This paper considers the financial system as a complex adaptive system. It applies some of the lessons from other network disciplines – such as ecology, epidemiology, biology and engineering – to the financial sphere. Peering through the network lens, it provides a rather different account of the structural vulnerabilities that built-up in the financial system over the past decade and suggests ways of improving its robustness in the period ahead.

Networks and finance are not complete strangers. There has been growing interest among network theorists in applying their techniques to financial phenomena over the past few years. For example, network techniques have already been applied extensively to the dynamics of payment systems and inter-bank networks. But the financial crisis of the past two years provides both a greater body of evidence, and a stronger incentive, to apply the lessons from other network disciplines to the pressing problems facing financial policymakers today.