Policymakers Urged to Take Steps to Reduce Risks in Critical $25 Trillion Treasury Market
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The $25.8 trillion US Treasury market is critical for global finance, but risks are building as trading volumes surge.
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Policymakers should promote central clearing of Treasuries to reduce counterparty risks. The SEC needs to ensure the clearinghouse can handle the load.
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Opening Treasuries trading to more participants through "all-to-all" platforms would increase liquidity during stresses.
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Central banks should allow nonbanks to post Treasuries for short-term loans to access liquidity when needed.
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Regulators should consider designating some key Treasuries institutions as systemically important for closer oversight of risks.