Source stringclasses 1
value | Date int64 1.98k 2.01k | Text stringlengths 2 27.1k | Token_count int64 1 5.57k |
|---|---|---|---|
fomc | 1,977 | Will we reconvene as the FOMC? | 10 |
fomc | 1,977 | No. We are reconvening as a-- | 10 |
fomc | 1,977 | I think that we need a report on foreign currency operations from Mr. Holmes. | 16 |
fomc | 1,977 | [Secretary's note: This statement was not found in Committee records.] | 14 |
fomc | 1,977 | Mr. Morris, please. | 6 |
fomc | 1,977 | Alan, what's been the reaction to the comments in the BIS [Bank for International Settlements] report about the place of the American dollar? | 28 |
fomc | 1,977 | Hasn't been much visible market reaction to that. I know it has caused a great many people inside government to think about how long we can sustain this without some pressure developing on the dollar. But I think more important is how well we do on the inflation front compared with Germany, Switzerland, and some of the... | 97 |
fomc | 1,977 | I have a feeling we have been pretty fortunate that the dollar has been as steady as it has been in view of the trade balance and our inflation performance. And the key, I suspect, in the last month or so was this rise in interest rates that came along at a fortuitous time from that standpoint. | 63 |
fomc | 1,977 | We had no appreciation of the dollar, but it did offset these other movements attempting to weaken it. | 20 |
fomc | 1,977 | Well, one wonders whether the dollar shouldn't appreciate. | 10 |
fomc | 1,977 | Well, we've had some discussions on that recently with foreigners, and what they point out is that there's no indication that our trade with other industrialized countries is really suffering. It's oil, and LDCs [less-developed countries] for various reasons, and Japan--Japan [as an industrialized country] is the one e... | 68 |
fomc | 1,977 | Yes, if you take out the OPEC countries, I think you still find the deterioration. | 19 |
fomc | 1,977 | That's right. But it's in the LDCs and in Japan. It's not vis a vis Europe--well it is Canada, too; [trade with] Canada has been [deteriorating]. | 41 |
fomc | 1,977 | Well, if you break up the world into enough separate spots, you're going to find some place you're in balance with. | 24 |
fomc | 1,977 | Well, this is the European argument you hear back, though. There is no need for any depreciation of the dollar vis a vis Europe. Which is basically what you are talking about here. | 38 |
fomc | 1,977 | Did you say, Alan, that money market conditions were easing in Germany? | 15 |
fomc | 1,977 | They had been except around the tax date. | 9 |
fomc | 1,977 | Do you think it was a special thing? | 9 |
fomc | 1,977 | No, I think they deliberately tended to keep interest rates on the low side. | 16 |
fomc | 1,977 | The Italians are a bit worried about their economy turning down; mass production figures showed a decline. Any other comment? | 24 |
fomc | 1,977 | When you observe that some pressures are being brought on the Japanese with respect to the upcreep in their reserves as a result of nonmarket acquisitions, [do] you see a tendency there to also try to accumulate, to some extent, high reserves at commercial banks? | 54 |
fomc | 1,977 | No, I think the Japanese have really abstained. And I suspect, of all the central banks, we have a larger share of their total dollar holdings than any other. In fact, they have used us to keep all those visitors from pounding on their doors. They say, "No, the Fed wants us to stay with them," which we have not said. B... | 91 |
fomc | 1,977 | That doesn't say whether they are hiding it? | 9 |
fomc | 1,977 | Well, I meant by commercial banks, banks of the Japanese-- | 13 |
fomc | 1,977 | Japanese commercial bank holdings. | 5 |
fomc | 1,977 | I have no evidence of this. | 7 |
fomc | 1,977 | The opposite of what the Italians are doing. | 10 |
fomc | 1,977 | I have no evidence. | 5 |
fomc | 1,977 | Any other comment? I take it that we have to approve, ratify, and confirm. | 19 |
fomc | 1,977 | One transaction. | 3 |
fomc | 1,977 | Without objection, that is done. The only other thing we have is this foreign RP [repurchase agreement] business. I don't know whether I can assume you have all read these memoranda--there is one from me and one from the Board's staff analyzing some of the pros and cons. If I can, let me just put the issue as simply as... | 1,601 |
fomc | 1,977 | Would you start off by saying what we are doing at the moment, Alan? | 16 |
fomc | 1,977 | What we are doing at the moment. At the moment, if the foreign account wants to make a repurchase agreement, we do a matched-sale agreement with them. With the System account. | 38 |
fomc | 1,977 | Whether or not the account needs to have that reserve [drain]? | 14 |
fomc | 1,977 | If we need to absorb reserves, that helps us to absorb. And then go into the market and do it for the System, matched in the market. So that in that case it helps. If we are not supplying reserves at all, our practice up until now had been to do it in the market. Now [if] we did [it] with the System account [when we do... | 192 |
