The proliferation of cheap exchange traded funds in the financial system has created a "huge risk of contagion", the chief economic adviser at German insurer Allianz, Mohamed El-Erian, has warned.

El-Erian, who was chief executive and co-chief investment officer at bond giant Pimco until 2014, told attendees at a conference hosted by the Bank of England in London today that risk in the global financial system had migrated from the banks and was now embedded in instruments such as ETFs.