The US Treasury may draw on the Treasury General Account, or TGA, which holds close to $1 trillion, to finance its recently expanded government bond purchase program, according to CNBC, citing two senior Treasury officials. The potential use of the account would give the department greater capacity to influence long-term bond yields and could alter how markets view the buyback strategy.
Last week, the Treasury unexpectedly said it would raise repurchases of long-dated off-the-run securities from $2 billion to at least $4 billion. Treasury Secretary Bessent said the size of those operations could exceed the new minimum, though the department did not say at the time how it would pay for the purchases.
Many market participants had expected the Treasury to fund the program by increasing issuance of short-term Treasury bills. If the TGA is used instead, that would mark a different funding route. The TGA is effectively the federal government's checking account at the Federal Reserve, with balances sourced from existing tax revenue.
The US Treasury may use the Treasury General Account, or TGA, which is close to $1 trillion in size, to fund its recently expanded government bond purchase program, CNBC reported, citing two senior Treasury officials.
TGA seen as a possible funding source
Using the TGA would give the Treasury greater ability to influence long-term bond yields. The account is essentially the US government's checking account at the Federal Reserve and functions as an emergency cash pool. Its funds are already derived from existing tax revenue.
Buybacks of off-the-run bonds were raised last week
Last week, the Treasury unexpectedly announced that it would increase repurchases of long-dated off-the-run securities from $2 billion to at least $4 billion. Treasury Secretary Bessent said the size of those operations could even go beyond that new minimum.
At the time, however, the department did not explain how those purchases would be financed.
Markets had expected bill issuance instead
Most market participants had previously expected the Treasury to raise funds by issuing more short-term Treasury bills. If the department chooses to use the TGA, market views of the plan could shift.
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