6 See C. A. Wilkins, “The Age of Leverage” (remarks to UBC Vancouver School of Economics and CFA Society Vancouver, Vancouver, British Columbia, March 14, 2019). -5is that in times of stress, redemptions of fixed-income ETF shares could amplify volatility in the value of these shares and in prices in the underlying corporate bond market.
What is clear, however, is that, in an environment of low interest rates and a lower equilibrium interest rate, monetary policy will reach the lower bound for rates more often in future. At the same time, the negative side effects of accommodative monetary policy are becoming increasingly evident. So fiscal policy will need to play a much stronger role in future.