Rishi Sunak has been accused of neglecting to act in order to save billions of dollars in interest payments on government debt.
The losses, according to the National Institute of Economic and Social Research, were caused by the Treasury's failure to insure against interest rate increases.
It meant that payments on £900 billion in reserves produced under the quantitative easing (QE) program were greater than necessary.
The Bank of England, according to the Treasury, is in charge of deciding on QE initiatives.
The Bank of England is separate from the government.
NIESR's plan, according to the Treasury, would jeopardize this independence and be "hugely detrimental" to the confidence of how government finances are managed.
"Proposals like these risk weakening the Bank of England's independence, and requiring commercial banks to swap reserves for gilts would be an act of financial repression," according to a Treasury spokeswoman.
Prof Jagjit Chadha of the National Institute of Economic and Social Research told the Financial Times that Mr Sunak's inability to act had left the government with "an tremendous cost and substantial continued exposure to interest rate risk."
Quantitative easing was used by the Bank of England to produce £895 billion in new money. The majority of it was spent on government bonds purchased from pension funds and other investors.
When those investors deposited the funds in commercial bank deposits with the Bank, it was required to pay interest at the Bank's stated rate.
When the official rate was still 0.1 percent last year, NIESR stated that the government Should have protected the expense of paying this loan from rising interest rates.
Interest payments have "become substantially more expensive," according to the report, which puts the deficit over the last year at roughly £11 billion.
"Such a missed chance is a needless expense to the public finances at a time when they are already stretched," the think tank stated.
It was recommended that the loan be converted into government bonds with a longer repayment period.
"It would have been far preferable to lower the size of short-term obligations sooner, as we have suggested for some time, and to take advantage of the benefits of longer-term debt issuance." Prof Chadha stated, "This is an issue for the Treasury to address."
It would not have been financially feasible to convert such a large amount of debt, according to the Treasury.
"The £11 billion number is predicated on the unrealistic premise that such a large-scale operation could be completed in a single transaction," it continued.
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