Methods for Improving the Efficiency of Collateral Operations of the Federal Treasury

Abstract

This study explores methods for enhancing the efficiency of the Federal Treasury’s collateral operations aimed at managing the liquidity of the Single Treasury Account (STA). The research examines instruments such as repurchase agreements (REPO), securities lending, and clearing participation certificates (CPCs). Special attention is given to recent innovations, including exchange-traded REPO with a central counterparty, as well as mechanisms for risk minimization and yield enhancement. The author analyzes the advantages and drawbacks of using CPCs, emphasizing their flexibility and potential to expand the collateral base. Based on the findings, the paper offers recommendations for further development of liquidity management tools, including the introduction of a “conditional zero” mechanism and the reintroduction of a specialized CPC asset pool. The results may be useful for government financial authorities responsible for budget liquidity management, financial market participants engaged in REPO and CPC operations, and the broader academic community studying modern approaches to public finance management.

Keywords

• federal treasury
• collateral operations
• repo
• clearing participation certificates
• liquidity management
• financial instruments