Treasury Tax and Loan

Treasury Tax and Loan

Treasury Tax and Loan Service is a service offered by the Federal Reserve Banks of the United States that keeps tax receipts in the banking sector by depositing them into select banks that meet certain criteria.

Because banks create money (see money multiplier) based on their reserves, if the Treasury were to not redeposit the money they received for taxes, then such payments would either threaten the liquidity of the banking sector, or result in a collapse of the higher monetary aggregates (M1, M2, M3, and L) resulting in deflation. TTL accounts are an attempt to limit the effect of taxation on monetary policy.

External links

* [http://www.frbservices.org/Treasury/TTL-Service.html TTL Service, from frbservices.org, a Federal Reserve webpage]


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