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Still the World’s Safe Haven?
Report

Still the World’s Safe Haven?

Redesigning the U.S. Treasury Market After the COVID- 19 Crisis



Editorial Rating

8

Qualities

  • Analytical
  • For Experts

Recommendation

In March 2020, amid the rising COVID-19 pandemic, massive sales of US Treasury securities stretched the market to its limits. Primary dealers were unable to absorb the heavy volume, forcing the Federal Reserve to undertake unusual measures to relieve the tension. In this sobering analysis, professor Darrell Duffie identifies flaws in the foundations of the Treasury market and recommends structural upgrades that could better support current and future US government borrowing. Financial professionals will find important ideas in this authoritative examination.

Take-Aways

  • The US Treasury market reeled under an intense March 2020 investor sell-off.
  • The Federal Reserve intervened to maintain market liquidity.
  • The Treasury market needs an all-inclusive clearinghouse to reduce systemic financial risk.

About the Author

Darrell Duffie is a professor of management and finance at Stanford University.