Grzegorz Hałaj European Central Bank The talk is largely based on the paper Kochanska, Kok and myself on the emergence of the EU corporate lending network. This paper uses network formation techniques based on the (agent-based) theoretical framework of Halaj and Kok (2014) to construct networks of lending relationships between a large sample of banks and non-banks in the EU. The model provides an assessment not only of how banks are directly related to each other in the interbank market but also how they may be indirectly related (due to common exposures) via their corporate lending relationships. We illustrate how the model can be used to conduct counter-factual simulations of the contagion effects arising when individual, or groups of, banks and firms are hit by shocks. This could allow policy makers to gauge specific vulnerabilities in the financial system evolving around the lending relationships between banks and their (corporate) borrowers. Furthermore, we show that the modelling framework can be used by micro and macroprudential authorities to analyse the impact of varying banks’ large exposure limits as a way to mitigate contagion effects within and beyond the financial system. I will try to show as well some general properties of networks generated in that theoretical framework.