Managers of official dollar reserves are bound to pay attention to the debate over safe assets: their investment portfolios operationally define such assets. This chapter argues that reserve managers need not worry about a shortage of safe assets. The debate turns first on whether demand for...

Robert McCauley maps the capital flows that preceded the 2008 crisis and argues that it was European banks that fuelled the U.S. housing boom. Large official inflows into U.S. Treasury and agency notes should have reinforced a U.S. mortgage market dominated by fixed-rate mortgages. Instead, one...