Economy and Business Info

Archive for the ‘England Financial’ Category

The study was conducted by Andrew Aldine, director of financial stability the Bank of England, along with ecologist at the University of Oxford, Robert May.
In addition, Aldine believes that if you look at the dynamic in nature, as given in the transmission of infectious disease or a forest fire, you can make comparisons that help to improve the economic models used to explain, for example, the contagion effect of the collapse of U.S. investment bank Lehman Brothers.
“In October 2008, financial systems and the global economy fell off a cliff,” Aldine told the BBC.

“The conventional economic models used to explain this. However, these cliffs and tipping points are common in natural systems, “added the researcher.
Two lessons
there are two main lessons that the financial world should learn from nature, the study said.

First, is the need to promote diversity in the financial system, and the loss of biological diversity limits the amount of environmental services offered by an ecosystem and endangers the existence of habitat as a whole, the lack of variety in the financial sector increases systemic risk?

“The fragility creates homogeneity,” say the authors. “A time to rebuild and keep the financial system, the regulatory community should give much greater prominence to the objective of encouraging systemic diversity.”

The second lesson from Mother Nature is that the financial system becomes more resistant form by adopting a”modular” to prevent component failure endangers the rest.