Treasury Market Liquidity Challenges

This chapter explores the complexities of liquidity in the Treasury market, highlighting the disconnect between theoretical liquidity and actual performance during stressful periods. It discusses the diminishing role of primary dealers amid regulatory pressures, their essential function in stabilizing the market, and the implications of proposed policy reforms. The narrative also examines the repo market's structure, the need for centralized clearing, and the various regulatory challenges that have emerged since the financial crisis.

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