[News Terms] 'Jaemubu Ilban Gyejeong' Treasury General Account Falls Below $100 Billion Balance

The 'Treasury General Account (TGA)' is an account opened by the U.S. Department of the Treasury at the Federal Reserve Bank of New York for cash management purposes.

Following the establishment of the Federal Reserve (Fed) in 1913, the U.S. Treasury was required to deposit all federal government funds with the Fed. However, due to past practices of operating the financial system without a central bank, the Treasury loosely managed funds by designating dozens of commercial banks nationwide as Subtreasuries.

Jerome Powell, Chair of the Federal Reserve Board (FRB).
[Photo by EPA/Yonhap News]

After receiving protests from the Fed, the Treasury established a general account at the Fed in 1916. Even then, only a portion of the funds was deposited at the Fed, while most of the Treasury funds remained deposited in commercial banks. When the public paid taxes to the Treasury, the Treasury dispersed these funds across banks. However, this process only changed the depositor name from the public to the Treasury, without significantly affecting the total reserves from the Fed's perspective.

After the 2008 global financial crisis, the U.S. Treasury recognized the need to centralize funds and began concentrating Treasury funds previously dispersed in commercial banks into the Fed. The newly opened account at the New York Fed at this time is the 'TGA.' Before the financial crisis, the Treasury's accounts held in commercial banks were called 'Treasury and Tax and Loan Account (TT&L).'

On the 18th (local time), U.S. media reported that the TGA balance sharply dropped by $52.5 billion (37.6%) from $140 billion on the 12th to $87.4 billion as of the 15th.

The TGA is used to pay interest on government bonds to prevent federal government default, and among numerous other expenditures, it also covers federal employee salaries. The so-called 'X-date,' mentioned by Treasury Secretary Janet Yellen as the potential default date of the federal government, is expected to be next month on the 1st, when the TGA balance is projected to be completely depleted.