Archive · 24 Aug 2026
Treasury Considers Using $1 Trillion Cash Account for Bond Buybacks
The U.S. Treasury has a large cash account held at the Federal Reserve.
Treasury Secretary Scott Bessent may use some of that money to buy back older government bonds.
These bonds have become more expensive for the government because their interest rates are high.
Officials have not said how much money they might use.
Another option would be to issue short-term Treasury bills to pay for the purchases.
Using the cash would avoid swapping one kind of government debt for another.
Some experts worry that changing the buyback plan quickly could make investors less confident.
They fear investors might then demand higher interest rates for buying long-term Treasury bonds.
Scott Bessent is considering using the Treasury General Account to expand bond buybacks.
The account held about $935 billion at the Federal Reserve on August 20.
Officials are examining purchases of older, higher-yielding Treasury securities.
Using the cash could avoid replacing purchased debt with newly issued Treasury bills.
Analysts warned that the timing could weaken the Treasury’s “regular and predictable” reputation.
- Who
- Treasury Secretary Scott Bessent and two senior Treasury officials are associated with the proposal; analysts, including Lou Crandall, criticized its timing.
- What
- The Treasury is considering using part of its General Account cash balance to fund expanded buybacks of older, higher-yielding Treasury securities.
- When
- The possibility was reported after Bessent’s comments the previous week; the account balance was reported as of August 20, and Crandall wrote about the issue on August 24.
- Where
- The cash is held at the Federal Reserve in the U.S. Treasury’s General Account.
- Why
- Using the account could fund buybacks without issuing new short-term debt, while the Treasury is also examining ways to use surplus cash.
Treasury’s Possible Rationale
Analysts’ Concerns
Using the cash account
Treasury’s Possible Rationale
Accessing the General Account could fund buybacks directly and avoid replacing purchased debt with newly issued Treasury bills.
Analysts’ Concerns
Critics are concerned that using the cash balance as part of a rapidly expanded program could create uncertainty about future debt management.
Timing of the buybacks
Treasury’s Possible Rationale
Treasury officials are considering expanded purchases after longer-term yields reached their highest levels in years.
Analysts’ Concerns
Lou Crandall said the timing and framing were problematic because the change came only two weeks after a quarterly tentative calendar was released.
Investor confidence
Treasury’s Possible Rationale
The Treasury has not ruled out Treasury bills and has a history of deliberating before changing federal debt-management practices.
Analysts’ Concerns
Analysts warned that departing from a regular and predictable approach could lead investors to demand a higher premium, particularly on longer-dated Treasuries.
- General Account balance
- About $935 billion as of August 20.
- Potential use
- Funding expanded buybacks of older, higher-yielding Treasury securities.
- Alternative funding
- Issuing shorter-dated debt, such as one-year Treasury bills.
- Minimum cash policy
- A 2015 policy called for at least five days of expenditures or $150 billion in the account.
- Market reaction
- The 10-year Treasury yield fell as much as four basis points to 4.69% after the report.
- Treasury principle
- The department has traditionally sought to manage debt in a “regular and predictable” manner.