Federal Reserve Bulletin, 1983-03

VOLUME 69 • NUMBER 3 • MARCH 1983 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield Griffith L. Garwood • James L. Kichline • Edwin M. Truman Naomi P. Salus, Coordinator The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Unit headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Helen L. Hulen. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 127 MONETAR Y POLICY REPORT TO of supervisory policies on the level of home CONGRESS and farm loan foreclosures and the need for additional measures to assist financially The recession continued through 1982, but troubled homeowners, before the Subcominflationary pressures were greatly reduced mittee on Supervision, Regulation and Inand an economic environment conducive to surance of the House Committee on Banksustainable recovery and expansion seemed ing, Finance and Urban Affairs, February to be emerging. 23, 1983. 181 Chairman Volcker discusses monetary poli- 141 TREASUR Y AND FEDERAL RESERVE cy in the context of current economic con- FOREIGN EXCHANGE OPERATIONS ditions, the outlook for inflation and inter- From August through January the dollar est rates, and the federal budget and says was lower on balance against the yen and that we are laying the foundation for lasting Swiss franc, but higher against most other noninflationary growth, before the Senate major foreign currencies. Committee on the Budget, February 24, 1983. 165 INDUSTRIAL PRODUCTION 187 Chairman Volcker presents the views of the Output rose about 0.3 percent in February. Board on the current economic and budgetary situation and the Federal Reserve's goals for monetary policy in light of the 167 STATEMENTS TO CONGRESS broad issues confronting monetary policy- Paul A. Volcker, Chairman, Board of Gov- makers and the relationship of these issues ernors, presents the Federal Reserve's ob- to other aspects of domestic and internajectives for monetary policy and their rela- tional economic policy, including the protionship to the prospects for the economy posed increase in the resources of the IMF, and expands on some of the points raised in before the House Committee on the Budthe "Monetary Policy Report to Congress" get, March 8, 1983. (pages 127-40 of this BULLETIN), before the 193 J. Charles Partee, Member, Board of Gov- Senate Committee on Banking, Housing, and Urban Affairs, February 16, 1983. ernors, testifies on the investment authority under the Monetary Control Act to invest 175 Chairman Volcker discusses the interna- foreign-currency holdings in interest-beartional financial situation and the role of the ing obligations of foreign governments and International Monetary Fund and recom- notes that this authority has enhanced the mends early approval of proposed legisla- Federal Reserve's ability to earn a competition to increase IMF quotas and expand the tive return on its assets arising out of for- General Arrangements to Borrow, before eign currency operations, before the Subthe Subcommittee on International Finance committee on Domestic Monetary Policy of and Monetary Policy of the Senate Commit- the House Committee on Banking, Finance tee on Banking, Housing, and Urban Af- and Urban Affairs, March 10, 1983. fairs, February 17, 1983. 197 Nancy H. Teeters, Member, Board of Gov- 177 Preston Martin, Vice Chairman, Board of ernors, discusses the expiration of the fed- Governors, testifies on the potential effect eral preemption of state usury laws govern- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ing business and agricultural loans and the banking and market reports indicated that effect of high interest rates on farmers and the new money market deposit accounts businesses and says that the Board believes were generating more substantial shifts of that state action rather than federal law funds into these broader aggregates from should prevail in the area of usury ceilings market instruments. The intermeeting range and that continued success in lowering in- for the federal funds rate, which provides a terest rates depends on continued progress mechanism for initiating further consultaagainst inflation and cutting back on federal tion of the Committee, was set at 6 to 10 budget deficits, before the Subcommittee percent. on Consumer Affairs and Coinage of the House Committee on Banking, Finance and 209 LEGAL DEVELOPMENTS Urban Affairs, March 10, 1983. Amendments to Regulation L; various bank holding company and bank merger orders; 199 ANNOUNCEMENTS and pending cases. Changes in Federal Reserve operating procedures to reduce and to price interterritory 235 DIRECTORS OF THE FEDERAL RESERVE check float and check holdover float. BANKS AND BRANCHES Revision of the money stock. List of directors by Federal Reserve District. Proposed amendment to Regulation Y to add to the list of nonbanking activities permissable for bank holding companies; pro- Ai FINANCIAL AND BUSINESS STATISTICS posed revision of Regulations U and G. A3 Domestic Financial Statistics Changes in Board staff. A46 Domestic Nonfinancial Statistics Admission of two state banks to member- A54 International Statistics ship in the Federal Reserve System. A69 GUIDE TO TABULAR PRESENTATION, 203 RECORD OF POLICY ACTIONS OF THE STATISTICAL RELEASES, AND SPECIAL FEDERAL OPEN MARKET COMMITTEE TABLES At its meeting on December 20-21, 1982, A70 BOARD OF GOVERNORS AND STAFF the Committee decided to seek to maintain expansion in bank reserves consistent with A72 FEDERAL OPEN MARKET COMMITTEE growth of M2 at an annual rate of around AND STAFF: ADVISORY COUNCILS 9Vi percent and growth of M3 at an annual rate of about 8 percent for the period from A73 FEDERAL RESERVE BANKS, BRANCHES, December to March. The objective for M2 AND OFFICES would allow for a modest amount of growth resulting from shifts into the newly autho- A74 FEDERAL RESERVE BOARD rized money market deposit accounts from PUBLICATIONS large-denomination certificates of deposit or market instruments. For both M2 and A76 INDEX TO STATISTICAL TABLES M3, the Committee indicated that greater growth would be acceptable if analysis of A78 MAP OF FEDERAL RESERVE SYSTEM incoming data and other evidence from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress Report submitted to the Congress on February 1979 and 1980, a much faster deceleration than 16, 1983, pursuant to the Full Employment and had generally been thought possible when the Balanced Growth Act of 1978.' year began. The slowdown was attributable to temporary influences to some extent, but there also has been more fundamental progress. In THE PERFORMANCE particular, expectations of inflation are being OF THE ECONOMY IN 1982 scaled down, productivity is improving, and indications of business and labor adapting their price The recession that began