Safe assets: made, not just born

□ Published by Robert N McCauley

□ Published on February 2019

□ Summary of the article:

This working paper reassures managers of US dollar reserves at central banks that they need not worry about a shortage of safe assets. This runs counter to the argument that a shortage of safe assets is key to understanding international finance. In that thesis, emerging market economies (EMEs) need to accumulate such assets in line with their own growth. But if advanced economy governments were to issue debt on a scale likely to meet this demand, they risk becoming over-indebted and losing their creditworthiness.

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