The subsequent emergence of the euro area sovereign debt crisis also led to government bonds in certain jurisdictions being no longer characterised as safe. According to Caballero and Farhi (2014), the global supply of safe assets has fallen from about $ in 2007 to just over $ USD in 2011.
Additional factors that have boosted the demand for safe assets are the new liquidity regulation for banks and the increased need of safe and liquid assets to be posted in collateralised transactions. Central banks have, of course, contributed to the compression of premia via their quantitative easing programmes, and I will come back to this.