Without answering those questions, I wish to argue that complexity theory might be a useful lens through which to begin exploring them. The architecture of complex systems may be a powerful analytical device for understanding and shaping the new architecture of macro-financial policy. Modern economic and financial systems are not classic complex, adaptive networks. Rather, they are perhaps better characterised as a complex, adaptive “system of systems” (Gorod et al (2014)). In other words, global economic and financial systems comprise a nested set of sub-systems, each one themselves a complex web. Understanding these complex subsystems, and their interaction, is crucial for effective systemic risk monitoring and management. This “system of systems” perspective is a new way of understanding the multi-layered policy architecture which has emerged since the crisis. Regulating a complex system of systems  BIS central bankers’ speeches  1  calls for a multiple set of tools operating at different levels of resolution: on individual entities – the microscopic or micro-prudential layer; on national financial systems and economies – the macroscopic or macro-prudential and monetary policy layer; and on the global financial and economic system – the telescopic or global financial architecture layer. The architecture of a complex system of systems means that policies with varying degrees of magnification are necessary to understand and moderate fluctuations. It also means that taking account of interactions between these layers is important when gauging risk. For example, the crisis laid bare the costs of ignoring systemic risk when setting micro-prudential policy.

This is a remarkably favorable picture; and yet there is growing concern about the long-term challenges for the U.S. economy and their implications for future prosperity. In parts of the business community, there is growing anxiety about a perceived shift in the locus of dynamism and growth away from the United States toward Asia and other parts of the world. Public opinion surveys report increased concern among Americans about economic security; about the prospects for future income growth and economic mobility; and about the implications of the long-term increase in income inequality. And there we can see growing concern among the general public and in the business community about the struggle to find a political consensus to support reforms to help us meet these challenges. The United States has long been one of the most open of the major economies. This basic policy choice, along with a range of other actions that have made our economy relatively flexible, has allowed us to be a substantial beneficiary of the rapid increase in global economic integration and in the growing economic success of the rest of the world. Globalization has brought challenges as well as benefits, however. The combined forces of technological change, immigration, and the rapid integration of China, India, and other economies into the world economy are altering the dynamics of competitive pressures on U.S. companies. The pace of change seems to be increasing, and more things we produce, and more of our services, are becoming tradable.