Discussion Paper
The Stability of Safe Asset Production
Almadani, Sara; Batty, Michael M.; Nemschoff, Danielle; Passmore, Wayne (2020-11-09)
A safe asset is a debt instrument that is expected to maintain its value over time, especially during adverse systemic events. Changes in the supply of safe assets can have a significant influence on short-term, risk-free interest rates. (Ferreira & Shousha, 2020) "When the scarcity of safe asset[s] is acute, the zero lower bound (ZLB) becomes binding and the safe asset market equilibrates via a reduction in output…"
FEDS Notes , Paper 2020-11-09-3