  We model the default contagion process in a large heterogeneous financial
network under the interventions of a regulator (a central bank) with only
partial information which is a more realistic setting than most current
literature. We provide the analytical results for the asymptotic optimal
intervention policies and the asymptotic magnitude of default contagion in
terms of the network characteristics. We extend the results of Amini et al.
(2013) to incorporate interventions and the model of Amini et al. (2015); Amini
et al. (2017) to heterogeneous networks with a given degree sequence and
arbitrary initial equity levels. The insights from the results are that the
optimal intervention policy is "monotonic" in terms of the intervention cost,
the closeness to invulnerability and connectivity. Moreover, we should keep
intervening on a bank once we have intervened on it. Our simulation results
show a good agreement with the theoretical results.
