Private Money Creation with Safe Assets and Term Premia
29 Marzo 2017
El Centro de Economía Aplicada del Departamento de Ingeniería Industrial y  El Instituto Milenio para la Investigación en Imperfecciones de Mercado y Políticas Publicas  de la Universidad de Chile, tienen el agrado de invitarlo a la presentación del paper:
 
“Private Money Creation with Safe Assets and Term Premia", a cargo de Sebastian Infante, Federal Board.
 
Abstract
It has been documented that an increase in the demand for safe assets induces the private sector to create more money-like claims. Focusing on private repos backed by U.S. Treasury securities, I show that an increase in the demand for safe assets leads to a decreases in the issuance of Treasury repos. The intuition is that Treasury securities already function as a safe asset, thus in terms of safe asset creation, private Treasury repos are neutral. In the model, Treasury repos are beneficial because they shift risk (i.e. term premia) from relatively risk averse households to a more risk tolerant financial sector, which issues repos to finance its portfolio. When the demand for safe assets increases, Treasury securities are reallocated to households, reducing the amount of Treasury repo issued by the financial sector. By contrast, Treasury repos created by the Federal Reserve's RRP program---a safe asset created by the public sector---increase with the demand for safe assets. I show the data supports the model's main predictions.

 
Sebastián Infante, es ex-alumno de Ingeniería Industrial de la Universidad de Chile, participó como ayudante de investigación en el Centro de Finanzas, realizó un doctorado en Finanzas, Stanford Graduate School of Business, y actualmente trabaja en la Reserva Federal, USA.


https://www.federalreserve.gov/econres/sebastian-infante.htm

República 701, Santiago, Chile. Teléfono: (+562) 2978 4054 / (+562) 2978 4914

E-Mail: cf@dii.uchile.cl

El Centro de Finanzas agradece el significativo aporte del Banco de Crédito e Inversiones, BCI, a esta iniciativa