US Treasury Market Needs to Be Strengthened Before 'Next Big Shock' - New York Fed
The US Treasury market needs to be strengthened before its "next big shock," with the coronavirus pandemic serving as a lesson of how surprising things could get, New York Federal Reserve President John Williams said Wednesday
NEW YORK (Pakistan Point News / Sputnik - 17th November, 2021) The US Treasury market needs to be strengthened before its "next big shock," with the coronavirus pandemic serving as a lesson of how surprising things could get, New York Federal Reserve President John Williams said Wednesday.
Speaking at an industry conference, Williams noted that the New York Fed took unprecedented action to stabilize the Treasury market after it was disrupted at the start of the pandemic. "Severe disruptions to critical financial markets like we saw last spring should be rare," he said, adding that policymakers needed to "think about how to shore up the Treasury market so it can better endure the next big shock.
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At the height of the COVID-19 crisis, the Fed calmed financial markets by offering up to $1 trillion in overnight repurchase agreement operations, or repo, and purchasing more than $300 billion in Treasuries per week. "The figures were staggering even for us," Williams said.
Williams said a review of the market disruptions seen last year revealed "a failure of the markets to function in the ways they were expected to do in response to those particular circumstances."
He added that the treasury market reform should incorporate ideas from both the public and private sectors.