However, even prior to the current nancial crisis, the identi cation of the probability and impact of shocks to the nancial system was assuming centre-stage in policy debate. Some policy institutions, for example, attempted to articulate the probability and impact of key risks to the nancial system in their Financial Stability Reports. 4 Moreover, the complexity of nancial systems means that policymakers have only partial information about the true linkages between nancial intermediaries. Given the speed with which shocks propagate, there is, therefore, a need to develop tools that facilitate analysis of the transmission of shocks through a given, but arbitrary, network structure. Recent events in the global nancial system.
