Bio: Hanno Lustig is the Mizuho Financial Group Professor of Finance at the Stanford GSB. Lustig has done work at the intersection of finance and macro on exchange rates and the pricing of currency risk, the impact of government guarantees, and the valuation of government debt and fiscal sustainability. His work in international finance has highlighted the central role of currency risk and risk premia in explaining exchange rate variation. Lustig's work also focuses on how the interaction of monetary and fiscal authorities determines the riskiness of government debt.

More recently, he has worked on financial repression in advanced economies.

Title: Are Treasurys a Safe Asset? 

Abstract: Governments and their central banks can decide to protect either bondholders or taxpayers, but not both. These choices determine the government's cost of funding. The riskiness of Treasurys is governed by the interaction between the Fed and the Treasury. If the Fed is in charge, then we can be in a safe debt regime, characterized by zero beta for the Treasury portfolio. In this case, bondholders are completely protected from fiscal shocks. If the Treasury is in charge, then we end up in a risky debt regime. Bondholders demand a risk premium for holding government bonds. They are no longer protected from fiscal shocks. Instead, taxpayers are protected. I provide some recent empirical evidence from advanced economies that suggests we are in a risky debt regime.