in mid-1981 continued and wage practices to the competitive realities of through 1982, bringing the cumulative decline in a new, less inflationary environment are widereal gross national product over that period to 2Vz spread. percent. Unemployment reached a postwar high, Reflecting both the sharp deceleration of price while industrial capacity utilization fell to a post- inflation and the cutbacks in economic activity, war low. At the same time, however, inflationary nominal gross national product grew only 3lA pressures were greatly reduced; and while some percent over the four quarters of 1982, little more potential obstacles to growth clearly need atten- than a third the rate of growth in 1981. Neverthetion, an economic environment conducive to less, the demands for money remained quite sustainable recovery and expansion seemed to strong, as exceptional economic and financial be emerging by year-end. uncertainties bolstered investors' desires to hold To a considerable extent, the recession and its liquid balances, and as the attractiveness of attendant economic and financial stresses have depository accounts was enhanced by the proreflected the difficulties inherent in reversing an gressive liberalization of deposit rate regulations. inflationary trend that had been gaining momen- The growth in aggregate debt outstanding also tum for more than a decade. By the late 1970s, was quite strong, with a particularly steep inthe underlying inflation rate had accelerated to crease in the credit needs of the federal governnear the double-digit level, and expectations of ment. Federal borrowing was extraordinarily rising wages and prices had become deeply em- large in the second half of 1982, when the federal bedded in the behavior of consumers, busi- sector absorbed nearly half of the funds raised by nesses, and investors. Growing financial disloca- all domestic nonfinancial borrowers. State and tions and economic imbalances made it plain that local governments, too, issued substantial inflation was having a debilitating effect on our amounts of new debt in 1982, especially late in economic performance. Although policies to the year. Private credit demands, however, were curb the inflation were strengthened considera- curtailed sharply as economic activity weakbly in late 1979, the inflation rate remained quite ened. high through 1980 and slowed only a little in Interest rates fell appreciably in 1982, primari- 1981. ly in the second half. By the end of the year, In this past year, however, the progress short-term rates were about half the peak levels against inflation has been more dramatic. The of 1981, and long-term rates also had declined rate of increase in most price measures in 1982 considerably. In turn, the declines in rates was only a third to half the peak inflation rates of helped trigger an improvement in activity toward year-end in the credit-sensitive sectors of the economy. In particular, automobile sales have 1. The charts for the report are available on request from perked up in recent months, and an upturn in the Publications Services, Board of Governors of the Federal housing sector gained momentum as the year Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • March 1983 progressed. Following an exceptionally rapid liq- In addition to the general cyclical factors afuidation of business inventories in the fourth fecting interest rates, the structure of rates quarter, the pressures to reduce stocks appeared across different markets this past year reflected, to be easing early in 1983 as both production and to an unusual degree, investor concerns about employment increased in January. All told, these the financial health of borrowers. Severe stress and other recent data provide strong indications was evident in a high level of bankruptcies, as that recessionary forces are dissipating and that well as in other difficulties experienced by many the economy may be entering the initial phases of businesses and financial institutions in the a new expansion. United States and abroad. In these circumstances, lenders began to assess credit risks more carefully, demanding larger returns for Interest Rates extending credit to potentially troubled borrowers. Later in the year, however, these risk premi- A year ago, as 1982 began, interest rates were ums dropped to more normal levels as an easing moving higher in association with stronger de- of overall credit conditions and anticipations of a mands for money and credit, reversing a portion pickup in economic activity relieved some of the of the decline that occurred as the economy anxieties in financial markets. slipped into recession in the second half of 1981. Even with the sharp declines of 1982, interest However, the rise in rates was soon halted. rates remain at high levels relative both to their Short-term interest rates showed little net change historical levels and to current inflation rates. A from late January through June, and then fell major factor propping up long-term rates espesharply in the third quarter, as sluggish money cially is the prospective size of federal governgrowth through the early part of the summer ment deficits, which threaten to remain massive reduced the demand for bank reserves, easing even as the economy recovers, thereby competpressures in money markets. With market rates ing with the rising demands of private borrowers falling and the economy still quite sluggish, the for available savings. Moreover, although infla- Federal Reserve reduced its discount rate V/i tion moderated substantially in 1982, many popercentage points over the second half of the tential investors, scarred by the experience of year in seven separate steps, thereby accommo- the 1970s, remained cautious about the longerdating the downward movement in money mar- range outlook—and about the government's ket rates. During this period, the broader mone- commitment to maintain forceful anti-inflationtary aggregates were running at or just above the ary policies. annual target ranges, but this did not seem inappropriate in light of prevailing economic and financial conditions. By December short-term Residential Construction rates had fallen around 5 percentage points from their average levels in June. So far, the housing sector has been the main Long-term interest rates also registered sub- beneficiary of falling interest rates. A gradual stantial declines in the second half of the year, upturn in housing activity that began in late 1981 responding not only to the easing in money gained momentum in the second half of 1982 as markets, but also to the sustained moderation of mortgage rates moved sharply lower. By last inflation and to the weakness in economic activi- month the interest rate on commitments for ty. On balance, yields