We have seen recent butterfly spreads and other measures of Y2K pressures in US markets respond positively to the announcement of these tools. Even with the flexibility provided by these tools, if the markets become more volatile, it may be difficult to forecast aggregate reserve demand and supply, engendering the potential for an unexpected shortfall in reserves.
The real GDP increased by 0.6 percent annually on average in the 2000s while, the real GNI excluding the terms of trade gains/losses, an indicator comparable to the real GDP, grew more rapidly by 0.7 percent (Chart 22). Of related matters, the ratio of Japanese foreign direct investment is notably lower than that in other advanced countries.