maturity , and which both owe a single amount of zero coupon debt , due at time . "System-exogenous" here refers to the assumption, that the business asset is not influenced by the firms in the considered financial system. In the classic single firm Merton model, it now holds at maturity for the equity and for the recovery value of the debt, that and Equity and debt recovery value, and , are thus uniquely and immediately determined by the value of the exogenous business assets. Assuming that the are, for instance, defined by a Black-Scholes dynamic (with or without correlations), risk-neutral no-arbitrage pricing of debt and equity is straightforward. Non-trivial asset value equations Consider now again two such firms, but assume that firm 1 owns 5% of firm two's equity and 20% of its debt. Similarly, assume that firm 2 owns 3% of firm one's equity and 10% of its debt. The equilibrium price equations, or liquidation value equations, at maturity are now given by This example demonstrates, that systemic risk in the form of financial interconnectedness can already lead to a non-trivial, non-linear equation system for the asset values if only two firms are involved. Over- and underestimation of default probabilities It is known that modelling credit risk while ignoring cross-holdings of debt or equity can lead to an under-, but also an over-estimation of default probabilities. The need for proper structural models of financial interconnectedness in quantitative risk management – be it in research or practice – is therefore obvious. Structural models under financial interconnectedness The first authors to consider structural models for financial systems where each firm could own the debt of other firms were Eisenberg and Noe in 2001. Suzuki (2002) extended the analysis of interconnectedness by modeling the cross ownership of both debt and equity claims. Building on Eisenberg and Noe (2001), Cifuentes, Ferrucci, and Shin (2005) considered the effect of costs of default on network stability. Elsinger's further developed the Eisenberg and Noe (2001) model by incorporating financial claims of differing priority. Acemoglu, Ozdaglar, and Tahbaz-Salehi, (2015) developed a structural systemic risk model incorporating both distress costs and debt claim with varying priorities and used this model to examine the effects of network interconnectedness on financial stability. They showed that, up to a certain point, interconnectedness enhances financial stability. However, once a critical threshold density of connectedness is exceeded, further increases in the density