And links have become both fatter and more frequent, increasing roughly 6-fold. The network has become markedly more dense and complex. And what is true between countries is also likely to have been true between institutions within countries. Second, the international financial network exhibits a long-tail. Measures of skew and kurtosis suggest significant asymmetry in the network’s degree distribution. Global finance appears to comprise a relatively small number of financial hubs with multiple spokes. Third, the average path length of the international financial network has also shrunk over the past twenty years. Between the largest nation states, there are fewer than 1.4 degrees of separation. Were the network extended beyond the 18 countries in the sample, the evolution of this “small world” property would be clearer still. So based on evidence from a sampled international financial network, the past twenty years have resulted in a financial system with high and rising degrees of interconnection, a longtailed degree distribution and small world properties. That is an unholy trinity. From a stability perspective, it translates into a robust-yet-fragile system, susceptible to a loss of confidence in the key financial hubs and with rapid international transmission of disturbances. That is not the worst description of financial events over the past decade – and in particular over the past 18 months. (b)  Feedback and stability  In epidemiology, the impact of a disease depends crucially on such structural parameters as the mortality rate once infected and the transmission rate across agents. 14 The first is largely fixed and biological.
It would therefore be impossible for the Eurosystem to conduct a successful policy by mechanistically following a simple rule whereby policy decisions are closely linked to a few indicator variables or to a central inflation projection at a particular point in time. Two key features of the ECB’s communication with the public and the markets are our Monthly Bulletins and the monthly press conferences. The latter usually directly follow the first Governing Council meeting of each month. By these means we publicly conduct a detailed review of current monetary, financial and other economic developments in the euro area against the background of the strategy. This aims at illustrating the application of the strategy in practice, guiding market expectations. Although the strategy is complex, we generally try to end with an overall assessment which summarises the opinion of the Council on the future situation. The press conference provides prompt information in an even-handed way, and it offers the opportunity for immediate two-way communication. As far as I am aware, no other central bank regularly communicates with the public in such a prompt and open manner immediately after its monetary policy meetings. We are convinced that this contributes to reducing uncertainty in the markets and thus gives important and clear guidance, also with regard to short-term policy moves. In this respect, one should recognise that the ECB is facing a completely new environment.