The US Treasury market needs to be restructured after a crisis, policymakers warn

US policymakers and other financial experts have raised market capitalization of $ 22tn US Treasury Currency to protect against future risks in the wake of recent disruptive business events.

The world’s most important bond market collapsed in March last year when investors collapsed at the start. corona virus epidemic tried to sell their Treasury Holdings shares.

Speakers at the annual Treasury market meeting Wednesday said they would soon planning process they did not go far enough to protect themselves from future problems.

John Williams, President of the Federal Reserve Bank of New York, has joined forces with Biden officials to say that changes need to be made in the way Treasuries sells and regulates.

“The biggest disruption to major financial markets as we saw last spring should be minimal. But just as the city devastated by the floods wants to rebuild in ways that help withstand the storms, so too, we need to consider how to establish a Treasury market to withstand risk. the next big thing, “Williams told a conference hosted by the New York Fed.

In the US Federal Reserve has already taken steps to strengthen the Treasury’s recovery in times of crisis, creating a system in July of two programs that allow qualified market participants to exchange financial security at a fixed price.

But conference participants stressed that more needs to be done.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission, also said that trading companies should register with his agency, which could shed more light on their operations.

These groups include high-speed trading companies that have become major players in the Treasury market, but are not limited to a group of 24 banks that are known to be early traders.

Banks have long been the mainstay of Treasury market financing, but they have recovered after the 2008 financial crisis cut off the amount of debt they could have on their banks. This provided an opportunity for commercial companies to enter.

Gensler also spoke strongly about the importance of abortion. Removal of houses and equipment that stands between buyers and sellers to confirm what is happening. Abortion reduces the risk of instability and can lead to better market performance.

Nellie Liang, an economist who works as the secretary-general of the U.S. Treasury department, acknowledged that the mid-term divorce was “encouraging”, but also told the conference about possible risks.

“Consideration should be paid to the very high costs of market participation as well as the risks that can be incurred in eliminating the central risk of intermediate risks,” he said.

Sandie O’Connor, a former JPMorgan Chase chief executive officer with the Task Force on Financial Stability, called for a change in the rules governing financial matters that large financial institutions should have.

Big banks need to own 3 percent of their assets, or 5 percent of large corporations. Lenders were allowed to temporarily withdraw Treasury assets and funds held in the Fed from their assets when they accounted for the figure after March 2020, but which were rescheduled for this year.

“Brokers are not able to change their sheets to deal with disruptions when they occur. And that is when we want our first sellers to change their sheets,” O’Connor said.