The Treasury General Account (TGA) is an account maintained by the

United States Department of the Treasury The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States. It is one of 15 current United States federal executive departments, U.S. government departments. ...

at the

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...

. It receives

tax A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...

payments and proceeds from the auction of Treasury securities, and disburses government payments to individuals and businesses. Aside from its cash flow duties, it is also held to protect the Treasury from running out of money if

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...

delays raising the debt ceiling. The TGA is often described as the government's "

checking account A transaction account (also called a checking account, cheque account, chequing account, current account, demand deposit account, or share account at credit unions) is a deposit account or bank account held at a bank or other financial instituti ...

". , the balance of the account is .

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 In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an collateral (finance), uncollateralized basis ...

. The target balance was ; 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. Starting after the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

, the Treasury began keeping almost all of its cash balance in the TGA, as

quantitative easing Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary polic ...

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 Excess reserves are bank reserves held by a bank in excess of a reserve requirement for it set by a central bank. In the United States, bank reserves for a commercial bank are represented by its cash holdings and any credit balance in an account ...

was an economic incentive to keep money in the TGA. The balance of the TGA increased to in 2021 as a result of increased government borrowing during the

COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...

. During the

2023 debt-ceiling crisis On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues. In r ...

, the account's balance fell as low as , compared to a target of .

References

External links

Historical balance of the account
from

FRED Fred or FRED may refer to: People * Fred (name), including a list of people and characters with the name Mononym * Fred (cartoonist) (1931–2013), pen name of Fred Othon Aristidès, French * Fred (footballer, born 1949) (1949–2022), Fred ...

United States Department of the Treasury Federal Reserve System

History

References

Further reading

External links