In many countries, a substantial share of aggregate savings is now managed by large institutional investors. Recent turmoil in U.K. bond markets raises concerns about the risk exposures of these financial institutions and suggests a tight link between institutional risk management and the supply of public debt. The Authors characterize this link in a general equilibrium model in which risk sharing is impaired because large institutions have price impact. Private risk management and public debt are complements: increasing the supply of government bonds improves risk sharing by raising liquidity and reducing market power in financial markets. Moreover, public debt crowds {in} private investment. This is the case even though markets are complete, perfectly integrated, and Ricardian Equivalence holds under perfect competition. Taken together, government bond supply thus shapes financial market power.