Affiliation: Universidad de los Andes (Chile)
Date and time: Wednesday, April 1, 2026 14:30 (Santiago, GMT-03:00)
Location (Hybrid Seminar):

• Auditorio at the Central Bank of Chile, Morandé 115, second floor
• Online meeting

Registration: seminarios@bcentral.cl

Abstract: We enrich the taxonomy of safe assets by formally introducing the concept of “local safe assets”: an asset denominated in local currency that serves as a safe haven for investors against country-specific risk (as opposed to global risk) and might interact with global sources of safety. Empirically, we show that local-currency sovereign bonds in fourteen high-income emerging markets (EMs) fall into this category. Their safety and liquidity attributes increase against country-specific risks in both domestic currency and dollar terms, but their liquidity premium drops against global risks. We analyze the Covid shock to show the latter is not driven by fundamentals, but by the larger size of the dollar market.