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5. The following quote about the financial system is taken from Alessandri and Haldane (2009) 'Although diversification may purge idiosyncratic risk, it simultaneously reduces diversity
5. The following quote about the financial system is taken from Alessandri and Haldane (2009) 'Although diversification may purge idiosyncratic risk, it simultaneously reduces diversity and thereby increases systematic risk'.Explain the quote and how it relates to the vulnerability of the financial system to crises. Make sure your answer fully explains the terms in italics in the quote
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