US Treasury may deploy nearly $1 trillion in fiscal cash to stabilize the money market.

September 23: The U.S. Treasury is studying a plan that could change the way the short-term funding market operates: regularly placing part of the cash in the Treasury General Account (TGA) into the private repo market, rather than parking all of it at the Federal Reserve.

This idea gained support from multiple market participants this week at the New York Fed's annual U.S. Treasury market conference. The TGA is currently slightly below $1 trillion and is the cash account the Treasury uses for daily operations. The Treasury already proposed this idea in May this year, and this week's discussion further shifted toward specific execution methods.

Market participants believe this move could become a new stabilizing tool for the short-term funding market. If the Treasury actively places part of the TGA cash into the repo market, it would be equivalent to adding a direct channel into the money market for traditional fiscal cash flows. Market participants are therefore especially focused on whether the operations are predictable.