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(Bloomberg) — Treasury Secretary Janet Yellen cited considerations in regards to the potential for a breakdown in buying and selling of US Treasuries, as her division leads an effort to shore up that essential market.
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“We’re apprehensive a couple of lack of enough liquidity out there,” Yellen mentioned Wednesday in answering questions following a speech in Washington. The balance-sheet capability of broker-dealers to interact in Treasuries market-making hasn’t expanded a lot, whereas the general provide of Treasuries has climbed, she famous.
Treasury debt excellent has climbed by about $7 trillion because the finish of 2019. However huge monetary establishments haven’t been as prepared to function market-makers, burdened by the so-called supplementary leverage ratio, or SLR, which requires that capital be put towards such exercise, in addition to towards reserve holdings.
Yellen famous that the Federal Reserve now has a standing repurchase facility to offer a liquidity backstop to the Treasuries market; that “might be useful,” she mentioned. She additionally mentioned that the so-called Group of 30 panel has offered some “good concepts” on reforms that might assist strengthen the market, together with the doable enlargement of central clearing.
Learn Extra: Geithner-Led Group Faults Fed for Gradual Work on Treasuries Market
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