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Presentation slides – Safe Assets in Emerging Market Economies (Cuevas)

2 February 2024
Publication Type: Workshop Presentation

This presentation explores the nature of safe assets in emerging markets. Investors derive non-pecuniary benefits from the safety and liquidity of U.S. Treasuries, and therefore carry a “convenience yield”. Convenience yields have made their way into macroeconomics in several areas:

  • Fiscal capacity analysis
  • Exchange rates
  • Channel of unconventional monetary policy, and
  • Drivers of global financial flows

In the past 20 years, some EMEs have deepened the local-currency sovereign debt market and have substantially improved their credit ratings.

This research asks: Does local-currency sovereign debt in Emerging Markets carry this convenience yield? What are their properties as Safe Assets?

25 January 2024
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