The Treasury General Account is the general checking account, which the Department of the Treasury uses. The Federal Reserve Bank of New York holds the Treasury General Account. The U.S. government makes all official payments from this account.
Breaking Down Treasury General Account
Created in 1789, the U.S. Treasury is the department of government responsible for issuing all Treasury bonds, notes, and bills. Key functions of the U.S. Treasury include printing bills, postage, and Federal Reserve notes, minting coins, collecting taxes, enforcing tax laws, managing debt issues, and more. The Treasury General Account also holds money that is credited to the government in the form of monetized gold.
The U.S. Treasury oversees U.S. banks, which cooperate with the Federal Reserve. Each time the Treasury makes a payment from its general account, funds flow directly into the depository institution’s account. In this way, the Treasury's receipts and expenditures have the ability to impact the balances of depository institutions’ accounts at the Reserve Banks.
The Treasury General Account (TGA) Program consists of a three-tier entity. First, the TGA Network is a group of commercial, financial institutions that receive and reconcile over-the-counter (OTC) government agency cash and check deposits. The network operates globally. Second, the Seized Currency Collection Network (SCCN), while also a syndicate of commercial, financial institutions, specializes in receiving funds that law enforcement agencies have seized. Finally, Mail-In TGA, or MITGA, is a depositary that receives only deposits, which agencies send via mail.
Treasury General Account and U.S. Monetary Policy
The focus of the U.S. Treasury is to promote economic growth and security. Established by the First Congress of the United States in New York on March 4, 1789, the institution has played a key role in U.S. monetary policy ever since. The secretary of the Treasury is nominated by the president and must be confirmed by the U.S. Senate (Alexander Hamilton was the first secretary of the Treasury and served until 1795).
In general, there are two types of monetary policy, expansionary and contractionary. Expansionary monetary policy increases the money supply to lower unemployment and boost private-sector borrowing and consumer spending. Contractionary monetary policy slows the rate of growth in the money supply to control inflation.
The Federal Reserve Bank buys and sells U.S. Treasury bills and bonds to control the country's money supply and manage interest rates. In the United States, this monetary policy helps determine the size and rate of growth of the money supply, which in turn affects interest rates.