Fundamental Collateral: A Concept to Understand Global Macroeconomics and Financial Market

Abstract

The systematic importance of US Treasuries for the global financial market stems from their attribute of fundamental collateral. This paper attempts to use the concept of fundamental collateral, as well as its basic features and functions, to explain how US Treasuries have strengthened the international status of the US dollar, and examines the prospects of a diversifying global fundamental collateral market.