Andrew Haldane, who is the Bank of England's Executive Director of Financial Stability, and his co-author Robert May have recently published a paper in Nature that focuses on the dangers to the stability of the financial system caused by too much complexity in the structure of financial networks. It is an excellent, easy read and definitely gives the flavour of the major results so far regarding systemic risk and financial network structure.
One of the many insights referenced in the paper is the idea that regulatory policy should take a more systemic approach (as opposed to focusing regulatory policy at the level of the individual institution). This reminded me of a recent post by Cosma Shalizi questioning the need for microfoundations in macroeconomics.
Andrew Haldane will be coming to Edinburgh in March to give a lecture on financial stability, and I will definitely be in attendance...
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