Despite being contested, this hypothesis has been quite influential and has been supported since 2008 by the theory which explained global imbalances by a “shortage of safe assets” in countries with underdeveloped financial systems. The ensuing search for those assets, particularly in the U.S., generated capital flows, decreased medium-term yields and allegedly conditioned U.S. monetary policy.
Until 2008, the imbalances resulting from excessive savings in search of safe assets could be equilibrated by the decrease of interest rates. After the crisis, the decrease of yields was accentuated by the reduction of the stock of assets resulting from weaker private issuers and from weaker European sovereigns.