Implications

         Our findings to this point imply several immediate messages relevant for a future architecture of the financial world:                      Global monitoring of leverage levels on the institution level. This could be done by central banks. Data should be made available for research. Without the knowledge of leverage levels at the institution scale, imposing and executing maximum leverage levels is pointless.             Monitoring and analysis of lending/borrowing networks, both of major financial players and of governments. It should be known who holds the debt of whom. Without this knowledge imposing maximum leverage levels becomes hard to implement.             Imposing maximum leverage levels depending on debt structure, trading strategies and position in lending/borrowing networks. Through this measure, regulators could control levels of extreme risk by limiting leverage. This is by no means a trivial undertaking, and needs to be accompanied by massive future research, concerning implications of this step.                

Systemic Financial Risk

Implications

Future research questions