Another development that portends build-up of systemic risk is a rather rapid growth of ETFs with USD 1.5 trillion in assets under management (AUM) which has close parallels, in terms of complexity and opacity, with the CDO market, including its “squared” and “cubed” variants.
Economic data measuring the overall state of the economy are sometimes subject to significant revisions and often released with a long delay. Furthermore, many of the variables that guide our policy decisions are not measured with precision. For example, we assess the level of maximum sustainable employment based on a wide range of imperfect indicators.