on bonds and conventional conventional fixed-rate mortgages had dropped mortgages fell 3 to 4 percentage points between to 13 percent from a high of I8V2 percent in the June and December. The decline in long-term fall of 1981, and rates on many types of variableyields and the promise of a sustained pickup in rate loans had declined even more. economic activity helped to maintain a sharp rise Homebuyers responded favorably to the rate in stock prices beginning in the summer, with reductions, and in the fourth quarter, sales of several broad market indexes reaching historic both new and existing homes rose to their highest peaks late in the year and rising to still higher levels since the recession began in mid-1981. levels in early 1983. Because the inventory of unsold new homes had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 129 been drawn down to a low level, the improve- business sector. Among nonfarm businesses, low ment in sales in the second half provided a direct operating rates depressed corporate profits, and impetus for new construction activity. Starts of the financial condition of many firms weakened new single-family dwellings in the fourth quarter under the burden of reduced availability of interwere up almost 50 percent from depressed year- nal funds, heavy short-term indebtedness, and earlier levels, with most of that gain coming in high interest charges. Credit ratings deteriorated the second half of the year. Starts of new multi- for many businesses, the incidence of dividend family units rose through most of the year, reductions or suspensions increased, and busisupported in part by federal subsidies. ness bankruptcies rose to a postwar high. Signs of growing financial distress also were evident in the farm sector of the economy. Consumer Spending Because of weak demand and exceptionally large crop harvests in 1982, farm prices slumped and Consumers continued to exhibit cautious spend- income was low for the third year in a row. Land ing patterns through most of 1982. Despite sharp prices in the farm sector have fallen substantially reductions in personal tax liabilities at midyear, in some areas since mid-1981, farm proprietors' real after-tax income rose only 0.6 percent during equity has declined, and debt-to-asset ratios the year, as reductions in employment cut deeply have risen noticeably in the past two years. into wage and salary payments. At the same Difficulties in servicing debt have increased, time, consumers were reluctant to finance pur- especially among those farmers who came to rely chases by taking on new debt. Domestic auto more heavily on credit financing in earlier years, sales remained depressed through most of the and farm bankruptcies and foreclosures have year, with the pace for 1982 as a whole the worst become more numerous. in more than two decades. Foreign car sales also Confronted with weak demand and financial fell, but much less than sales of domestic makes. strains, many business firms moved aggressively Nevertheless, the economic situation in the in 1982 to trim inventories and curtail capital consumer sector appeared to be improving as the spending. In real terms, total fixed investment year ended. With liquidity up and debt burdens expenditures in the business sector fell more down, consumers' financial positions, in the ag- than 8 percent over the four quarters of 1982. gregate, have improved considerably from the Cutbacks in spending for equipment accounted overextended positions of the late 1970s. Con- for nearly all of the decline; purchases fell espesumer confidence began to perk up in the second cially rapidly for heavy industrial machinery half of 1982 as inflation remained moderate and such as engines, construction equipment, farm as interest rates on consumer loans began gradu- machinery, and transportation equipment. ally to decline. Spending, most notably on dura- Business investment spending on nonresidenble goods, started to grow more rapidly toward tial structures slowed in the first half of 1982 and year-end. Sales of domestic autos rose signifi- then turned down in the second half. Much of the cantly in November and have been maintained at decline was concentrated in outlays for oil and a higher level into early 1983, apparently reflect- gas drilling, which fell sharply over the year as ing financing concessions as well as changes in drilling incentives weakened in response to manufacturers' design and pricing policies. Re- worldwide reductions in energy demand and tail sales excluding autos also rose a little in late declines in petroleum prices. In contrast, busi- 1982, and in the fourth quarter, total consumer ness spending for new buildings was well mainspending registered its strongest gain, in real tained through 1982, although part of this terms, since late 1980. strength probably reflected the continuation of projects started some time ago. Forward-looking indicators, such as the constant-dollar value of Business Sector new construction contracts, fell substantially during the year while vacancy rates for office The persistent weakness of economic activity in buildings climbed sharply. These and other indi- 1982 led to considerable stress in the private cators suggest that capital spending by busi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • March 1983 nesses, especially for construction, could contin- deficit widened in response to weak growth in ue to weaken for some months. taxable incomes, reductions in tax rates, the Depressed aggregate demand also caused busi- further rise in government purchases, and a nesses to liquidate inventories at a rapid pace in recession-induced increase in unemployment 1982. The weakening of final sales in the second compensation and other transfer payments. half of 1981 had led to an unintended buildup of Real purchases of goods and services by state inventories, and in early 1982 businesses began and local governments were little changed over liquidating those excess stocks at a rapid pace. the four quarters of 1982. Faced with a recession- However, the runoff of inventories halted around induced shrinkage in tax revenues and cutbacks midyear, possibly because businesses generally in federal support, many state legislatures enanticipated a midyear upturn in sales. When no acted increases in sales, income, or corporate such upturn occurred, a second round of inven- taxes to help maintain service levels. In addition, tory liquidation began, and stocks were reduced state and local borrowing increased substantialat a particularly rapid pace in the fourth quarter. ly, not only to finance traditional functions but By year-end many industries had reduced inven- also, in a number of cases, to support mortgage tories to below prerecession levels, but stocks