This contribution focuses on a recent proposal put forward by the European Systemic Risk Board to create a “safe asset … system of sovereign bond markets. In the present paper, however, authors Paul De Grauwe and Yuemei Ji argue that a financial … nature of the instability of the government bond markets in a monetary union and then analyse whether this proposal of …

changes in global risk (VIX). We find that inertia (whether the bond behaved as a safe asset in the past) and good …We study what makes government bonds a safe asset. Building on a sample of monthly changes in government bond yields in … on whether the change in global risk is driven by financial shocks rather than by US monetary policy. …

maturity races, information sensitivity, risk-intolerant debt and induced runs reinforce the liquidity risk externality …

and NGEU initiatives helped improve EU bonds' market liquidity from previously low levels, also reducing liquidity risk …