There are perhaps two clear lessons from this experience. First, the importance of targeting high-risk, high-infection individuals – the “super-spreaders”. This principle has an impeccable epidemiological pedigree. 30 For randomly distributed networks, targeted treatment has no value. But for networks exhibiting long tails – which is most of them, certainly including finance – targeted vaccination programmes offer a much more effective means of curtailing epidemics. Not for nothing is epidemiology the origin of the 80/20 principle. 31 For a number of diseases, including SARS and measles, the distribution of infection rates suggest 20% of the population is responsible for 80% of the spread. Similar patterns have been found in the transmission of HIV/AIDS, foot and mouth and computer viruses on the internet. In each of these cases, the right response has been shown to be targeted vaccination of the superspreaders. The second lesson concerns the importance of a system-wide approach to the management of network problems. The Australian HIV/AIDS programme was system-wide, tackling both the causes and consequences of the disease and its spread. Fisheries management provides a second revealing case study. Concerns about the collapse of fisheries came to a head during the 1970s and 1980s, leading to the imposition of fishing quotas for various species. The effect of quotas was, at best, mixed. 29  Bowtell (2005, 2007). 30  May and Anderson (1991). 31  May and Anderson (op.cit. ), May (2005). 14  BIS Review 53/2009  Recently, there has been a growing recognition of what went wrong.

And links have become both fatter and more frequent, increasing roughly 6-fold. The network has become markedly more dense and complex. And what is true between countries is also likely to have been true between institutions within countries. Second, the international financial network exhibits a long-tail. Measures of skew and kurtosis suggest significant asymmetry in the network’s degree distribution. Global finance appears to comprise a relatively small number of financial hubs with multiple spokes. Third, the average path length of the international financial network has also shrunk over the past twenty years. Between the largest nation states, there are fewer than 1.4 degrees of separation. Were the network extended beyond the 18 countries in the sample, the evolution of this “small world” property would be clearer still. So based on evidence from a sampled international financial network, the past twenty years have resulted in a financial system with high and rising degrees of interconnection, a longtailed degree distribution and small world properties. That is an unholy trinity. From a stability perspective, it translates into a robust-yet-fragile system, susceptible to a loss of confidence in the key financial hubs and with rapid international transmission of disturbances. That is not the worst description of financial events over the past decade – and in particular over the past 18 months. (b)  Feedback and stability  In epidemiology, the impact of a disease depends crucially on such structural parameters as the mortality rate once infected and the transmission rate across agents. 14 The first is largely fixed and biological.