Recent analysis by the Federal Reserve notes that Treasury General Account (TGA) balances, the U.S. government’s deposits at the Fed, have fluctuated sharply over recent years. These swings affect the Fed’s balance sheet, requiring adjustments in other assets or liabilities to keep the ledger balanced. The Fed has primarily used an ample‑reserves strategy, allowing reserves to absorb TGA changes, and has employed the overnight reverse‑repurchase (ON RRP) facility as a shock absorber when demand is high. Alternative strategies include actively adjusting securities holdings, increasing lending to financial institutions, or, as a new proposal, backing the TGA with Treasury bills and changing bill positions reactively. Each approach aims to keep short‑term rates stable while limiting impacts on the Fed’s policy stance.
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https://www.federalreserve.gov/econres/notes/feds-notes/fluctuations-in-the-treasury-general-account-and-their-effect-on-the-feds-balance-sheet-20250806.html
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