Article: https://fedguy.com/

FEBRUARY 22, 2021 / FED GUY / 0 COMMENTS

The Treasury stated in its refunding statement that it will reduce the Treasury General Account (“TGA”) to $800 billion by quarter-end, an $800b decline from where it is today. The TGA is the Treasury’s checking account at the Fed (like commercial banks, the Treasury has a Fed account and can hold central bank reserves). When the TGA is run down, that liquidity will enter the financial system as reserve assets for commercial banks (balanced by deposit liabilities to non-banks), and deposit assets for non-banks. This post briefly introduces the TGA, explains the mechanics of the upcoming decline, and discusses how the huge influx of liquidity could affect markets.