Final answer:
The U.S. Treasuries market is considered the largest security market in the world, based on trading volume. However, the foreign exchange market eclipses this and is actually the largest market in the world economy, with $5.3 trillion traded daily.
Step-by-step explanation:
The U.S. Treasuries market is the largest security market in the world based on trading volume. United States federal Treasury Bonds are sold globally to individuals, banks, and sovereign funds, with countries such as China and Japan being notable investors. These bonds are highly sought after because the U.S. government has maintained a consistent track record of payments for over two centuries, making them one of the safest investments. Even when sold at low interest rates, as has been the case for much of the last decade, they remain popular.
However, it's important to differentiate between different types of financial markets. While U.S. Treasuries represent a significant market based on security trading, the foreign exchange market is considered the absolute largest in the world economy. A 2013 survey by the Bank of International Settlements reported that a staggering $5.3 trillion was traded daily on foreign exchange markets. This figure eclipses the trading volume of U.S. Treasuries and underlines the immense size of the foreign exchange markets in comparison to U.S. real GDP, and indeed any individual security market, including U.S. Treasuries.