this newly acquired UST bond was financed with some liability of the bank let's say the bank itself issued bonds with a smaller coupon than UST’s thus, the bank used a liability to finance and asset and earns a spread

Illya Gerasymchuk 2025-08-13 00:00

a bank may buy a US Treasury bond (UST) and hold it as an asset. at some point, that bond matures, thus terminating its existence