in lending in local communities. A surge in new some sectors still appeared large relative to the bond issues in the fourth quarter was in part an prevailing sales pace. attempt by state and local governments to raise Reflecting the reductions in inventories and funds before a requirement to register all new capital spending, businesses reduced their credit issues of tax-exempt securities after year-end usage appreciably in 1982. The strong rally in the (later postponed to mid-1983) was scheduled to stock market that began during the summer also take effect. helped reduce borrowing, as firms started relying more heavily on equity financing and relatively less on new debt issuance. Falling long-term International Payments and Trade interest rates enabled businesses to accomplish some lengthening of their debt maturities toward Following a steep advance in 1981, the weightedthe end of 1982, but even so, business balance average value of the dollar appreciated another sheets at year-end were heavily laden with short- 20 percent from the beginning of 1982 through term debt. early November. The strengthening apparently was in large part a response to the progress made in reducing inflation and the sense of a continu- Government Sector ing commitment of U.S. authorities to ensure greater economic stability. Moreover, during a Total government purchases of goods and ser- period of major strains in the international finanvices rose Vh percent in real terms during 1982, cial system and considerable economic uncerabout the same as in the previous year. At the tainty, there evidently was a view that dollar federal level, real outlays for national defense assets, especially U.S. assets, would provide a expanded rapidly for the second year in a row. "safe haven." Since early November the foreign Spending also rose considerably for agricultural exchange value of the dollar has fallen a little, on programs, as the federal government accumulat- net, as market participants have reacted to the ed farm inventories under programs designed to prospect of very large deficits in 1983 in the U.S. keep farm prices and farm incomes from falling merchandise trade and current accounts. further. Federal purchases of other goods and A movement toward deficit in the U.S. current services, on balance, were cut back sharply. account was already evident in 1982. Reflecting The credit demands of the federal government the effects of the strong dollar, as well as sluggish rose steeply in 1982, and accounted for almost 40 economic growth abroad, real exports of goods percent of total credit flows to the domestic and services decreased 13 percent over the four nonfinancial sectors of the economy. Federal quarters of 1982. The volume of imports of goods borrowing from the public rose from $87 billion and services also declined during 1982, but the in 1981 to $161 billion in 1982, as the federal decline was smaller than for exports; the increas- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 131 ing price competitiveness of foreign goods, through 1982, the number of workers unemwhich resulted in part from the strong dollar, ployed for longer than a half-year increased to helped support import demand. As a result of more than 2Vz million. In order to support the these trade patterns, net exports, in real terms, incomes of these long-term unemployed, the fell $15 billion over the four quarters of 1982; the period of eligibility for unemployment benefits trade sector thus made an atypically large contri- was lengthened twice, to as much as 55 weeks for bution to the recession. The U.S. current ac- some workers. count, which was in small surplus for 1981 as a Nevertheless, a little improvement in labor whole, recorded surpluses in the first half of the demand began to be evident around the turn of year but then swung into deficit in the second the year. The incidence of layoffs appeared to be half as exports weakened. moderating toward the end of 1982; unemployed The external financial position of several large workers have been recalled in some industries. borrowing countries—notably Argentina, Brazil, And in January of this year, the civilian unemand Mexico—worsened in 1982. These financing ployment rate declined to 10.4 percent. problems have placed severe strains on the banking system and on international markets generally, as the need arose to refinance or reschedule Wages and Labor Costs existing debt. During the year, borrowers and private and official lending institutions made The falloff in labor demand in 1982, along with repeated cooperative efforts to address these the general unwinding of inflation, led to a sharp problems, and the debtor countries, to gain con- slowing in the rise of wages and labor costs. The trol of rising debt burdens, are adopting strong wage rates of production workers increased policies of internal and external adjustment. As a about 6 percent during 1982, the smallest adresult, debtor countries have reduced their de- vance in 15 years. The moderation in wage mand for exports from major industrial coun- increases was especially striking among new tries, particularly the United States because of contracts negotiated under major collective barits close ties to Latin America. gaining agreements; in 1982, first-year wage increases under these agreements averaged 33A percent, less than half the average increases Labor Markets reached when these workers last negotiated. In some particularly hard-pressed industries, work- Employment in the United States fell steadily ers agreed to new contracts that eliminated altothroughout 1982, and by year-end total nonfarm gether the fixed wage increases that had been payroll employment was more than 23A million customary in past wage agreements, and in some below its July 1981 peak. As is typical in reces- cases there were outright wage reductions. Nevsions, the largest job losses were in the cyclically ertheless, with price inflation slowing even more sensitive manufacturing and construction indus- rapidly than nominal wages, real wage rates in tries. In addition, employment fell in the oil- and the nonfarm business sector actually rose faster gas-drilling industries, and trade employment than in most recent years. suffered an unusually sizable decline. Employ- Labor costs per unit of output were up only 4Vi ment in the service sector continued to grow in percent over the four quarters of 1982, as an 1982, but at a slower pace than in recent years. improved productivity performance reinforced The back-to-back recessions of the early 1980s the impact of slower nominal increases in wages were accompanied by a rise in total unemploy- and benefits. Qualitative reports throughout the ment of about 5Vi million, and by the end of 1982, year suggested