Safe Asset Migration

72 Pages Posted: 15 Apr 2020 Last revised: 22 May 2020

See all articles by Chase P. Ross

Chase P. Ross

Board of Governors of the Federal Reserve System

Date Written: May 22, 2020


Post-crisis reforms changed the location of safe asset production. I propose a pair of tests to identify who issues safe assets and which safe asset issuers opportunistically time issuance when the price of safe assets is high. The Federal Home Loan Bank (FHLB) system is a newly crucial safe asset producer. FHLB debt issuance is an important determinant of the price of safe assets, and FHLB debt issuance responds to day-to-day fluctuations in the demand for safe assets — measured via the convenience yield. FHLBs issue more after an unexpected increase in the convenience yield and an unexpectedly large FHLB issue decreases the convenience yield. The FHLBs' ability to produce safe assets depends on their implicit government backing, a potential source of concern for future policymakers.

Keywords: safe asset, convenience yield, Federal Home Loan Banks

JEL Classification: E4, G2

Suggested Citation

Ross, Chase P., Safe Asset Migration (May 22, 2020). Available at SSRN: or

Chase P. Ross (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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