Abstract
In this lecture we explain the intimate relationship between modular invariants in conformal field theory and braided subfactors in operator algebras. Our analysis is based on an approach to modular invariants using braided sector induction ($\alpha$-induction) arising from the treatment of conformal field theory in the Doplicher-Haag-Roberts framework. Many properties of modular invariants which have so far been noticed empirically and considered mysterious can be rigorously derived in a very general setting in the subfactor context. For example, the connection between modular invariants and graphs (cf. the A-D-E classification for $SU(2)_k$) finds a natural explanation and interpretation. We try to give an overview on the current state of affairs concerning the expected equivalence between the classifications of braided subfactors and modular invariant two-dimensional conformal field theories.
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