Ruth Judson: TIC data’s limitations hinder foreign investment insights, the Fed’s diminishing focus on monetary aggregates, and the TGA’s impact on currency demand volatility | Macro Musings

Monetary aggregates' relevance wanes as the Fed shifts focus, impacting economic insights during instability.

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Add us on Google by Editorial Team Apr. 10, 2026

Key takeaways

• The TIC data system’s limitation to US entities restricts the completeness of foreign investment data.
• TIC data prioritizes securities, particularly treasuries, reflecting the Treasury’s interests.
• The Fed’s focus on interest rates has reduced the relevance of monetary aggregates in policy-making.
• Monetary aggregates are less emphasized by the Fed, shifting from weekly to monthly publications.
• During economic instability, monetary aggregates provide critical insights.
• In stable times, monetary aggregates have diminished utility.
• The Federal Reserve supplies currency on demand to member banks.
• The transition to having the entire TGA at the Fed has increased currency demand volatility.
• The TGA is cost-effective for the federal government compared to banks.
• Currency demand during COVID was driven by precautionary actions from banks and consumers.
• Foreign and domestic factors equally influenced currency demand during the pandemic.
• The Fed’s operational mechanics ensure currency is supplied free of charge to member banks.
• The TGA’s current system allows for greater daily fluctuations than before.
• The Fed’s policy changes reflect broader trends in economic analysis and strategy.
• Understanding the historical context of monetary policy is crucial for analyzing current economic conditions.

Guest intro

Ruth A. Judson is a monetary economist at the Federal Reserve System. She is a veteran of the Federal Reserve Board of Governors with expertise in tracking US currency held overseas and counterfeit dollars globally. Her research covers how we measure foreign currency holdings, TIC data, and dollar-backed stablecoins.

The limitations of TIC data

• The TIC data system only collects information from US entities, affecting data completeness.

• The way the tic data collection system works we only or we as with the authority delegated to us from the treasury can only collect from us entities.

  — Ruth Judson

• This limitation hinders a full understanding of foreign investments in US securities.
• TIC data focuses heavily on securities, especially treasuries, due to the Treasury’s interests.

• We tend to focus more heavily on the securities and especially heavily on the treasuries because well the treasury owns the data and that’s what they care about.

  — Ruth Judson

• The prioritization of certain data types within TIC is crucial for understanding US financial data.
• Knowledge of TIC’s scope is essential for analyzing foreign investment trends.
• The Treasury’s priorities shape the data collection and analysis processes.

The evolving role of monetary aggregates

• The Fed’s focus on interest rates has diminished the relevance of monetary aggregates.

• I think there’s a relationship there and we can talk about maybe other things are more fundamental than the money itself something else is driving money but monetary policy modern age we don’t use monetary accuracy anymore.

  — Ruth Judson

• The publication frequency of monetary aggregates has shifted from weekly to monthly.

• I think the publication of the monetary aggregates themselves dialed back from weekly to monthly a few years back… just significant de emphasis with the monetary aggregates across the board.

  — Ruth Judson

• This shift indicates a broader trend in economic analysis and policy-making.
• Monetary aggregates are less useful during stable economic periods.

• when it’s stable it’s kinda like how useful is it

  — Ruth Judson

• During crises, monetary aggregates provide valuable insights into economic conditions.
• Understanding the historical context of monetary policy is crucial for current analysis.

Currency issuance and management by the Federal Reserve

• The Federal Reserve supplies currency on demand based on member banks’ needs.

• So we supply currency on demand if a bank wants currency so you can get currency from a reserve bank if you are a member bank… the currency is supplied on demand and free of charge.

  — Ruth Judson

• This demand-driven supply highlights the operational mechanics of currency issuance.
• The system ensures that currency is available without charge to member banks.
• Understanding this process is key to analyzing the US monetary system.
• The Federal Reserve’s role in currency management is critical for economic stability.
• The demand-driven nature of currency supply reflects broader economic strategies.
• The Fed’s operational mechanics are designed to meet the needs of the banking system.

The impact of the TGA on currency demand

• The transition to having the entire TGA at the Fed has increased currency demand volatility.

• the practice of having the entire tga be at the fed started basically in 2008 yeah 2009… it is quite volatile but it used to be constrained to a range between 5 and $7,000,000,000 a day and now it’s it it can be far larger.

  — Ruth Judson

• The TGA’s current system allows for greater daily fluctuations than before.
• The TGA became important because it was cheaper for the federal government to hold funds there.

• one of the reasons you know the tga became so important was because it was cheaper to have the federal government pockets funds there than it was at the banks when they started paying interest on reserves.

  — Ruth Judson

• This cost-effectiveness influences government financial strategies.
• Understanding the TGA’s role is crucial for analyzing currency demand trends.
• The TGA’s impact on currency demand reflects broader economic policy changes.

Currency demand during the COVID pandemic

• Currency demand during COVID was driven by precautionary measures from banks and consumers.

• In the very short run… about a third of the demand was foreign… about a third was domestic and about a third was just banks loading up their vaults to the ceiling… it’s straight up precautionary.

  — Ruth Judson

• Both foreign and domestic factors equally influenced currency demand during the pandemic.
• This demand spike highlights the multifaceted reasons behind currency behavior in crises.
• Consumer behavior and banking strategies played significant roles in currency demand.
• The pandemic’s economic environment affected currency demand dynamics.
• Understanding these factors is key to analyzing crisis-driven economic changes.
• The Fed’s response to currency demand during COVID reflects broader economic strategies.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.