A parsimonious time-series model shows that, once we account for the impact of the Treasury’s extraordinary measures during debt-ceiling episodes, the observed changes in the Treasury General Account since COVID are mostly driven by higher target balances. An effective sterilization program by the Fed would require timely and accurate information at high frequencies.
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The Treasury General Account and the Fed’s Balance Sheet
October 2026
WP 26-48 – Changes in the Treasury’s cash management practices after the COVID pandemic increased the Fed’s balance sheet by as much as 2 percentage points of nominal GDP, including the larger buffer required to maintain ample reserve levels.