Interbank Network

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The interbank network as a multiple network. A schematic representation of the balance sheets of three banks akin to that of Fig. 12.2 is reported. The first layer (light blue color, on the left) represents the exposures banks have to common assets. Shocks on this part of the nexus will impair the asset side of the banks forcing for a balance sheet reduction. The layer in the center (light orange) represents the “traditional” interbank lending. The last layer on the right (light red) represents the CDS network, where pairs of banks are connected if they engage in one of these contracts (links in red). Interestingly, other banks can be the reference entity for a contract (links in purple).

Source: Garas, A. "Interconnected networks." (2016). Chapter 12. "The Financial System as a Nexus of Interconnected Networks", by Stefano Battiston, Guido Caldarelli, and Marco D’Errico. http://www.springer.com/us/book/9783319239453
Last modified on Thursday, 04 February 2016 15:05