that business firms, many of them the unemployment rate, at 10.8 percent, was hard-pressed financially, were engaged in aggresnearly 2 percentage points above its previous sive efforts to cut costs and bolster efficiency. postwar peak. Increases in unemployment were Productivity gains in the second half of the year especially large among adult men, who hold a were particularly noteworthy, given that busidisproportionate number of jobs in the cyclically ness output was still declining cyclically; normalsensitive industries. As the recession persisted ly, productivity tends to slump in the contraction Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • March 1983 phase of the business cycle as firms reduce tary discipline needed to sustain the progress output by more than the hours worked. toward lower rates of inflation—a crucial element in satisfactory economic performance over the longer run. The specific monetary target Prices ranges chosen by the Federal Open Market Committee (FOMC) last February and reaffirmed in In 1982, all major price indexes advanced at July were as follows, with growth measured from considerably slower rates than in 1981, and for the fourth quarter of 1981 to the fourth quarter of some price measures, the increases in 1982 were 1982: for Ml, 2Vi to 5V percent; for M2, 6 to 9 2 the smallest in more than a decade. The consum- percent; and for M3, 6V2 to 9Vi percent. The er price index rose 3.9 percent over the year, associated range for bank credit was 6 to 9 compared with 12V2 percent just two years earli- percent at an annual rate, measured from the er. Capital goods prices were up less than half as average level of December 1981 and January much as in 1981, and prices were little changed 1982 to the fourth quarter of 1982; the base for a broad range of materials used in manufac- period for bank credit was selected to minimize turing and construction. distortions from the shifting of assets to newly In many ways the slowing of inflation this past established international banking facilities, first year has reflected the pervasive influence of the authorized in late 1981. recession on product and labor markets. In addi- It was recognized when selecting these ranges tion, the strength of the dollar has helped to hold that several factors could affect the relationship down the prices of U.S. imports; bountiful har- of monetary and credit growth to income and vests have contributed to declines in agricultural expenditure in the economy. In particular, the prices; and the worldwide recession has de- Committee contemplated that Ml might deviate pressed the prices of oil and other commodities. for periods of time from expected patterns of Although these influences themselves may prove growth in the event that economic and financial to be temporary, the foundation is now in place uncertainties fostered unusual desires for liquidfor more lasting gains against inflation. In partic- ity. Such desires had already been indicated by a ular, the wage-price interactions that served to surge in growth around year-end 1981, at which perpetuate inflation through the 1970s appear to time it was believed that vigorous efforts to bring have lost much of their momentum. Workers money back within target ranges rapidly would generally are agreeing to smaller pay increases not be appropriate when the economy was still than in earlier years, and in some sectors in quite weak. In addition, the demand for Ml was which long-term wage agreements are prevalent, seen as likely to demonstrate a continuing sensithe settlements concluded in 1982 will help en- tivity to changing financial technology and the sure diminished labor cost pressures in coming proliferation of new money and near-money-type years. Lower labor costs are relieving pressures instruments. The Committee also anticipated on prices, and in turn, an improved price per- that the broader aggregates, M2 and M3, might formance is reducing expectations of inflation be affected by legislative and regulatory changes, and thus leading to a further slowing of labor such as broadened eligibility for individual retirecosts. This cumulative process of disinflation ment accounts (IRAs) and Keogh accounts and still appeared to have momentum at year-end, the ongoing deregulation of deposit rates, as well thereby providing solid grounds for continuing as unusual desires for liquidity. In July, while the better price performance in 1983. Committee decided to retain the ranges adopted earlier for monetary growth, it underscored in its report to the Congress its willingness to accommodate any unusual precautionary demands for THE GROWTH liquidity that might be associated with unsettled OF MONEY AND CREDIT IN 1982 economic and financial conditions. The Federal Reserve has been seeking to provide The behavior of the aggregates over the year enough liquidity to facilitate an early upturn in indeed diverged substantially from normal hiseconomic activity, while maintaining the mone- torical patterns. Precautionary motives evidently Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 133 boosted demands for money and other highly money—defined as the ratio of gross national liquid assets relative to the expansion of nominal product to measures of money—fell sharply in GNP, which remained quite sluggish. Ml ex- 1982. The velocity of Ml dropped 43/4 percent panded 8!/2 percent on a fourth-quarter to fourth- and that of M2 5Vi percent, from the fourth quarter basis, 3 percentage points above the quarter of 1981 to the fourth quarter of 1982. For FOMC's target range, largely reflecting relative- Ml, this was the largest four-quarter decline in ly rapid growth over the course of the year in the postwar period, and in fact there have been interest-bearing checking accounts that also very few four-quarter spans in which Ml velocity serve a savings function. In addition, Ml growth declined at all. In the case of M2, no parallels for was boosted by special developments late in the the steep velocity decline of last year are to be year in connection with the large amounts of found since the 1950s. maturing all savers certificates. Although declines in velocity of M2 have not The broader aggregates, M2 and M3, expand- been uncommon during periods of recession, in ed at rates of 9.2 and 10.1 percent respectively, past periods they were explainable largely in much closer to—though still somewhat above— terms of reflows of funds from securities into M2the upper limits of their ranges. These growth type balances when market rates of interest fell rates for M2 and M3 are lower than those ob- below deposit rate ceilings—a factor of much served before some recent changes in money reduced importance in the present regulatory stock definitions, the previous figures