Enhancing the Liquidity of U.S. Treasury Securities in an Era of Surpluses*

61 Pages Posted: 11 Nov 2008

See all articles by Paul B. Bennett

Paul B. Bennett

Fordham University Business School

Kenneth Garbade

Federal Reserve Bank of New York

John Kambhu

Federal Reserve Bank of New York

Date Written: November 1999

Abstract

This paper presents three proposals intended to enhance liquidity in the market for U.S. Treasury debt: making principal and interest STRIPS maturing on a common date fungible with each other, aligning the maturity of 2-year debt with either bill maturities or the maturities of longer-term debt, and establishing a facility to allow market participants to exchange (with the Department of the Treasury) single-payment securities with similar, but not identical, maturities. The proposals would enhance liquidity by improving the substitutability of identical and very nearly identical Treasury liabilities, and by increasing the integration of the markets for bills, notes, bonds and STRIPS. The proposals would be complementary to, rather than a substitute for, the initiative to buy back outstanding debt announced in August 1999.

Suggested Citation

Bennett, Paul B. and Garbade, Kenneth and Kambhu, John, Enhancing the Liquidity of U.S. Treasury Securities in an Era of Surpluses* (November 1999). NYU Working Paper No. FIN-99-083, Available at SSRN: https://ssrn.com/abstract=1299453

Paul B. Bennett

Fordham University Business School ( email )

1790 Broadway
New York
New York, NY 10019
United States
917 434 0226 (Phone)

HOME PAGE: http://business.fordham.edu/faculty/bennett

Kenneth Garbade

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

John Kambhu

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
58
Abstract Views
784
rank
448,606
PlumX Metrics