Complexity Economics

Top EU Versus US Banks and Which System is More Vulnerable.


Which system of banks is more robust, that of the US or the European one? A quick and dirty analysis using stock market data reveals that the US market is far less vulnerable in case of contagion. Here are the results.

Top US Banks.


A 4-star rating (84%) points to a resilient situation.

Top EU Banks.


Again, a 4-star rating (85%) reveals high resilience. So why is the US system potentially less vulnerable? Look at the map densities. The US Complexity Map has a density of 32%, that of the EU banks 76%, far more than double. This means that in case of financial contagion, the EU system of banks will propagate shock faster and more efficiently in virtue of the very high degree of interdependency. This is also evident if one examines the size of the nodes in each map. In the case of the US, there are 3, 4 dominant nodes (hubs) while in the EU almost all systemic banks have very similar footprints. Of course, we’re not talking of revenue – by footprint we mean the impact of each bank on the overall resilience of the system. The above results also mean that the EU system is far more difficult to reform than the US banking system. It is also much more complex (39.37 versus 25.28). It will be interesting to see how the unification of the EU banking industry (starting in January 2016) will impact the resilience of the system. Is the ECB running simulations in this sense?

Established originally in 2005 in the USA, Ontonix is a technology company headquartered in Como, Italy. The unusual technology and solutions developed by Ontonix focus on countering what most threatens safety, advanced products, critical infrastructures, or IT network security - the rapid growth of complexity. In 2007 the company received recognition by being selected as Gartner's Cool Vendor. What makes Ontonix different from all those companies and research centers who claim to manage complexity is that we have a complexity metric. This means that we MEASURE complexity. We detect anomalies in complex defense systems without using Machine Learning for one very good reason: our clients don’t have the luxury of multiple examples of failures necessary to teach software to recognize them. We identify anomalies without having seen them before. Sometimes, you must get it right the first and only time!

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