being 9.8 environment and with the emergence of money and 10.3 respectively. To maintain consistency market mutual funds as an important investment in the treatment of various kinds of financial outlet. The recent weakness in velocity more assets, M2 and M3 now include balances in tax- probably reflects strong demands for relatively exempt money market mutual funds, which have safe, liquid assets on the part of the public attributes very similar to those of the highly because of uncertainties in the business and liquid taxable money funds, and exclude bal- financial outlook. ances in IRAs and Keogh accounts, which close- Further evidence of strong precautionary dely resemble pension funds and consequently are mands is to be found in the particular types of much less like money balances. Table 1 shows monetary assets that the public chose to acquire figures for growth of M2 and M3 in recent years last year. Interest-bearing negotiable order of under both old and new definitions. withdrawal (NOW) accounts—which are includ- The income velocity of various measures of ed in Ml—continued to expand rapidly, though 1. Growth of money and credit1 Percentage changes Outstanding debt New Old New Old Bank of domestic Period Ml M2 M2 M3 M3 Credit2 nonfinancial sectors Fourth quarter to fourth quarter 1978 8.2 8.0 8.2 11.1 11.3 13.3 12.9 1979 7.4 8.1 8.4 9.6 9.8 12.6 12.1 1980 7.2 9.0 9.2 9.7 10.0 8.0 9.9 1981 5.1 (2.5) 9.4 9.5 11.7 11.4 8.1 9.9 1982" 8.5 9.2 9.8 10.1 10.3 7.1 9.5 Annual average to annual average 1978 8.2 8.5 8.8 11.5 11.7 12.4 12.2 1979 7.7 8.2 8.5 10.2 10.3 13.6 13.1 1980 6.2 8.0 8.3 9.0 9.3 8.6 12.3 1981 7.2 (4.8) 9.5 9.8 11.6 11.6 9.4 10.0 1982p 6.5 9.4 9.8 10.5 10.5 5.8 10.0 1. Ml and the new M2 and M3 figures incorporate minor effects of 2. Bank credit data are not adjusted for shifts to international benchmark and seasonal adjustment revisions. New M2 and M3 banking facilities in 1981 and 1982. The 1982 growth rate, however, is incorporate definitional changes as well. calculated from a December 1981 and January 1982 base to minimize Ml figures in parentheses are adjusted for shifts to NOW accounts distortions owing to such shifts, in 1981. p. Preliminary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • March 1983 growth was, of course, less rapid than in 1981 ther complicated the interpretation of the movewhen they first became available nationwide. ments in the money supply, necessitating a more Such deposits, while serving the transaction than ordinary degree of flexibility in responding needs of holders, have many of the characteris- to incoming data on monetary growth. tics of savings accounts, which in the past have Recognized in the early fall was that the betended to grow during periods of economic ad- havior of Ml during the final three months of the versity. Indeed, during the first half of last year, year would very likely be distorted by special when interest rates on other investments were factors. In particular, an extremely large volume still relatively high, individuals began once again of all savers certificates matured beginning in to add to their savings balances following a long early October, and this volume was expected to downtrend in such deposits; growth in savings have sizable temporary effects on Ml. Also of deposits surged once more in the final months of potential importance was the introduction (man- 1982, apparently buoyed in part by deposits of dated by the Garn-St Germain Depository Instiproceeds from maturing all savers certificates. tutions Act of 1982) of new deposit instruments The attractiveness of NOW and savings accounts for banks and thrift institutions that were to be no doubt was enhanced after midyear as lower competitive with money market mutual funds. In interest rates reduced the earnings disadvantage the event, the Depository Institutions Deregulaof keeping funds in such highly liquid form. tion Committee authorized, beginning December Other types of liquid assets included in the 14, depository institutions to offer a money maraggregates also grew rapidly in 1982. A sizable ket deposit account (MMDA), which could be buildup of balances occurred in the 7- to 31-day used to a limited extent for transaction purposes accounts and 91-day accounts at depository insti- and would be free from interest rate ceilings, and tutions, soon after these accounts were autho- authorized Super NOW accounts free of interest rized in May and September respectively. Shares rate ceilings beginning January 5. of money market mutual funds also increased MMDAs, because of their more limited transsubstantially, albeit much less rapidly than in action feature, are included only in the broader 1981 when many people were first attracted to aggregates, while Super NOWs, which have unthese savings vehicles. By contrast, inflows to limited transaction features but also include a longer-maturity time deposits were moderate. savings element, are included in Ml. These dis- The apparent strong desire for liquidity, and tinctions are not clear-cut, and they illustrate the the associated shifting in asset demands, had an increasing fuzziness of the dividing line between important bearing on the FOMC's assessment of Ml- and non-Ml-type balances. In fact, in makthe behavior of the aggregates as the year pro- ing this definitional decision, the Federal Regressed. The Committee felt that some growth in serve Board noted that it would be monitoring the aggregates above the longer-run target ranges carefully the behavior of the new accounts to could be tolerated in the prevailing economic determine whether some alteration in their treatconditions, which appeared to be giving rise to ment might be advisable. greater precautionary demands for money than The sizable shifts of funds that might result might be anticipated in normal circumstances. from these developments in the fourth quarter— The lengthening recession and associated eco- and, in the case of the new accounts, possibly nomic dislocations prompted more cautious fi- even shifts in anticipation of their availability— nancial management on the part of households seemed likely to have direct and indirect effects and businesses, and this attitude of caution in on Ml that would be large in magnitude and financial markets was intensified from time to would, particularly in the case of the new actime by concerns about strains on some financial counts, affect the underlying behavior of narrow institutions and about the ability of private and money as the public reallocated transaction and governmental borrowers in a number of foreign savings funds. As a result, the FOMC at its countries to meet their debt-service obligations. October meeting decided that it would give con- The latter part of the