NY Fed on why the US Treasury auctions bills

The US Treasury began auctioning bills in 1929 to mitigate several flaws in the department's financing structure, research published by the New York Fed reveals.

The three most substantial flaws in the financing structure were:

· the underpricing of new securities sold in fixed-price subscription offerings;

· an infrequent issuance schedule that required the Treasury to borrow in advance of its needs; and

· payments on maturing issues financed with short-term loans from Federal Reserve Banks

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