Finance:Treasury General Account
The Treasury General Account (TGA) is an account maintained by the United States Department of the Treasury at the Federal Reserve.[1] It receives tax payments and proceeds from the auction of Treasury securities, and disburses government payments to individuals and businesses.[2] Aside from its cash flow duties, it is also held to protect the Treasury from running out of money if Congress delays raising the debt ceiling.[3] The TGA is often described as the government's "checking account".[4][5][6] As of 3 January 2025[update], the balance of the account is US$677 billion.[7]
History
Because funds in the TGA count as reserves in the central banking system, under the Fed's former limited-reserves regime the balance of the TGA was kept low so as not to influence the federal funds rate. The target balance was US$5 billion; the rest of the government's cash balance was kept at private depository institutions in the Treasury Tax and Loan Note (TT&L) program. Funds were transferred to and from the TT&L accounts daily to meet the TGA target.[1]
Starting after the 2008 financial crisis, the Treasury began keeping almost all of its cash balance in the TGA, as quantitative easing greatly increased the amount of reserves, so a large TGA balance would no longer have an outsized effect on the system. Also, interest on excess reserves was an economic incentive to keep money in the TGA.[1]
The balance of the TGA increased to US$1.6 trillion in 2021 as a result of increased government borrowing during the COVID-19 pandemic.[4][2] During the 2023 debt-ceiling crisis, the account's balance fell as low as US$50 billion, compared to a target of US$600 billion.[8]
References
- ↑ 1.0 1.1 1.2 Santoro, Paul J. (2012). "The Evolution of Treasury Cash Management during the Financial Crisis". Current Issues in Economics and Finance (Federal Reserve Bank of New York) 18 (3). https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci18-3.pdf. Retrieved February 3, 2024.
- ↑ 2.0 2.1 Rao, Sujata (February 22, 2021). "U.S. Treasury's cash drawdown - and why markets care". Reuters. https://www.reuters.com/article/idUSKBN2AM269/.
- ↑ Klein, Matthew C. (March 29, 2019). "The Federal Reserve Should 'Put America First'". Barron's. https://www.barrons.com/articles/the-federal-reserve-should-put-america-first-51553874768.
- ↑ 4.0 4.1 Capo McCormick, Liz; Harris, Alex (June 12, 2020). "Treasury's Record Cash Pile Is Jerome Powell's $700 Billion Headache". Bloomberg. https://www.bloomberg.com/news/articles/2020-06-12/treasury-s-record-cash-pile-is-powell-s-700-billion-headache.
- ↑ Miller, Rich; Capo McCormick, Liz (February 16, 2021). "Yellen Shift on Vast Treasury Cash Pile Poses Problem for Powell". Bloomberg. https://www.bloomberg.com/news/articles/2021-02-16/yellen-shift-on-vast-treasury-cash-pile-poses-problem-for-powell.
- ↑ Wallerstein, Eric (June 20, 2023). "Wall Street Buys More T-Bills, Parks Less at Fed". The Wall Street Journal. https://www.wsj.com/articles/wall-street-buys-more-t-bills-parks-less-at-fed-304cf41e.
- ↑ "Daily Treasury Statement". US Department of the Treasury. https://fiscaldata.treasury.gov/datasets/daily-treasury-statement/operating-cash-balance.
- ↑ Wallerstein, Eric (June 7, 2023). "Treasury's $1 Trillion Debt Deluge Threatens Market Calm". The Wall Street Journal. https://www.wsj.com/articles/treasurys-1-trillion-debt-deluge-threatens-market-calm-f2173ef4.
Further reading
- Tymoigne, Éric (2014). "Modern Money Theory and interrelations between the treasury and the central bank: The case of the United States". Levy Economics Institute of Bard College. https://www.econstor.eu/handle/10419/110026.
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