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Global safe assets

Author

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  • Pierre-Olivier Gourinchas
  • Olivier Jeanne

Abstract

Will the world run out of 'safe assets' and what would be the consequences on global financial stability? We argue that in a world with competing private stores of value, the global economic system tends to favor the riskiest ones. Privately produced stores of value cannot provide sufficient insurance against global shocks. Only public safe assets may, if appropriately supported by monetary policy. We draw some implications for the global financial system.

Suggested Citation

  • Pierre-Olivier Gourinchas & Olivier Jeanne, 2012. "Global safe assets," BIS Working Papers 399, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:399
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    References listed on IDEAS

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    Keywords

    safe assets; dollar; euro; liquidity trap; government debt crisis;
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