{"id":13632,"date":"2026-09-23T19:54:57","date_gmt":"2026-09-23T19:54:57","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=13632"},"modified":"2026-09-23T19:54:57","modified_gmt":"2026-09-23T19:54:57","slug":"bank-reserves-and-bitcoin-treasury-repo-proposal-explained","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=13632","title":{"rendered":"Bank reserves and Bitcoin: Treasury repo proposal explained"},"content":{"rendered":"

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At a New York Fed conference on Sept. 22, Treasury officials and market participants discussed whether the government should lend excess cash into the overnight repo market, which finances Treasury trades. Such a move could raise bank reserves. Treasury announced no repo-lending program, amount or timetable at the conference, and any benefit for Bitcoin would be indirect.<\/p>\n

Reuters reported that several private-sector panelists welcomed the idea. The Treasury Borrowing Advisory Committee had considered it in May and urged further study. For now, the discussion is about how Treasury might manage its cash, rather than an operating program.<\/p>\n

How a Treasury repo investment would work<\/h2>\n

The Treasury General Account, or TGA, holds government operating cash at the Federal Reserve. In a May presentation, the advisory committee modeled what would happen if Treasury lent some of that cash overnight against Treasury securities. Money would leave the TGA, while bank reserves, the balances banks hold at the Fed, would rise. Treasury would earn a repo rate, and the Fed would pay interest on the additional reserves.<\/p>\n

The two public institutions have to be considered together. Treasury\u2019s interest earnings alone would not be the full government benefit, because additional reserves also bring an interest cost at the Fed. The economic result depends on the repo rate Treasury earns compared with the rate the Fed pays on reserves, after costs. The modeled transaction is Treasury cash lending, not Federal Reserve bond buying.<\/p>\n

The size of the TGA is therefore a poor shortcut for the size of any possible operation. Treasury\u2019s August cash plan assumed a $950 billion balance at the end of September and said the account could reach about $1.05 trillion, plus or minus $50 billion, in late October. Those figures are cash-balance plans around government payment needs. Treasury did not present either as money earmarked for repo lending.<\/p>\n

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Related Reading<\/span><\/p>\n

How $739B in new US debt could absorb crypto\u2019s liquidity before buybacks even reach Bitcoin<\/h3>\n<\/p>\n

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The committee\u2019s May report also tempered the economic case. A presenting member estimated that, with ample bank reserves, investing excess cash might produce only 0 to 2 basis points of economic return for the government on a consolidated basis. The committee saw likely benefits as marginal against the challenges of setting up a program and recommended more design work. That small, regime-dependent estimate is not a promised return.<\/p>\n