Top Federal Reserve officials saw a number of vulnerabilities to the financial system worth monitoring as of last month, one of which has to do with the use of leverage in the Treasury market.

Minutes of the July 30-31 meeting of the policy-setting Federal Open Market Committee, released on Wednesday, said that participants regarded such leverage as a risk. Their comments came during the part of the committee’s discussion on financial stability, in which they also considered it important to monitor any developments regarding the Treasury market’s resiliency.

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The use of leverage in the $27 trillion market for U.S. government debt has been of concern since at least last year amid greater scrutiny of the so-called basis trade. The trade is a maneuver that involves taking a short Treasury futures position and a long Treasury cash position, while borrowing in the repo market to finance the trade and to provide leverage.

In a paper released last August, staff at the Fed board and the Treasury Department had indicated that the use of basis trades by hedge funds warranted “continued and diligent monitoring.”

“The basis trade remains pretty popular among hedge funds,” said Lawrence Gillum, a Charlotte, North Carolina-based chief fixed-income strategist for broker-dealer LPL Financial. “This is something that has been an ongoing concern of the Fed’s now for quite a while, but it is not adding to volatility in the market. It’s more of a concern that has disrupted markets in the past and could disrupt markets in the future, but is not something I see as an imminent risk.”

Indeed, the Fed’s July meeting minutes listed a number of other financial-system risks worth watching. Those risks were seen as being linked to unrealized losses on securities in the banking system, to exposures on commercial real estate, and to cyber disruptions.

After the central bank’s minutes were released on Wednesday, 10-