U.S. Treasury debt held by the public reached $28.3 trillion, almost 96% of gross domestic product, by the third quarter of 2024 and continues to climb rapidly.
In a new BPEA paper, authors Anil K. Kashyap, Jeremy C. Stein, Jonathan L. Wallen, and Joshua Younger examine changes in the Treasury market since the pandemic and offer recommendations for how the Federal Reserve can best address future episodes of extreme market stress.
Why the market matters. The U.S. Treasury market provides several critical functions to the country’s economy, including its role in financing the government, facilitating the Federal Reserve’s monetary policy, and serving as a source of safe and liquid assets and liquidity risk management for investors, banks, and nonbanks. Nellie Liang highlights lessons learned from the pandemic, the impact of recent tariffs, and measures taken in the past four years that have strengthened the resilience of the Treasury market.
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