I have done so because the supply and demand of safe assets is an important reference point for monitoring and assessing the stability and potential vulnerabilities of the financial system. Let us look back at the mid-2000s. At that time, as the yield spread suggests, the demand-supply balance of U.S. dollar safe assets tightened.
In response, U.S. and European investors searching for yields bought large amounts of highly rated asset-backed securities issued by private financial intermediaries with the perception that these financial instruments were safe but gave yields that were only a little better than U.S. Treasuries. In turn, the issue of asset-backed securities, in particular mortgage-backed securities, rose to meet increased demand from investors.