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 1 February 2024[update], the balance of the account is US$813 billion.[7]
History
[edit]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 in 2008 in the aftermath of the 2007–2008 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
[edit]- ^ a b c Santoro, Paul J. (2012). "The Evolution of Treasury Cash Management during the Financial Crisis" (PDF). Current Issues in Economics and Finance. 18 (3). Federal Reserve Bank of New York. Archived (PDF) from the original on 25 February 2024. Retrieved 3 February 2024.
- ^ a b Rao, Sujata (22 February 2021). "U.S. Treasury's cash drawdown - and why markets care". Reuters. Retrieved 3 February 2024.
- ^ Klein, Matthew C. (29 March 2019). "The Federal Reserve Should 'Put America First'". Barron's. Archived from the original on 3 February 2024. Retrieved 3 February 2024.
- ^ a b Capo McCormick, Liz; Harris, Alex (12 June 2020). "Treasury's Record Cash Pile Is Jerome Powell's $700 Billion Headache". Bloomberg. Archived from the original on 8 May 2021. Retrieved 3 February 2024.
- ^ Miller, Rich; Capo McCormick, Liz (16 February 2021). "Yellen Shift on Vast Treasury Cash Pile Poses Problem for Powell". Bloomberg. Retrieved 3 February 2024.
- ^ Wallerstein, Eric (20 June 2023). "Wall Street Buys More T-Bills, Parks Less at Fed". The Wall Street Journal. Archived from the original on 29 January 2024. Retrieved 3 February 2024.
- ^ "Daily Treasury Statement". US Department of the Treasury. Archived from the original on 3 February 2024. Retrieved 3 February 2024.
- ^ Wallerstein, Eric (7 June 2023). "Treasury's $1 Trillion Debt Deluge Threatens Market Calm". The Wall Street Journal. Archived from the original on 3 February 2024. Retrieved 3 February 2024.
Further reading
[edit]- 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.