Recent announcements of planned U.S. support for Argentina have brought the Treasury’s Exchange Stabilization Fund (ESF) back into focus, Bank of America (BofA) said in a research note this week.
The bank told investors that the ESF was created under the Gold Reserve Act of 1934.
While its original purpose was to stabilise the dollar under the gold standard, “post-gold standard, it’s scope expanded to ‘deal in gold, foreign exchange, and other instruments of credit and securities,’” BofA explained.
Importantly, the Treasury Secretary has “full discretion within scope” to use the fund.
BofA estimated the ESF currently holds around $200 billion, largely in non-marketable U.S. Treasury securities, special drawing rights (SDRs), and foreign reserves.
“Potential funds currently available in the ESF” totalled about $187 billion in June 2025, with scope to rise above $200 billion if warehousing limits were lifted, the bank said.
They added that historically, the ESF has been deployed for both domestic and international purposes. During COVID, it was “temporarily funded and used as a facility for the CARES Act.”
Internationally, it was tapped to extend swap or credit lines to Mexico in 1994, Indonesia and South Korea in 1997, Brazil in 1998, and Uruguay in 2002.
The Argentina case is significant, BofA argued, because the ESF “had not been used to extend credit to a foreign country for over 20 years” and could be viewed as “sidestepping the traditional channels of support, like the IMF.”
That move, BofA said, “could mark the beginning of a new U.S. geopolitical strategy.”