Foreign Ownership of U.S. Treasury Securities Harvard Case Solution & Analysis

In 2004, for the first time, foreigners owned more than half of private U.S. debt, mostly in the form of marketable U.S. Treasury securities. In internal discussions at the U.S. Treasury, the increase in foreign appetite for Treasury securities represented votes global investor confidence in the U.S. economy. Many in the Treasury believes that the broad foreign ownership helped to reduce the cost of Treasury borrowing. But there was no great concern to many in government circles in Washington about U.S. dependence on foreign loans. This case describes a meeting between the Treasury and the Treasury borrowing advisory committee (TBAC) Bond Market Association on August 3, 2004, in which the Ministry of Finance has the charge of the committee to discuss, among other issues, the level of foreign ownership. Written for the first year of a course entitled "The global economy and markets," this case is described in the securities market of the U.S. Treasury, giving detailed information on market institutions and market participants, and some of the reasons why U.S. Treasury securities serve as benchmarks and hedging instruments . In the third case in the module on the world markets, it is used to describe a market that is closest to the ideal of a perfectly competitive market and to illustrate the relationship between market institutions and, on one hand, and the market liquidity and efficiency on the other. The case is also used in the module to an open economy in the first program year, Darden MBA. In this usage, is usually preceded by the event, introduces the concept of the real exchange rate and the economic effects of exchange rate risk, as well as discussion on the balance of payments account. This case (UV1366) or shortened version (UVA-F-1540) and then used to implement a model of a large open economy. Case, as a rule, follow classes on definitions, modes of exchange rate and balance of payments crises.
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by Wei Li Source: Darden School of Business 22 pages. Publication Date: October 11, 2005. Prod. #: UV1366-PDF-ENG

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