Toward Prediction of Financial Crashes with a D-Wave Quantum Annealer
Yongcheng Ding, Javier Gonzalez-Conde, Lucas Lamata, José D. Martín‐Guerrero, Enrique Lizaso, Samuel Mugel, Xi Chen, Román Orús, E. Solano, Mikel Sanz
Abstract
The prediction of financial crashes in a complex financial network is known to be an NP-hard problem, which means that no known algorithm can efficiently find optimal solutions. We experimentally explore a novel approach to this problem by using a D-Wave quantum annealer, benchmarking its performance for attaining a financial equilibrium. To be specific, the equilibrium condition of a nonlinear financial model is embedded into a higher-order unconstrained binary optimization (HUBO) problem, which is then transformed into a spin-1/2 Hamiltonian with at most, two-qubit interactions. The problem is thus equivalent to finding the ground state of an interacting spin Hamiltonian, which can be approximated with a quantum annealer. The size of the simulation is mainly constrained by the necessity of a large number of physical qubits representing a logical qubit with the correct connectivity. Our experiment paves the way for the codification of this quantitative macroeconomics problem in quantum annealers.