hinting that a possible sequel is in the works.[35] The Most Wanted reboot was officially confirmed on June 1, 2012 on the official website and Facebook fan page. EA presented the game at their E3 live press conference on June 4, 2012, and the reboot was released on October 30, 2012.
References[edit]
Jump up ^ "Microsoft Announces Xbox 360 Day One Launch Lineup — Strongest Launch in the History of Video Game Consoles". Microsoft. November 14, 2005. Retrieved November 14, 2005.
Jump up ^ "EA closing 18 online multiplayer services". Eurogamer. July 13, 2011. Retrieved July 19, 2011.
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. FMV titled "6 days ago."
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. FMV titled "Present day."
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. FMV titled "Some time later..." Mia: Razor set you up. He messed with your car.
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. FMV titled "Some time later..." Mia: I heard they didn't have enough on you. Guess it's hard to nail you for street racing when you don't have a ride.
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. Final FMV played after defeating Razor in the game.
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. About 12 seconds into the final pursuit, Cross calls the player. Cross: Hey Hotshot! Hey thanks for helping us out! We've been able to pickup every blacklist racer thanks to you! Now I'll take that into consideration if you give yourself up. So what's it going to be?
Jump up ^ Electronic Arts (2005-11-15). Need for Speed: Most Wanted. PlayStation 2. Electronic Arts. 5 minutes into the final pursuit, Mia calls revealing the bridge.
^ Jump up to: a b "Need for Speed: Most Wanted (Black Edition) release information". MobyGames. Retrieved September 22, 2006.
Jump up ^ "Need for Speed: Most Wanted release information (PlayStation 2 version)". GameSpot. Retrieved September 23, 2006.
Jump up ^ "Need for Speed: Most Wanted patch 1.3". The Software Patch. Retrieved September 22, 2006.
^ Jump up to: a b "Need for Speed: Most Wanted (X360)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (Xbox)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (PS2)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (PC)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (GC)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (GBA)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (NDS)". GameRankings. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (X360)". Metacritic. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (Xbox)". Metacritic. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (PS2)". Metacritic. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (PC)". Metacritic. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (GC)". Metacritic. Retrieved 2013-03-12.
^ Jump up to: a b "Need for Speed: Most Wanted (NDS)". Metacritic. Retrieved 2013-03-12.
Jump up ^ "Need for Speed: Most Wanted review". 1UP. Retrieved August 3, 2008.
Jump up ^ Mason, Lisa. "Need for Speed: Most Wanted review". Game Informer. Archived from the original on October 11, 2007. Retrieved February 12, 2007.
Jump up ^ Ferris, Duke. "Need for Speed: Most Wanted review". Game Revolution. Retrieved February 12, 2007.
^ Jump up to: a b Gerstmann, Jeff. "Need for Speed: Most Wanted review". GameSpot. Retrieved February 12, 2007.
Jump up ^ Osborne, Scott. "Need for Speed: Most Wanted review". GameSpy. Retrieved February 12, 2007.
^ Jump up to: a b Perry, Douglas. "Need for Speed: Most Wanted review". IGN. Retrieved February 12, 2007.
Jump up ^ Totu, Florian (22 October 2009). "100 million Need for Speed Games Have Been Sold to This Day". Softpedia. SoftNews NET SRL. Archived from the original on 2 April 2012. Retrieved 22 August 2015.
Jump up ^ "ELSPA Sales Awards: Double Platinum". Entertainment and Leisure Software Publishers Association. Archived from the original on May 20, 2009.
Jump up ^ Caoili, Eric (November 26, 2008). "ELSPA: Wii Fit, Mario Kart Reach Diamond Status In UK". Gamasutra. Archived from the original on September 18, 2017.
Jump up ^ Phillips, Tom (2012-04-18). "Need for Speed: Most Wanted 2 outed by retailer". Eurogamer.
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