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The world’s first global safe asset: British public debt, 1718-1913

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  • Gomez-Gonzalez, Patricia
  • Mathy, Gabriel

Abstract

This study assesses whether British public debt featured a convenience yield during the Classical Gold Standard before World War I, as the US does in modern times. The empirical results support this thesis. Increases in the British debt-to-GDP ratio decreased the convenience yield on British public debt by between 8 and 20 basis points, qualitatively similar to the behavior of US public debt yields post-1926. Interestingly, the relationship between US yields and US public debt during the Classical Gold Standard counters previous findings for modern US times. The international public debt yield spreads between other Gold Standard core countries and Britain were consistently positive and averaged 55 basis points, even though currency and sovereign risk were negligible at that time for the chosen countries.

Suggested Citation

  • Gomez-Gonzalez, Patricia & Mathy, Gabriel, 2025. "The world’s first global safe asset: British public debt, 1718-1913," Explorations in Economic History, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:exehis:v:97:y:2025:i:c:s0014498325000269
    DOI: 10.1016/j.eeh.2025.101679
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    More about this item

    Keywords

    Convenience yield; Safe asset; Liquidity; Gold standard;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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