Ex-governor says Fed should use Treasury derivatives in crisis
Doing so could split response from monetary policy and hedge interest rate risks, argues Jeremy Stein
The US Federal Reserve should consider using derivatives when buying Treasuries during market turmoil, as this could separate the emergency response from monetary policy while hedging interest rate risks, a former member of the bank’s board of governors has said.
In a speech at the European Central Bank’s money market conference on November 6, Jeremy Stein explained how the Fed could improve its response should the US Treasury market become stressed again.
During the March 2020 ‘dash for cash’
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