US Government Debt Different - Finance Department - University of ...

Zoltan PozsarWhile increased rollover risks for the sovereign are an externality,they are a less costly and disruptive externality than those associatedwith the alternative. Proposing that public debt managementshould incorporate considerations other than minimizing the costof debt issuance may sound radical but so was the idea (pre-crisis)that central banks should focus on anything other than their inflationtarget. In the aftermath of the crisis, central banks today havean equally important mandate of focusing on financial stability aswell. If Treasury bills are the closest it comes for institutional cashinvestors to “money” and their shortage leads to an excessive creationof private money claims, perhaps the management of the issuancevolume of Treasury bills should be considered as an addition to themacro-prudential toolkit.43