Fixing the bond market structure: A priority for the Biden administration?

Is a centralised solution better for everyone?

The events of March 2020 demonstrated some significant fragilities in the US capital markets. This was not unexpected.

That all was not well in the largest and most liquid government bond market was clear in September 2019 when stresses in the Treasury repo markets led the Federal Reserve to intervene to ease pressures in the overnight funding markets. In 2019, the Fed identified contributing factors to the stresses such as the role of money market funds, the increasing size of the overall market relative to the available reserves, and a declining balance sheet capacity of the dealer community. Interestingly, the Fed concluded, that the "strains in money markets in September seem to have originated fr...