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SSRN
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Quantitative Easing and the Safe Asset Illusion

SSRN Electronic Journal
2021
  • 5
    Citations
  • 1,908
    Usage
  • 10
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    5
    • Policy Citations
      3
      • 3
    • Citation Indexes
      2
  • Usage
    1,908
    • Abstract Views
      1,609
    • Downloads
      299
  • Captures
    10
  • Ratings
    • Download Rank
      204,796

Article Description

The massive recourse to quantitative easing (QE) calls for a better understanding of its effects on safe assets. Based on a simple balance sheet framework, we show how QE impacts the total amount, cross-sectional distribution, and composition of safe assets in the economy. Analyzing the ECB’s Public Sector Purchase Programme (PSPP), we find that the amount of universally accessible safe assets decreases and there is a transfer of safe assets from the non-bank to the banking sector. We call this phenomenon the safe asset illusion. The sectoral shift in the holding structure of safe assets has important implications for financial stability and the cost of secured liquidity.

Bibliographic Details

Alexander Bechtel; Jens Eisenschmidt; Angelo Ranaldo; Alexia Ventula Veghazy

Elsevier BV

Safe assets; quantitative easing; Public Sector Purchase Programme; secured deposits; repurchase agreements

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