Recent Disruptions and Potential Reforms in the U.S. Treasury Market: A Staff Progress Report

Excerpt:  “The Treasury market is the deepest and most liquid market in the world and a central component of the U.S. and global financial systems. However, recent years have seen several episodes of abrupt and disruptive deterioration in the functioning of some segments of the market. Although some disruptions came amid the extreme public health and economic shock at the onset of the COVID-19 pandemic, other disruptions arose in seemingly more benign environments. Furthermore, the market has evolved significantly over recent decades and is expected to continue to change, including as a result of growth in electronic trading and substantial increases in the amount of Treasury securities outstanding. To help ensure that the Treasury market continues to reliably fulfill its vital role, the authorities overseeing the market are pursuing a program of analysis to inform policy making. This paper provides a progress report on those efforts.”