Is network theory the best hope for regulating systemic risk?

I was recently interviewed for the article by Christopher Wright, now published in the CFA magazine (July/August 2009, Vol. 20, No. 4) and entitled "Six degrees of rumination – Is network theory the best hope for regulating systemic risk?". The article discusses whether and how network theory can be used to develop a "financial network theory" where the linkages between banks matter as much as the banks themselves. It is available for purchase from CFA website (for $3) or you can just get in touch with me and ask for a copy (unfortunately I can’t post it here).

A recent speech by Andy Haldane (Executive Director of Financial Stability at the Bank of England) "Rethinking the financial network" tackles the same topic. It likewise understands the financial system as a complex adaptive network, and looks how other sciences besides economics have tackled similar problems: from the behavioral effects in the spread of epidemics (vs. panics in financial markets) to the robustness enhancing effects of biodiversity (vs e.g. the Glass-Steagall act that created different financial institutions with different risk profiles).