-9As a concrete example, consider the (ex-post) hedging value of bonds for equity risk in the Global Financial Crisis. In 2008, the total return on the S&P 500 index was around minus 37 percent, while the total return of the on-the-run 30-year Treasury bond was about 38 percent!
Furthermore, adequate reserves, keeping in view the national balance sheet considerations, which include public and private sectors, provide comfort. Public policy can achieve these desirable conditions only through some sort of management of capital account.