Safe asset issuance with an information-acquiring demand side

I consider a situation in which the demand side of safe assets acquires information about their supply and decides how much to purchase accordingly. Information acquisition is described as the ex post reduction of uncertainty. Under full commitment, there exists a unique optimal quantity of safe asset issuance, which may be greater or less than that without information acquisition. Under limited commitment, the safe asset issuer’s safety zone is smaller than that without information acquisition. Moreover, due to information acquisition, the Triffin dilemma becomes more likely, and the supplier’s safeguarding measures become more extreme. An increase in the unit cost of information acquisition can either increase or decrease the likelihood of the Triffin dilemma. Finally, with information acquisition, the instability results concluded by Nurkse (1944) no longer hold.