Dealers get much of their government securities inventories

Question

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Dealers typically obtain their government securities inventories by bidding at competitive auctions held by the Treasury. This process ensures that the securities are distributed among a wide variety of buyers and helps to maintain a fair market value for these securities. While dealers may also purchase securities from commercial banks or receive transfers from the Federal Reserve, these methods are less common than participating in competitive auctions. Direct transfers from the Treasury are also relatively rare and typically only occur in unusual circumstances.

Dealers Get Much of Their Government Securities Inventories