Big Deficits Risk Mounting Treasuries Stress: Jackson Hole Paper Finds
- Stanford expert urges moves to boost market resilience
- Central clearing, all-to-all trading are among proposals
The US Treasury Department in Washington, DC.
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Escalating federal borrowing needs may worsen structural deficiencies in the market for US Treasuries that were already on stark display during the 2020 Covid crisis, according to a paper presented to the Federal Reserve’s annual Jackson Hole symposium.
Darrell Duffie, a Stanford University professor who’s been closely involved for years in efforts to address liquidity concerns in the world’s largest debt market, warned in the paper of risks including financial instability if current weaknesses aren’t resolved.