First, a number of studies show that short-term Treasury bills (which are a publicly provided type of money-like asset) enjoy a “liquidity premium,” especially when the supply of Treasury bills is relatively low.9 Short-term Treasury bills can provide various money-like services for larger institutions because they are so safe. Deposit insurance is limited (currently it is limited to deposits of $ so large institutions that want to hold funds safely for short periods cannot find that safety directly with bank deposits. Instead, shortterm Treasury bills can provide a convenient way for large institutions to hold wealth in a safe form. Because the Treasury bills are short-term, their prices don’t experience much variation, and they are easily transferred and used as collateral. Hence, they provide those features of money I mentioned earlier, namely a good store of value and a means of exchange. A second finding from these studies is that when the U.S. Treasury issues relatively smaller amounts of Treasury bills, the private-sector issuance of money-like assets increases, taking advantage of the liquidity premium that large institutions are willing to pay for their safety and convenience. So when the government funds itself with relatively more long-term debt, firms fill the resulting gap by issuing more short-term debt.10 In related work, Jeremy Stein (2012) points out that, notwithstanding their private benefits, there are systemic risks involved when the private sector creates money-like assets. For many reasons, if private intermediaries run into difficulty issuing those assets or in rolling over their short-term debt, then they must deleverage abruptly.
This workshop will help us learn from other practitioners' experiences who have already tackled some of the issues we are due to solve or are in the process of doing so. I wish you all a very productive rest of the day discussing about these issues. Thank you. 3/3  BIS - Central bankers' speeches