year, moreover, brought a siderably less weight to Ml in the conduct of number of institutional developments that fur- policy and rely more on the broader aggregates, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 135 M2 and M3. It anticipated in this decision that quiring close to $13 billion in the final quarter the special factors affecting growth of Ml in the alone. fourth quarter would have a much smaller impact on M2 and M3 because a major portion of the shifts of funds would occur among assets con- THE FEDERAL RESERVE S OBJECTIVES FOR tained in these broader aggregates; for example, THE GROWTH OF MONEY AND CREDIT proceeds from maturing all savers certificates (a component of M2) that were deposited in trans- The economy over the past year and a half has action balances would remain part of M2. How- passed through a most difficult period, one of ever, it was recognized that the advent of the high unemployment, depressed incomes, and se- MMDA might boost expansion of M2 late in the vere distortions in financial markets. There is year. substantial evidence that the recession is ending. In late December, growth of M2 in fact was Forces seem to be in place that are consistent raised by sizable inflows to MMDAs from with recovery in economic activity. One positive sources outside M2—such as market instruments factor is the improvement in financial market and large certificates of deposit—and growth conditions in the past six months, which is continued at an extraordinarily rapid pace into stimulating activity in major credit-sensitive secthe early weeks of 1983. The new accounts were tors of the economy. A better balance is being heavily advertised by the depository institutions established between inventories and final deand often were offered initially at interest rates mands. Inflationary expectations, while still senthat were exceptionally high relative to prevail- sitive, have abated. Substantial progress toward ing rates on comparable investments. By year- restoring price stability has been made and there end, MMDAs outstanding had risen to a level of is good reason to believe that further progress about $87 billion, and by the end of January 1983 can be achieved even as business activity picks were about $230 billion. Growth of Super NOW up. An improvement in productivity should bolaccounts was much slower, reaching about $18 ster growth in real income and profitability durbillion by the end of January. ing recovery and can be a factor in sustaining Commercial bank credit grew 7.1 percent in better price performance. Diminishing inflation 1982, near the midpoint of the FOMC's range. and a lowering of inflation expectations, in turn, The pace of bank loan growth during the year should promote further declines in interest rates. was considerably affected by changes in the Against this backdrop, monetary policy has pattern of business financing. During the first been, and will continue to be, concerned with half, when the persistence of high long-term fostering a lasting expansion in business econominterest rates encouraged firms to concentrate ic activity in a framework of continuing progress their borrowing in short-term markets, business against inflation. Monetary expansion and liquidloans at banks expanded rapidly. But as interest ity should be adequate to support the moderate rates moved lower over the second half, corpora- recovery that appears to be starting. At the same tions increasingly shifted their financing to long- time, although the recent gains that have been term debt and equity markets; in the third quar- made against inflation are highly encouraging, ter, business loan growth slowed sharply, and in clearly the test of the success of our anti-inflathe fourth quarter showed no net increase, as tionary effort is still ahead. Thus, the Federal corporations used the proceeds from bond sales Reserve remains committed to a course of moneto avoid increasing bank indebtedness. Real es- tary discipline that is essential to avoid a resurtate loans at banks also slowed as the year gence of inflationary pressures as economic exprogressed and, for the year as a whole, in- pansion proceeds. creased only 5V2 percent—a rate below that of In setting guidelines for monetary growth conrecent years. Consumer loans continued weak, sistent with these goals, the Federal Open Marexpanding only 3!/2 percent. While loan growth ket Committee recognized that the relationship slowed, banks greatly expanded their holdings of between growth ranges and ultimate economic U.S. Treasury obligations during the year, ac- objectives had deviated substantially from past Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • March 1983 patterns during 1982. As noted earlier, monetary While effects of these new deposit instruments growth was quite rapid relative to income, and on Ml seemed smaller than might have been by year-end exceeded the targets set by the expected to date, the rapidly changing composi- Committee for 1982. This growth, however, ap- tion of Ml since the introduction of nationwide peared fully consistent with the needs of the NOW accounts at the beginning of 1981 seems to economy and progress against inflation, given have altered and made less predictable the bethe indications of unusual demands for monetary havior of that aggregate. The NOW accounts assets that persisted during the past year. With appear to behave partly like savings accounts velocity declining sharply, rigid adherence to the and partly like transaction accounts. Thus, the 1982 targets would have produced a much more pattern of Ml movements has come to be influrestrictive economic effect than was appropriate. enced by individuals' attitudes toward saving as The atypical behavior of velocity last year will well as by transaction needs and interest rates. likely prove at least in part temporary, to be As a result, the relationship of this aggregate to followed by an unwinding of the exceptional income may well be in the process of change liquidity demands this year; appreciable in- that, by the nature of things, can only be accucreases in Ml velocity, in particular, are com- rately determined as new behavior patterns are mon during the early stages of economic recov- reflected over time in the data. Though they have ery. It may well be that the experience of 1982 not grown rapidly in the early weeks of the year reflected in part a more basic shift in underlying when depository institutions were promoting demands for money, at least as now defined. MMDAs so aggressively, Super NOW accounts, Institutional changes have led to the increased which can be offered free of interest rate ceilings, availability of transaction accounts that pay in- have the potential for further disturbing Ml terest tied to market rates, and