fomc | 1,977 | Well now, what will happen when you get to [a] lower [volume of] operations if the legislation concerning Treasury interest on balances passes? Wouldn't you then find yourself sometimes in the position, and perhaps quite often, that you are acting in the markets simply in order to offset something that you've done with... | 85 |
fomc | 1,977 | We would say it's in connection with a customer transaction. | 11 |
fomc | 1,977 | So there's no danger of misleading the market that you're actually trying to achieve an objective that isn't the case. | 21 |
fomc | 1,977 | No. | 2 |
fomc | 1,977 | But it could still appear after a while that a very substantial part of total transactions reflected these customer transactions in the foreign accounts. | 25 |
fomc | 1,977 | Yes, but this is very common in the bill market when we buy outright. As you know, we buy and sell for foreign accounts, over three or four times as much as we do for the System account outright. And we identify those as customer transactions when we do them in the market. And that's caused us no trouble. | 66 |
fomc | 1,977 | Under the alternative proposal, anyway, these transactions would be for the New York Bank as very brief principal to a foreign account, and not to the System account. They're all done as a trading [unintelligible]. | 44 |
fomc | 1,977 | But that would have a reserve impact, Paul. It's no different than dealing for the System Open Market Account. | 22 |
fomc | 1,977 | Well, it depends upon where you begin this process. A foreigner brings money in--of course, he wouldn't bring money in if we didn't have the facility--but if that was not offset, it would be a drain. When the Bank acts for its own account, there is no reserve impact. That's one way of looking at it. It's just monies pa... | 102 |
fomc | 1,977 | [Unintelligible] right away, like you would if you bought bills for it. | 19 |
fomc | 1,977 | That's right. It's just like using bills for the foreign account. Except the only difference is a technical one. We buy bills as agent. Here we would just inject our name as principal on both sides of the transaction. That's the only change that would take place. Where we're not acting as agent, we would act as princip... | 68 |
fomc | 1,977 | Paul, you are suggesting, really, that we continue under the first approach and consider, after the IRS ruling, whether to adopt the second or the third approach. | 33 |
fomc | 1,977 | Right. | 2 |
fomc | 1,977 | Now, you've already had a meeting of the FOMC to discuss this by telephone. | 18 |
fomc | 1,977 | It was not a meeting. It was an informal discussion. | 12 |
fomc | 1,977 | Informal discussion, all right. I have a strong preference for the second approach, but I will deal with that as you find it in order to be dealt with. Because we are not going to make, according to your specifications, a final decision. | 51 |
fomc | 1,977 | I think that's right, and I don't think we need to know specifically which approach will be adopted in the end. I think we need to know that one of the three will be adopted. That decision, I think, should be made today. | 49 |
fomc | 1,977 | So the decision is basically whether the facility is worthwhile or not? | 13 |
fomc | 1,977 | Although, I guess in applying for the ruling, [we] will have to apply either in our [Federal Reserve Bank of New York] name or the System name, won't we. | 37 |
fomc | 1,977 | Yes, I think that, too, can be a matter to await a decision. I agree with President Mayo that, at this time--or, may I suggest, Mr. Chairman, the [discussion], first, as to whether or not you will continue this operation, is appropriate; and then, whatever sense of the Committee [is] in terms of the alternative, to fol... | 79 |
fomc | 1,977 | I think that is right. The basic issue is whether we have this facility at all, at least on the present scale. And you may still do it in a very limping way. You can certainly do it with the Saudis. | 48 |
fomc | 1,977 | Do you want a motion to that effect or would you just rather have a-- | 16 |
fomc | 1,977 | Before we start that, may I ask a couple of questions about the issues. First, Alan, to what extent are we dealing with others rather than central banks? | 33 |
fomc | 1,977 | It's been entirely, well, if you include some of the monetary authorities as a central [bank], it's strictly central banks. | 25 |
fomc | 1,977 | Some central banks acting as agency for their government. | 10 |
fomc | 1,977 | But that's because they do it anyway. | 8 |
fomc | 1,977 | We are dealing only with central banks. | 8 |
fomc | 1,977 | Asian Development Bank is also a customer. | 8 |
fomc | 1,977 | Asian Development Bank is a customer. | 7 |
fomc | 1,977 | Yes, some of the international-- | 7 |
