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Financial Networks Key to Understanding Systemic Risk 

May 29, 2014
Camelia Minoiu, Sanjay Sharma, IMF

With financial markets around the world so interconnected, the analysis of “networks” in the financial system would help deepen understanding of systemic risk and is key to preventing future financial crises, say leading researchers and policymakers at a conference on Interconnectedness: Building Bridges between Research and Policy.

The global financial crisis has shed light on the importance of contagion and systemic risk. One source of risk is the interconnectedness of economic agents created through financial transactions. These transactions generate a “financial network.” Yet there is no clear understanding of how financial networks function and how robust they are. Understanding systemic risk in networks is critical to establish rules that will effectively manage it.

Read more: IMF

 
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