The Treasury Department announced Tuesday that it is resuming its "supplementary financing account" to lend to the Federal Reserve in support of the central bank's balance sheet.
The account was established in September 2008 but was halted when it neared its mandatory debt ceiling. Congress voted last year to raise the ceiling, allowing the Treasury to increase the Fed account to $200 billion from its current level of $5 billion.
The Treasury is to reach that level through $25 billion auctions, each with 56-day bills, during the next eight weeks. The first auction is to begin today.
A Treasury official said enlarging the account gives the Fed flexibility to manage its liquidity facilities.
