A small number of participants dominate the interbank market

Analysis - June 2019 - No. 12

Authors Sørensen, Jan Lund; Harmat, Simon Hajaj Ruby
Subject Financial stability; Interbank payments; Interconnectedness
Type Analysis
Year 2019
Published 17 June 2019
The analysis looks at the complex network created when the financial institutions exchange many thousands of transactions across the Danish interbank market. The analysis shows that there is a core consisting of a few institutions which are important in terms of spreading liquidity, and that a small number of institutions alone connect isolated institutions with the rest of the network. The interconnectedness of the network emphasise the importance of having robust central participants.