Volume 9 Issue 3, March 2013

Our developing scientific understanding of complex networks is being usefully applied in a wide set of financial systems. What we've learned from the 2008 crisis could be the basis of better management of the economy — and a means to avert future disaster.

The intrinsic complexity of the financial derivatives market has emerged as both an incentive to engage in it, and a key source of its inherent instability. Regulators now faced with the challenge of taming this beast may find inspiration in the budding science of complex systems.

The science of complex networks can be usefully applied in finance, although there is limited data available with which to develop our understanding. All is not lost, however: ideas from statistical physics make it possible to reconstruct details of a financial network from partial sets of information.

Understanding something of the complexity of a financial network is one thing, influencing the behaviour of that system is another. But new tools from network science define a notion of 'controllability' that, coupled with 'centrality', could prove useful to economists and financial regulators.

Observations made by the Cassini spacecraft at the bow shock of Saturn suggest that electrons are likely to be accelerated to near-relativistic energies by strong astrophysical shocks.

Networks as complex as national power grids must be stable enough to maintain synchrony in order to function. Understanding how this stability is achieved forms the focus of a new study that holds promise for improving grid performance.

A quantum phase transition from an antiferromagnetic to a ferromagnetic state suggests that bilayer graphene can exhibit properties analogous to those seen in topological insulators.

Nitrogen atoms trapped tens of nanometres apart in diamond can now be linked by quantum entanglement. This ability to produce and control entanglement in solid systems could enable powerful quantum computers.

Ionizing radiation can diffract molecules and demonstrate a novel matter-wave interferometer. Ionization gratings may now enable quantum interference with heavier particles and interferometric measurements with higher precision.

Engineered defects in the diamond lattice hold promise for the storage and manipulation of quantum information. Entanglement between the electron and nuclear spins of two such defects is demonstrated at room temperature.

A matter-wave interferometer is ‘universal’ if it can be applied to any atom or molecule irrespective of its internal state. This removes the need to prepare a spatially coherent incident beam. Such a system is now realized using three separate optical ionization gratings, and interference of molecular clusters with a de Broglie wavelength as small as 275 fm is demonstrated.

Electric fields can break the structural inversion symmetry in bilayer 2D materials, providing a way of tuning the magnetic moment and Berry curvature. This effect can be probed directly in bilayer MoS₂ using optical measurements.

A quantum phase transition from an antiferromagnetic to a ferromagnetic state is now measured in graphene bilayers. This observation supports the idea that bilayer graphene can sustain counter-propagating spin-polarized edge modes in analogy to the quantum spin Hall effect seen in topological insulators.

An all-optical method to measure the space–time characteristics of an isolated attosecond pulse, without temporal and spatial averaging, is now demonstrated. The approach will provide further insight into the generation of ultrafast light, and may possibly be used to finely control the pulse characteristics.

Data from the Cassini spacecraft identify strong electron acceleration as the solar wind approaches the magnetosphere of Saturn. This so-called bow shock unexpectedly occurs even when the magnetic field is roughly parallel to the shock-surface normal. Knowledge of the magnetic dependence of electron acceleration will aid understanding of supernova remnants.

Controllable quantum systems can be used to emulate intractable quantum many-body problems, but such simulators remain an experimental challenge. Nuclear spins on a diamond surface promise an improved large-scale quantum simulator operating at room temperature.

High-harmonic spectroscopy provides attosecond-scale information about optical processes in molecules. Present techniques, however, cannot simultaneously measure the phase as a function of molecular angle and photon frequency. An approach that retrieves both the amplitude and the phase of high-harmonic emission is now demonstrated, and could enable a full reconstruction of the molecular wavefunction.

A nanomechanical oscillator coupled to a superconducting waveguide provides all-microwave field-controlled tunable slowing and advancing of microwave signals, with millisecond distortion-free delay and negligible losses.

A megaelectronvolt beam of atoms is now generated by ionizing argon clusters, and then neutralizing the ions using Rydberg atoms. The compact system demonstrates a high neutral yield, and could find an important application as a sensitive probe of matter.

Power-grid networks must be synchronized in order to function. A condition for the stability of the synchronous state enables identification of network parameters that enhance spontaneous synchronization—heralding the possibility of smart grids that operate optimally in real-world systems.

The 2008 financial crisis has highlighted major limitations in the modelling of financial and economic systems. However, an emerging field of research at the frontiers of both physics and economics aims to provide a more fundamental understanding of economic networks, as well as practical insights for policymakers. In this Nature PhysicsFocus, physicists and economists consider the state-of-the-art in the application of network science to finance.