To some scientists, the global financial crisis of 2008 looked a lot like the spread of an infectious disease or the collapse of a complex ecosystem such as a coral reef, according to SFI Science Board member Robert May in an Albuquerque Journal interview.
May says he wondered if the mathematical tools scientists use to describe complex natural systems might be useful in explaining banking systems. He and collaborators showed they do.
The result, he says, is his conclusion that preserving individual banks won’t solve the problem. The solution, rather, is in finding ways to keep a problem afflicting one bank or hedge fund from propagating through the system.
Read the article in the Albuquerque Journal (November 19, 2012, subscription required)
Watch the video of May's SFI community lecture on stability in financial systems (October 3, 2012)