US Treasury bonds remain the most liquid and widely held safe assets worldwide, according to a recent ECB study. The study compares the yields of US Treasuries with those of German government bonds, the euro area benchmark. It finds that the US Treasury basis, the yield gap between US Treasuries and hedged foreign bonds, is more negative than the euro basis, indicating stronger foreign demand for dollar securities. The convenience yield – the benefit investors receive from safety, liquidity, and dollar denomination – is estimated at about 190 basis points for US Treasuries in 2025, versus roughly 90 basis points for German bonds. Despite the euro’s share of global GDP being close to its share of foreign‑exchange reserves, the limited supply of highly rated euro‑area debt constrains its role as a reserve currency. The ECB notes that EU‑issued bonds, although growing, remain fragmented and temporary, limiting their safe‑asset status.
© European Central Bank, 2025.
Summary derived from the ECB website (https://www.ecb.europa.eu ).
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