The fourth feature is that, aside from the aforementioned purchases of JGBs, the Bank has decided to expand purchases of other assets with higher risk; namely, exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs).
The Bank of Canada and the FSB are both looking at how to model these interlinkages.16 I find work to stress-test the system particularly worthwhile because it helps identify where safeguards should be maintained or strengthened. Regulators around the world also need to continue to make good use of macroprudential policies to address localized vulnerabilities as they emerge.