Here are two paragraphs of the CCC along with a cite from Indulgentiarum Doctrina which address the treasury of merit as it relates to indulgences.
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1476 We also call these spiritual goods of the communion of saints the Church’s treasury, which is “not the sum total of the material goods which have accumulated during the course of the centuries. On the contrary the ‘treasury of the Church’ is the infinite value, which can never be exhausted, which Christ’s merits have before God. They were offered so that the whole of mankind could be set free from sin and attain communion with the Father. In Christ, the Redeemer himself, the satisfactions and merits of his Redemption exist and find their effficacy.”
1478 An indulgence is obtained through the Church who, by virtue of the power of binding and loosing granted her by Christ Jesus, intervenes in favor of individual Christians and opens for them the treasury of the merits of Christ and the saints to obtain from the Father of mercies the remission of the temporal punishments due for their sins. Thus the Church does not want simply to come to the aid of these Christians, but also to spur them to works of devotion, penance, and charity.
**Paul VI, Indulgentiarum doctrina, 8 **
The taking away of the temporal punishment due to sins when their guilt has already been forgiven has been specifically called “indulgence.”
While it has something in common with other ways of eliminating the vestiges of sin, an indulgence is clearly different from them.
In fact, in granting an indulgence the Church uses its power as minister of Christ’s Redemption. It not only prays. It intervenes with its authority to dispense to the faithful, provided they have the right dispositions, the treasury of satisfaction which Christ and the saints won for the remission of temporal punishment.
The authorities of the Church have two aims in granting indulgences. The first is to help the faithful to expiate their sins. The second is to encourage them to do works of piety, penitence and charity, particularly those which lead to growth in faith and which help the common good.
Further, if the faithful offer indulgences by way of intercession for the dead they cultivate charity in an excellent way. While they raise their minds in heaven they bring a wiser order into the things of this world.
The teaching authority, the Magisterium of the Church, has defended and explained the teaching about indulgences in various documents. Unfortunately, the practice of indulgences has on occasions been improperly applied. This has been either through “untimely and superfluous indulgences” which humiliated the power of the keys and weakened penitential satisfaction or it has been through the collection of “unlawful profits” which blasphemously took away the good name of indulgences. The Church deplored and corrected these improper uses. It “teaches and commands that the usage of indulgences—a usage most beneficial to Christians and approved by the authority of the Sacred Councils—should be kept in the Church; and it condemns with anathema those who say that indulgences are useless or that the Church does not have the power to grant them.” *
Here is a
CA link that gives info and bible references on indulgences.