Ex-Treasury chief warns of US bond crash, calls for contingency plan
“When we hit it, it will be vicious, so we have to prepare for that eventuality,” said former Treasury Secretary Henry Paulson on a potential US Treasury market crisis.
Former Treasury Secretary Henry Paulson has urged US authorities to prepare a contingency plan for a potential future collapse in demand for US Treasurys, warning that the fallout would be “vicious.”
“We need an emergency break-the-glass plan, which is targeted and short-term, on the shelf, so it’s ready to go when we hit the wall,” Paulson told Bloomberg in an interview on Thursday.
The US Treasury market acts as the bedrock of the global financial system, serving as a “risk-free” benchmark with other assets, such as corporate bonds, mortgages, and stocks, being priced relative to Treasurys. Instability could cause ripple effects in the global economy.
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