The explosive growth in structured credit products could have made some investors more vulnerable to losses in the event of an unexpected economic shock, the president of the New York Federal Reserve has warned.

Speaking to the Financial Times, Timothy Geithner said: "The growth of credit derivatives and other forms of risk transfer seem to have made the system more stable. But these gains may have come at the price of increasing uncertainty and potential losses if we end up in the 'tail' " - a bankers' term to describe the chance of a statistically rare event occurring.