  The recent financial crisis of 2008 and the 2011 indebtedness of Greece
highlight the importance of understanding the structure of the global financial
network. In this paper we set out to analyze and characterize this network, as
captured by the IMF Coordinated Portfolio Investment Survey (CPIS), in two
ways. First, through an adaptation of the "error and attack" methodology [1],
we show that the network is of the "robust-yet-fragile" type, a topology found
in a wide variety of evolved networks. We compare these results against four
common null-models, generated only from first-order statistics of the empirical
data. In addition, we suggest a fifth, log-normal model, which generates
networks that seem to match the empirical one more closely. Still, this model
does not account for several higher order network statistics, which reenforces
the added value of the higher-order analysis. Second, using loss-given-default
dynamics [2], we model financial interdependence and potential cascading of
financial distress through the network. Preliminary simulations indicate that
default by a single relatively small country like Greece can be absorbed by the
network, but that default in combination with defaults of other PIGS countries
(Portugal, Ireland, and Spain) could lead to a massive extinction cascade in
the global economy.
