The Federal Reserve is exiting from the bond market, and traders are nervous, The New York Times reported.

Already spooked by the economic uncertainty, traders fear that the central bank’s ending of its quantitative easing policy undertaken in response to the COVID-19 pandemic in 2020 could rattle the $25 trillion U.S. Treasury market—the “bedrock of the global financial system” as the Times called it. Quantitative easing entails buying mortgage bonds and government debt in large quantities.

What the Fed is now doing is the opposite, known as  quantitative tightening—reducing its support for financial markets while it raises interest rates to stem inflation. The Fed is not selling its holdings, but, rather, failing to reinvest them as they come due. This step could have implications for everything with an interest rate, from mortgages to credit cards to business loans, the Times said.

The ramifications of what the Times termed “small wobbles in the markets” as the Fed reduces its balance sheet—which grew from $4 trillion in early 2020 to a peak of nearly $9 trillion two years later—could be vast. They range from a devaluation of the U.S. dollar to a drastic reduction in the value of stocks and other bonds to a possible federal government default.

“While this sounds like a bad science-fiction movie, it is unfortunately a real threat,” Ralph Axel, an interest rate strategist at Bank of America, wrote in a research report last week.

Since June of last year, the Fed has let some bonds mature without being replaced. The worry among some economists is that this could create lessened demand for U.S. bonds that could, in turn, introduce more volatility to the markets.

While some are concerned that quantitative tightening and higher interest rates are a recipe for recession, others say that the Fed is more prepared than the last time and has, accordingly, taken actions that can serve to reduce risk. For example, it has introduced a permanent facility that could supply an emergency infusion of cash to market participants if there is a liquidity crunch.

That is not to say that the policy is risk-free. In a Financial Stability Report in May, the central bank warned that the “risk of a sudden significant deterioration appears higher than normal.”