But maps of the topology or wiring of the financial sector can be revealing about the strength, direction and complexity of the counterparty links between, and interactions among, financial firms. As one example, Chart 6 looks at the interbank connections between UK banks in 2013. 10 This suggests the wiring of the interbank network is messy and dense. The network’s epicentre is a small set of large banks with a very large number of connections – “superspreader” banks. There are, in addition, a large number of peripheral banks with few connections. In other words, the interbank system has all the properties of a classic scalefree network. Chart 7 looks at the pattern of interbank funding exposures among UK banks. It, too, suggests a complex web with scale-free properties. Networks with these properties are prone to failures among the super-spreader nodes. Since these are likely to be the entities most exposed to “too complex to manage” problems, this topology harbours a potential systemic vulnerability, the type of which was exposed in 2008. 9  “True Cost of complexity in the banking sector”, Simplicity Consulting (2012). 10  It is taken from Langfield, Liu and Ota (2014). Exposures comprise unsecured loans, marketable securities, CDS sold minus CDS bought, securities lending and repo and derivatives exposures. BIS central bankers’ speeches  7  Complex interactions are not confined to the banking sector. The non-bank (“shadow” banking) sector has become increasingly important over recent years.
Regardless of whether you have decided to pursue your studies in economics or start a professional career, I am sure that the knowledge and habits you have acquired in the past two years will prove to be extremely helpful in your endeavours. I wish you every success in your careers. Thank you very much. 2/2  BIS central bankers' speeches