How Does the Maturity Date of Reserve Assets (E.g. Treasury Bills) Impact Reserve Liquidity?

The maturity date of reserve assets is critical for liquidity. Short-term Treasury Bills (T-Bills) with a maturity of a few months are highly liquid and can be easily sold or allowed to mature quickly to meet redemption demands.

Long-term assets, such as T-Bills maturing in several years, are less liquid because selling them before maturity requires finding a buyer and exposes the issuer to interest rate risk, potentially leading to a loss. Shorter maturity ensures higher liquidity and lower risk of a depeg.