Fears that the 'Fragile Five' will provoke a new global financial crisis are overblown. The cycle of economic instability is driven by the political economy of the US, not peripheral countries.
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We should think of the global financial system as a network of financial relationships, in which some countries are heavily connected to everyone else, while others are only weakly connected. For example, if you look at cross-border portfolio assets, there are enormous differences between the center and the periphery. As the figure above (based on IMF cross-border portfolio investment data for the end of 2012) illustrates, the U.S. is right at the center of the network, attracting investment in large amounts from almost every country in the system. Most countries, including the Fragile Five, sit on the periphery, attracting limited investment from a very small number of countries. The UK occupies an intermediate position in the network—not quite as central as the U.S., but certainly not peripheral either. Large EU countries are in turn less central than the UK, but less peripheral than the remaining countries. Though America’s centrality in the global financial system is widely understood, people have thought little about how this structure affects the system as a whole.