At the Core of the International Financial System

This paper offers additional evidence on the structure of the international financial network as emerging from the Coordinated Portfolio Investment Survey (CPIS) dataset collected by the IMF. Making use of blockmodeling techniques which allow us to fit a given community partition to real data, we show that the system is characterized by the presence of a particular type of meso-scale structure known as core–periphery, in which a densely connected subset of nodes (core) coexists with a sparsely connected partition (periphery), while the members of the core act as intermediaries between members of the periphery. The composition of the core – whose constituents are identified as the set of systemically important international financial centers – is rather small and remains stable over time. In addition to very large economies playing host to well-known global financial centers, the core comprises several off-shore financial markets.