The Importance of US Treasuries in the Financial System

US Treasuries play a crucial role in the economy, providing the ability for the government to borrow at low costs. This asset is considered risk-free, which allows people to invest in them during times of crisis. They are the foundation of the financial system, providing stability and liquidity. Regulated financial firms are required to hold treasuries as high-quality liquid assets to maintain their stability. Treasuries are also used as collateral in private financial transactions, such as the repo market, where they ensure the safety of credit relationships.