The U.S. Treasury's plan to channel some of its cash into the $13 trillion buyback market has sparked discussions about transforming the financial system.

The U.S. Treasury is exploring the possibility of investing part of its cash reserves into the repurchase agreement market, which has a scale of approximately $13 trillion. This move revives an idea from two decades ago and has sparked debate over its potential to reshape key components of the financial system. The plan was initially tested before the global financial crisis and has now resurfaced due to increased volatility in the Treasury's cash flows—volatility that complicates the Federal Reserve’s efforts to shrink its balance sheet. By investing a portion of its $1 trillion cash balance in the repo market, the government would become an active counterparty alongside the Fed’s liquidity operations.

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Original article: toutiao.com/article/1872306916231179/

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