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Still the World’s Safe Haven?

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Still the World’s Safe Haven?

Redesigning the U.S. Treasury Market After the COVID- 19 Crisis

Brookings Institution,

5 min read
3 take-aways
Audio & text

What's inside?

Economic uncertainty over COVID-19 rocked the US Treasury market in March 2020.

Editorial Rating



  • Analytical
  • For Experts


In March 2020, amid the rising COVID-19 pandemic, massive sales of US Treasury securities stretched the market to its limits. Primary dealers were unable to absorb the heavy volume, forcing the Federal Reserve to undertake unusual measures to relieve the tension. In this sobering analysis, professor Darrell Duffie identifies flaws in the foundations of the Treasury market and recommends structural upgrades that could better support current and future US government borrowing. Financial professionals will find important ideas in this authoritative examination.


The US Treasury market reeled under an intense March 2020 investor sell-off.

The US Treasury market has long enjoyed a reputation as a safe haven for investors around the world. US securities firms that act as primary dealers are the main conduits for the buying and selling of Treasury securities. These institutions must maintain capital reserves in accordance with financial regulations. 

As the COVID-19 pandemic arose in March 2020, sellers – predominantly hedge funds and foreign public sector investors – divested...

About the Author

Darrell Duffie is a professor of management and finance at Stanford University. 

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