Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/60722
Authors: 
Fleming, Michael J.
Year of Publication: 
2001
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 120
Abstract: 
U.S. Treasury securities fill several crucial roles in financial markets: they are a risk-free benchmark, a reference and hedging benchmark, and a reserve asset to the Federal Reserve and other financial institutions. Many of the features that make the Treasury market an attractive benchmark and reserve asset are likely to be adversely affected by the paydown of the federal debt, and recent developments suggest that this may be happening already. Market participants are responding by moving away from Treasuries as a reference and hedging benchmark toward agency debt securities, corporate debt securities, and interest rate swaps. The Federal Reserve is taking steps to adjust its portfolio and should be able to do so with minimal implications for monetary policy.
Subjects: 
Treasury market, benchmark, reserve asset, liquidity
JEL: 
H63
G14
E52
G12
E43
Document Type: 
Working Paper

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