The US Treasury's Reverse Repo Facility Is a Buffer for Commercial Banks

The US Treasury will have to bring down this cash buffer from levels just south of 400 billion, two levels around 85 billion over the course of the next two to three months. They're not allowed to hold that amount of dollar cash when the debt ceiling is hit. But there is a caveat and that is the so-called reverse repo facility at the Federal Reserve. So, what they do is that they park liquidity at the Fed and they receive collateral in the form of, for example, a T-bill in return as collateral.