Introducing Cash Treasuries

Chapter 2 introduces the U.S. cash Treasury market by tracing its origins from the Revolutionary War to its current role as the world’s leading risk-free debt benchmark. It reviews pivotal historical developments, including Alexander Hamilton’s debt consolidation, Civil War and World War financing innovations, and the transformation of issuance practices from fixed-price to competitive auctions. The chapter explains the distinctions between marketable Treasury securities and non-marketable savings bonds, details auction methods, buybacks, and the conventions for price and coupon quotation. The evolving use of electronic platforms and book-entry settlement is highlighted, along with critical concepts such as on-the-run and off-the-run securities. The chapter emphasizes the integration of cash Treasuries with derivative markets and their centrality to financial stability, global benchmarking, and regulatory frameworks for liquidity and risk management.