Press Releases

Today, the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity, led by Chairman Frank Lucas (OK-03), held a hearing entitled, "U.S. Treasury Debt in the Monetary System." This hearing explored the fundamentals of Treasury securities, the basic framework that governs markets for Treasury securities, and how the Federal Reserve uses those markets to conduct monetary policy. Members also examined how post Dodd-Frank Act policies have impacted the Treasury markets and the effects of Treasury markets on broader financial markets and the wider economy.

Watch the hearing online HERE.  

On the importance of a functioning Treasury market:

• "The Treasury market is the world’s largest and most liquid government bond market with $28 trillion of Treasury securities outstanding. … A Treasury market that fails to function effectively stops an economy from growing. Consumers will not receive cheap financing for homes, cars, or education. Investors will lose their safest option to hedge against risk," said Chairman Hill (AR-02).

On the strength of the U.S. Treasury market:

• “The U.S. Treasury market is the deepest, strongest, and most liquid in the world. As such, it is the foundation of the global financial system, and we must safeguard its status and functions. … An efficient and resilient Treasury market is paramount to U.S. leadership abroad and the dollar’s status as the world’s reserve currency. This privilege cannot be jeopardized. We must prioritize greater liquidity of the Treasury market — for the United States, for the investor, and for the taxpayer,” said Task Force Chair Frank Lucas.

On if regulators should permanently exclude U.S. Treasuries from the supplemental labor ratio and the enhanced supplementary leverage ratio:

• “I do believe the capital requirement that is not risk sensitive should be adjusted. I would support excluding reserves at the central bank, which are riskless,” said The Honorable Nellie Long, Senior Fellow, Economic Studies, Brookings Institution.

Witnesses echoed their support for the work of the Committee.

Tom Wipf, Managing Director at UBS, Serving as CEO of Credit Suisse US Entities stated,  "The U.S. Treasury market remains the most important financial market in the world. Any disruption to this market could strain financial stability, given the central role of the U.S. Treasury markets in the global financial system. Any reform of the Treasury market should enhance liquidity and market resiliency and preserve the capacity of dealers and other market participants to meet the growing demand for, and supply of, Treasury securities. 

The Honorable Scott O'Malia, CEO, International Swaps and Derivatives Association stated, "The U.S. Treasury market is the deepest, most liquid market in the world. It is the oil that keeps the wheels of the global financial system turning and is the primary means by which the U.S. government raises funding. More specific to derivatives, the Treasury repo market supports the exchange of collateral, which is a foundational element of the post-crisis reforms. Without a cost-effective and liquid repo market, we would compromise the timely delivery of margin for cleared and non-cleared derivatives trades. This would severely impact asset managers, pension funds, insurance companies, and other firms that use the repo market to exchange invested securities into eligible collateral. It is therefore critical that this market continues to function safely and efficiently."

Dr. Kristin Forbes, Jerome and Dorothy Lemelson Professor of International Economics and Management, MIT - Sloan School of Management stated, "This Task Force is an important addition to the oversight provided by Congress. A well-functioning Treasury market and the effective implementation of monetary policy are both critical foundations of US economic prosperity. Both of these foundations, however, are currently facing challenges. This is a critically important time to reinforce what has been working well, as well as consider how to strengthen areas where fragilities are emerging."