Planet Money The U.S. economy's biggest superpower, explained
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Dec 11, 2023 Yesha Yadav, a Professor at Vanderbilt University Law School and a financial regulation expert, dives deep into the intriguing world of U.S. Treasuries. She discusses how the U.S. government borrows cheaply through these securities and their crucial role in economic stability. Yadav highlights the possible fragility of the Treasury market and its implications for global finance. Additionally, she explores the lack of regulatory oversight in this sector and the innovative potential of blockchain technology to bolster transparency and trust.
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Benefit of Risk-Free Treasuries
- The US government can borrow cheaply and finance itself without heavily relying on taxpayers.
- This is possible due to the perceived safety and stability of US Treasuries.
Treasury Market Liquidity
- Treasuries are frequently traded, making them highly liquid assets.
- This liquidity allows for easy conversion to cash, contributing to market stability.
Treasuries and Financial Stability
- Treasuries play a vital role in financial system stability, serving as a safety net for firms.
- Regulations require institutions to hold Treasuries as high-quality liquid assets (HQLAs).