Traffic flows past in front of the Bank for International Settlements (BIS) in Basel December 5, 2013. (REUTERS/Arnd Wiegmann)
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The recent volatility in global financial markets should not deter top central banks from lifting interest rates or ending years of unprecedented stimulus, the Bank for International Settlements said Sunday.BIS staff also looked at the role volatility-focused Exchange Traded Funds, which buy and sell things such as VIX U.S. stock volatility futures, played in last month's turbulence which saw world equities shed 10 percent.There was a separate section of the report too which showed the rapid growth of 'passive funds' like ETFs that invest in assets tracking the return of a benchmark or an index.These type of funds now constitute 20 percent of investment fund assets and 43 percent of U.S. equity fund assets it found. Exchange-traded funds are 40 percent of passive fund assets.The report pointed out, however, that the recent market turbulence had not altered the broader economic and financial picture.Researchers also looked at whether combining household debt and international credit with aggregate credit would create better early warning indicator of banking crises.
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