Preserving the Safe Haven Attributes of US Treasury Markets

Аннотация

US Treasury securities have long been VOLUME Vol.07 Issue 06 2025 considered the quintessential global safe haven asset, CITATION foundational to the international financial system. Dr. Marlene K. Ashcroft, & Prof. Julian Mercer. (2025). Preserving the However, recent episodes of market dysfunction, Safe Haven Attributes of US Treasury Markets. The American Journal of Management and Economics Innovations, 7(06), 01–07. Retrieved from notably the "dash for cash" in March 2020, have https://theamericanjournals.com/index.php/tajmei/article/view/6219 underscored vulnerabilities in their liquidity and COPYRIGHT market functioning. This article examines the critical © 2025 Original content from this work may be used under the terms of the creative commons attributes 4.0 License. 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; Flight to quality; Treasury market reform; Debt management; Investor confidence; Market resilience; Federal Reserve; Economic uncertainty; Asset pricing; Crisis response The American Journal of Management and Economics Innovations 1 https://www.theamericanjournals.com/index.php/tajmei INTRODUCTION This study was conducted as a comprehensive conceptual and literature review, aiming to synthesize For decades, US Treasury securities have stood as the economic perspectives on preserving the safe haven bedrock of the global financial system, universally attributes of US Treasury markets. The methodology recognized as the ultimate safe haven asset. Their involved a systematic approach to identify, select, and unparalleled liquidity, deep markets, and the perceived critically analyze relevant scholarly and policy-oriented absence of default risk have made them the preferred