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February 14, 2023

U.S. Treasury Markets’ Vulnerability to Stress Requires Urgent Reforms

WASHINGTON, D.C.— Dennis M. Kelleher, President and CEO, issued the following statement in connection with the release of a report titled “U.S. Treasury Market Instability During Stress Requires Urgent Reforms.” This is the third report in Better Markets’ series on the shadow banking sector.

“The U.S. Treasury markets have a long history as the most important financial markets in the global financial system.  They affect virtually every financial asset, from bonds to derivatives and every financial product from mortgages to large commercial loans.

“While these markets have historically functioned smoothly, they have experienced multiple episodes of stress since the 2008 Crash. These stresses threatened to cause massive financial instability, with the potential even to trigger an economic collapse. They also disrupted the key financing markets that fund the day-to-day operations of the largest companies, including the largest banks. While previous stress events may have seemed isolated or one-off occurrences, the pandemic stress dramatically showed that the fragilities in these markets are indeed fundamental issues that must be addressed.

“In our report, we review the key role of the Treasury markets, their vulnerabilities, and some of the regulatory solutions that are necessary to ensure that they—and the financial markets that depend on them—remain stable.

“The bottom line is that the financial regulatory agencies individually and collectively must work to address the many issues in the Treasury markets that have been neglected for decades. This is particularly important now, given the Fed’s decision to unwind its balance sheet and stop serving as a primary purchaser of Treasuries in the future. In addition, financial market uncertainty abounds as we recover from the pandemic, confront the highest inflation in decades, and witness central banks’ rapidly increasing rates to address inflation.  We cannot afford to ignore these challenges and put off the necessary regulatory reforms any longer.”

You can find the Report here.


Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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