fomc | 1,977 | Ficio, in Italy, has been one; that's probably one we have to stop anyway. It is not clear what its status is. | 28 |
fomc | 1,977 | That's finished. | 3 |
fomc | 1,977 | That's finished? | 3 |
fomc | 1,977 | But it's only with people that are authorized to have an account with us. It's mainly central banks; it would be one or two international institutions that from time to time might have just raised a bond issue, have plans to invest that money or use it within a week, and they might ask us to do an RP. | 64 |
fomc | 1,977 | In all respects, it's the same people for which we have always had investment accounts, which is-- | 20 |
fomc | 1,977 | How do you distinguish doing it for the foreigner and not for a U.S. government agency? Let's say the Home Loan Bank Board would like you to start investing its money. | 36 |
fomc | 1,977 | I think they would much rather do it themselves. As far as RPs are concerned, I know that for a fact. That's a big operation they have, and I wouldn't want that operation; that's a big operation. I'd much rather see them be part of the market. | 55 |
fomc | 1,977 | Though, of course, you are talking about a billion and a half, if I understand, and that's a very large operation. | 26 |
fomc | 1,977 | Yeah, but the Home Loan Banks are doing more than that themselves each day. | 16 |
fomc | 1,977 | Has this question ever risen, of a U.S. governmental agency wanting us to--any kind of government agency. | 23 |
fomc | 1,977 | No. | 2 |
fomc | 1,977 | We haven't sent them a circular offering-- | 8 |
fomc | 1,977 | But I think we did make some for the postal-- | 11 |
fomc | 1,977 | Well, we do. | 5 |
fomc | 1,977 | At one point, I think before they took it over themselves. I think the Treasury-- | 18 |
fomc | 1,977 | Well, regularly these transactions, they just go through the Treasury. I am certain the FDIC [Federal Deposit Insurance Corporation] was always investing through the New York Bank, but they did it through the Treasury. | 42 |
fomc | 1,977 | Well, government operations are one thing you do with a government institution, but here we are taking business away, it seems to me, from the market. Now is this analogous to operating in bills on behalf of customers? If commercial banks did this for a foreign central bank, would that commercial bank be making a profi... | 77 |
fomc | 1,977 | Oh, yes, I believe it would. | 9 |
fomc | 1,977 | So we are already, by virtue of having all of these securities, taking something away from the market. | 21 |
fomc | 1,977 | We have always had the attitude, Governor Wallich, that if central banks would prefer to deal directly in the market, go ahead and do it. We have interposed no objection to that. But we feel that ever since we started operations--we have done operations before in central banks--they like it, it's part of our close work... | 120 |
fomc | 1,977 | Well, I can see there are advantages, but I can also see that the general principle that one should let the private sector do what it can is in danger of being violated here. There may be many things that we could do better, or at least we could take away from the private sector, if we were so minded. And I think, unle... | 110 |
fomc | 1,977 | Especially because we make no charge for doing it. | 10 |
fomc | 1,977 | Well, the charge is a separable issue. I think we ought to charge, myself. And we are preparing some plans to that effect, and the charge would be-- | 35 |
fomc | 1,977 | Mr. Chairman, on that point, it is observed in the report that the operation in the aggregate is a bit on the profitable side. What is the source of the earnings at present? | 38 |
fomc | 1,977 | Well, the whole foreign department in New York is a very profitable operation. If you take all the balances which foreign central banks hold with us and assume some earnings made on those balances, yes, just demand deposits. It is now, however, very unevenly skewed. Some accounts have a sizable balance that we don't do... | 102 |
fomc | 1,977 | What is the nature of the earnings on the foreign balances? | 12 |
fomc | 1,977 | Well, it's just that we assume the earnings rate on the portfolio-- | 14 |
fomc | 1,977 | An assumed income? | 4 |
fomc | 1,977 | No, it's an actual income because the fact that the central banks brought money in and left it has absorbed reserves. In offsetting that, we've bought securities. | 32 |
fomc | 1,977 | For every dollar they have in an account balance, it's a drain on reserves which we have offset through enlarging the System Open Market Account. | 28 |
fomc | 1,977 | Are any of those balances in the funds markets? | 10 |
fomc | 1,977 | I think this would be one alternative, if we gave up the facility. | 15 |
fomc | 1,977 | The RP market's not much different. | 8 |
fomc | 1,977 | Well, the question-- | 5 |
fomc | 1,977 | The RP market is not quite as high a rate. | 11 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.