Articles
| Open Access | Preserving the Safe Haven Attributes of US Treasury Markets
Dr. Marlene K. Ashcroft , Department of Financial Economics, Northbridge Institute of Policy Studies, Vermont, USA Prof. Julian Mercer , Center for Global Finance, Bellford University, Ohio, USAAbstract
US Treasury securities have long been considered the quintessential global safe haven asset, foundational to the international financial system. However, recent episodes of market dysfunction, notably the "dash for cash" in March 2020, have underscored vulnerabilities in their liquidity and market functioning. This article examines the critical factors underpinning the safe haven status of US Treasuries and analyzes the challenges that threaten this unique position. Drawing upon a comprehensive review of economic literature, we delve into the structural characteristics of the Treasury market, including its over-the-counter nature and the role of dealer intermediation, and discuss how these contribute to liquidity fragility during periods of stress. We then explore a range of proposed reforms and policy interventions, such as central clearing, all-to-all trading, and expanded access to central bank facilities, designed to enhance market resilience. The discussion emphasizes the necessity of these reforms to ensure that US Treasuries can continue to fulfill their vital role as a stable anchor for global finance, balancing efficiency with robustness in an evolving economic landscape.
Keywords
US Treasury markets, Safe haven assets, Financial stability, Market liquidity, Systemic risk, Monetary policy
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Copyright (c) 2025 Dr. Marlene K. Ashcroft, Prof. Julian Mercer
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