Carol Bertaut, Alexandra Tabova and Vivian Wong
The Replacement of Safe Assets
Evidence from the U.S. Bond Portfolio
Federal Reserve Board, 2014
What's inside?
Mark Twain’s observation that “history doesn’t repeat itself, but it does rhyme” could apply to the financial sector.
Recommendation
Highly rated bonds are at the heart of Wall Street’s business. Few transactions would be possible without the collateral and leveraging possibilities that highly liquid money-like instruments offer. With central banks vacuuming up the best debt issues, from where are financial institutions sourcing their bonds? Economists Carol Bertaut, Alexandra Tabova and Vivian Wong of the Federal Reserve Board offer some challenging insights into the “safe” securities that have replaced the mortgage bonds that triggered the 2008 crisis. getAbstract recommends this dense but intriguing analysis of the changing composition of US investors’ bond portfolios.
Summary
About the Authors
Carol Bertaut, Alexandra Tabova and Vivian Wong are economists at the Board of Governors of the Federal Reserve System.
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