+

Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

Close
HomeQuizzoneWhatsappShare Flash Reads
 

These two charts show how the world's banking system exploded in size before the 2008 crash

Mar 27, 2015, 16:20 IST

The Bank of England's chief economist, Andy Haldane, just gave a speech about how complicated the world's financial systems are. That included some great charts on how the world's banking sector boomed from 1990 to 2007.

Advertisement

Here, in 1990, it's clear to see how much bigger the United Kingdom is than the United States (and pretty much everywhere else) - France, Germany, Italy, Switzerland, the Netherlands and Belgium make up a big chunk of the map. Those grey lines signify the connections between the centres.

The only really noticeable Asian presence is Japan:

Andy Haldane, Bank of England

Fast-forward to 2007, not even two decades later, and it's easy to see how the sector has exploded in size.

Advertisement

The UK still dominates, though the US seems to have caught up with and perhaps narrowly overtaken Germany and France. Mapping the relationships between the nodes is now incredibly difficult - practically the whole background is laced with those grey lines.

Suddenly dozens of smaller centres are much more obvious - many of which in are in Asia. Singapore, Hong Kong, South Korea and Taiwan have burst onto the scene, along with many others around the edges.

The incredibly complicated nature of the system, and the speed at which it became more complicated seems obvious from the graphs:

Andy Haldane, Bank of England

Haldane indicates that this boom contributed to the bust afterwards:

Advertisement

The global financial crisis provided a telling illustration of the susceptibility of such a network to a weakening, or failure, of the core banking sector. As these core sectors came under stress, it caused a significant cascading of global interbank contagion. Cross-border inter-bank lending flows fell by around 20% between 2008Q2 and 2010Q2. The largest cross-border banks - the "super-spreaders" - appear to have played a central role in instigating and propagating this global contagion.

NOW WATCH: Animated map of what Earth would look like if all the ice melted

Please enable Javascript to watch this video
You are subscribed to notifications!
Looks like you've blocked notifications!
Next Article