[P2P-F] Fw: [gang8] interbank settlement etc.

Sat Sep 8 11:01:10 CEST 2012

----- Forwarded Message -----
From: Gunnar Tómasson <gunnar.tomasson at verizon.net>
To: gang8 at yahoogroups.com 
Sent: Thursday, 6 September 2012, 13:07
Subject: Re: [gang8] interbank settlement etc.

Thanks for sharing these links, Richard.

I will be interested to see whether the international banking system may have moved towards what I have been toying with since the 1980s, namely the idea of automatic overdraft facilities within a computerized international banking network for banking units that follow certain (still-to-be-specified) macro-prudential guidelines for their loan operations.

I have in mind an updated version of Keynes's bancor concept/international financial framework.

Of course, it is not a practical concept as of now - but once the post-Bretton Woods international monetary non-system runs out of operational steam, Keynes's thinking may serve as a guide to a sustainable system.

Gunnar

Sep 6, 2012 04:27:20 AM, gang8 at yahoogroups.com wrote:

>Dear All,
> 
>Robert Fischer wants to draw our attention to three articles about the web of interbank connections, and implications, namely
> 
> 
>1. Stefano Battiston et al. in Nature (Aug 2012): 
> 
>
>DebtRank: Too Central to Fail? Financial Networks, the FED and Systemic Risk
>
>
>               Abstract
>Systemic risk, here meant as the risk of default of a large portion of the financial system, depends on the network of financial exposures among institutions. However, there is no widely accepted methodology to determine the systemically important nodes in a network. To fill this gap, we introduce, DebtRank, a novel measure of systemic impact inspired by feedback-centrality. As an application, we analyse a new and unique dataset on the USD 1.2 trillion FED emergency loans program to global financial institutions during 2008–2010. We find that a group of 22 institutions, which received most of the funds, form a strongly connected graph where each of the nodes becomes systemically important at the peak of the crisis. Moreover, a systemic default could have been triggered even by small dispersed shocks. The results suggest that the debate on too-big-to-fail institutions should include the even more serious issue of too-central-to-fail.
>             
>Source: http://www.nature.com/srep/2012/120802/srep00541/full/srep00541.html
>
>
>
>2. Working paper Nr 321 of the Bank of England:
>On which he comments:  “an interesting thought, IMHO related with the work of Stefano Battiston et al.;  i.e. the netting matrix for bank systems (see page 11). On page 17 there is an important math formula regarding netting ratio between interbank and centrally settled banking networks: 
>A-network:  That means correspondent banking, i.e. Transactions in system between “n” international banks without Central Bank, (I call that decentral netting or clearing) 
>
>    
>B-network:  Transaction of  “n” Banks with a clearing center (I call that central netting or clearing) 
>Theoretically the netting ratio of an A-Network of “n” Banks is sqrt(n-1) times larger then in a  B-network. In other words:  In case of a  global systemic crisis, the “n” banks interconnected in the  A-network  would need theoretically sqrt(n-1) times more central bank money for the the settlement of their open net debit-credit-positions then in a B-Network. Nota bene: Actually the unsettled debit-credit positions of “our” worldwide  A-network  mount to 21 Trillion (10^12) $. (See BIS, quarterly review)
>
>
>
>3.  Stefania Vitali, James B. Glattfelder and Stefano Battiston
>The network of global corporate control
>
>
>Abstract
>The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions.
>This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers.
> 
>The paper is available at: http://arxiv.org/pdf/1107.5728v2.pdfor http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0025995
>
>
>Thanks Robert for passing these on with your comments.
>Warm regards,
>Richard
__._,_.___
Reply to sender | Reply to group | Reply via web post | Start a New Topic Messages in this topic (2) 
Recent Activity: 
Visit Your Group 
The gang8 list is devoted to Creditary Economics.
To unsubscribe, email: gang8-unsubscribe at yahoogroups.com

Switch to: Text-Only, Daily Digest • Unsubscribe • Terms of Use
. 

__,_._,___
-------------- next part --------------
An HTML attachment was scrubbed...
URL: https://lists.ourproject.org/pipermail/p2p-foundation/attachments/20120908/beefa9c1/attachment.htm 