Wednesday, December 19, 2012

BIS: "Global safe assets"

After reading the paper by former BIS honcho William White, below, a reader asks why we didn't link to this:
From the Bank for International Settlements--

by Pierre-Olivier Gourinchas and Olivier Jeanne
Working Papers No 399

December 2012
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.

JEL classification: F02, F30, G01, G15
Keywords: classification: safe assets, dollar, euro, liquidity trap, government debt crisis 
 I answered him "I dunno", which may be an indication of why I am not a trial attorney.