Fed's Brainard says Fed examining possible drop in market liquidity

The U.S. Federal Reserve has launched a study to see if U.S. Treasury markets are being hampered by a lack of liquidity, an issue some investors and others have cited as a potential risk to financial stability, Fed board member Lael Brainard said on Wednesday. Brainard, speaking at a financial conference in Austria, said events like the sharp swing in U.S. bond prices last October and earlier this year in the market for German bonds added to anecdotal evidence that markets for the world's safest assets are less deep and less liquid than they had been. If true, she said, that could cause trouble in times of financial stress if investors cannot freely buy and sell safe haven bonds at other than fire-sale prices.

Fed's Brainard says Fed examining possible drop in market liquidity source: http://finance.yahoo.com/news/feds-brainard-says-fed-examining-130604083.html