A feared liquidity drainage in the U.S. banking system as the Treasury refills its coffers has not materialised yet, on the contrary reserves increased recently, assuaging some concerns the bond spree could lead to further credit tightening.
The U.S. Treasury started rebuilding its account through T-bills after the government’s debt ceiling was suspended last month. Since early June, the Treasury General Account at the Fed has increased by about $460 billion.
Read More : US Banks’ Reserves Remain Stable, Easing Concerns Over Liquidity Drainage