MITRE and Simudyne Make Financial Crisis Model Available to Global Financial Institutions
McLean, Va., and London, December 18, 2018—The MITRE Corporation and Simudyne have partnered to provide a financial crisis model to help central banks and other financial institutions around the world address future economic turmoil. Based on the 2008 financial crisis, MITRE worked closely with the U.S. Treasury Department's Office of Financial Research to build this model to help prevent similar events from occurring again by testing scenarios and decision models. MITRE has licensed the technology to Simudyne, which is bringing the model to market as part of its commercial offering.
"MITRE has a long history in applying systems engineering and modeling techniques in support of our U.S. government sponsors," said Jay Schnitzer, MITRE vice president and chief technology officer. "We worked with the Department of the Treasury's Office of Financial Research to build detailed mapping of the transformations and dynamics of the financial system in an agent-based model that provides insight into the primary pathways for the propagation of financial contagion. Modeling and simulation of scenarios can lead to better decision making in financial markets."
Recent advances in computing power and simulation capabilities have made much more accurate analysis of market dynamics possible. This agent-based model uses advanced data analytics to predict future financial fault lines. With the right data and more sophisticated modeling methods, financial regulators and institutions can now address future economic crises before they happen. Agent-based modeling incorporates human behavior into possible scenarios, which can be used to improve understanding of the impact of regulations on market dynamics and the economy.
Justin Lyon, CEO and founder of Simudyne, said, "Agent-based modeling has opened up a number of opportunities for banks to test their decisions before committing resources or taking action. We are excited to be working with MITRE to offer this groundbreaking model to central banks and other financial institutions."
Using agent-based models, Simudyne can help businesses simulate complex networks, like financial markets, by examining how the interactions of a large number of individual agents may drive broader behavior across every market participant.
"Given the interactive dynamics of national economies, this financial crisis model can help banks around the nation and the world mitigate financial system vulnerabilities, thereby reducing risk for us all," said Barry Costa, director of MITRE's Technology Transfer Office. "By licensing our model to Simudyne, a company that shares our values with respect to the integrity of global financial systems, banks and financial institutions around the world have access to these techniques."
MITRE's Technology Transfer Office makes internally developed technologies—like this model—available to commercial companies that then make them commercially accessible to government and industry. MITRE has an active technology licensing program with more than 500 technology licenses completed in the last five years. The MITRE and Simudyne partnership aims to create an efficient technology transfer of this financial crisis model that can contribute to economic stability around the world.
Read the article in the Journal of Economic Interaction and Coordination (subscription required).
Simudyne is the first solution provider to bring agent-based simulation into the financial enterprise. With their modelling toolkit their customers are better able to represent the complex and interconnected systems that make up today’s financial landscape. Simudyne is in use by large financial institutions that need to model risk, run stress tests, explore trading strategies, optimise execution algorithms, and better train artificial intelligence to spot fraud or market abuse. Find out how Simudyne can help you build advanced simulations today and gain wisdom at simudyne.com.
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