%0 Journal Article
%@ 2045-2322
%A Battiston, Stefano
%A Puliga, Michelangelo
%A Kaushik, Rahul
%A Tasca, Paolo
%A Caldarelli, Guido
%D 2012
%F eprints:1331
%I Nature Publishing Group
%J (Nature) Scientific Reports
%K Applied physics; Modelling and theory; Statistical physics, thermodynamics and nonlinear dynamics; Theoretical physics
%N 541
%P 1-6
%T DebtRank: Too Central to Fail? Financial Networks, the FED and Systemic Risk
%U http://eprints.imtlucca.it/1331/
%V 2
%X 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.