this availability is behavior relative to historical tendencies. likely to affect the trend growth of money. The All of these factors contributed to the comdeceleration of prices may increase the incen- plexity of setting target ranges for 1983, and the tives to hold money over time, especially as the Committee recognized that an unusual degree of reduced inflation is reflected fully in market judgment would be necessary in interpreting the interest rates. These considerations suggest that growth of money and credit in coming months. velocity in 1983 may well follow a pattern differ- Some flexibility in reassessing the ranges could ent from that of past recoveries. In setting targets be important. The Committee decided to continfor 1983, account had to be taken of the experi- ue setting target ranges for all three measures of ence of 1982, past cyclical behavior, and the money, but with some departures from past possible alteration of underlying relationships practice to deal with the special uncertainties it between money and ultimate economic objectives. faces currently. The members of the FOMC also recognized In the case of M2, the Committee felt that that the introduction of new deposit instruments performance of this aggregate would be most very recently has affected, and would continue to appropriately measured from a base period that affect for a time, the growth rates and behavioral would be less affected by the initial, highly characteristics of the various aggregates. The aggressive marketing of MMDAs. Thus, the exextremely rapid buildup of money market depos- pected growth of M2 is 7 to 10 percent, measured it accounts, in particular, already has resulted in from the average level of February and March a substantial flow of funds into M2 from market 1983 to the average level of the fourth quarter of instruments, greatly inflating the growth of this this year. This range is 1 percentage point higher aggregate in the current quarter. Anticipations than that set for M2 last year, but it makes are that the redistribution of funds associated allowance for some further shifting of funds into with the MMDAs and, to a lesser extent, Super MMDAs from non-M2 sources over the remain- NOW accounts will continue to influence the der of the year, although at a greatly reduced behavior of the aggregates, though the effect of pace from what evidently has occurred to date. such shifts on growth rates of the different mone- The range for M3 was set at 6*/2 to 9Vi percent, tary measures clearly cannot be determined with measured in accordance with past convention a high degree of confidence. from fourth quarter to fourth quarter. This range Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 137 is identical to that set for 1982, but the Commit- that time regarding the behavior of the aggretee contemplates growth below the actual out- gates and their relationship to other economic come last year. In adopting the range, the Com- variables. For the time being, in implementing mittee assumed that any net shifts of funds over monetary policy, the Committee agreed that subthe year into the new types of deposit accounts stantial weight would be placed on behavior of from market instruments would be moderate. M3 the broader aggregates—M2 and M3—in anticiwas expected to be less affected by the new pation that current distortions from the initial accounts because many depositories have the adjustment to the new deposit accounts will option of reducing their issuance of large CDs if abate. The behavior of Ml will be monitored, sizable inflows of MMDAs and other core depos- with the degree of emphasis given to that aggreits satisfy their needs for funds. Whether this in gate over time dependent on evidence that velocfact turns out to be the case will depend in part ity behavior is resuming a more predictable paton the public's perceptions of the risks entailed tern. Debt expansion, while not targeted in uninsured investments and on the ability and directly, will be evaluated in assessing behavior desire of depository institutions to use their new of the money aggregates and the impact of moneliability powers to expand their market shares in tary policy. financial intermediation. The Committee emphasized that policy imple- For Ml, a growth range of 4 to 8 percent was mentation in 1983 necessarily will involve a specified for the period from the fourth quarter of continuing appraisal of the relationships between 1982 to the fourth quarter of 1983. This range, each of the measures of money and credit and while pointing to slower actual growth than in economic activity and prices, particularly in the 1982, is both wider and higher than the range aftermath of unusual behavior of velocities of tentatively set last July. The new range reflects both money and credit aggregates last year. This allowance for a possible change in cyclical be- appraisal will involve taking account of patterns havior as well as for the evolving character of Ml of saving behavior and cash management among as a more important repository for savings, espe- businesses and households and of indications of cially in an environment of lower inflation and changing conditions in domestic and internationlower interest rates. The comparatively wide al credit markets and in foreign exchange marrange set for Ml also reflects the Committee's kets. judgment that some allowance should be made in this fashion for the uncertainties introduced by the existence of the new deposit accounts. THE OUTLOOK FOR THE ECONOMY An associated range for total domestic nonfinancial debt was estimated at 81/2 to 11 Vi percent There are encouraging signs that the economy over the four quarters of 1983. This range encom- will soon be in the early stages of an economic passes growth about in line with expected growth upturn, if indeed the expansion has not already of nominal GNP, in accordance with long-term begun. In its initial phases, the economic recovtrends; however, Committee analysis of the out- ery may be less robust than the average postwar look suggested that, in the particular circum- expansion, but, at the same time, the chances stances of 1983, somewhat more rapid growth of that the recovery can be sustained over the long credit also might be consistent with its overall run have been considerably enhanced by the objectives. Owing to the extraordinary size of significant progress against inflation in the past the federal budget deficit, the share of credit year or so. flowing to the private sector is expected to be Indications that the economy is turning up lower than that experienced generally in the past. have been apparent in recent weeks. The housing The commercial bank share of total debt expan- sector appears to be well along in the recovery sion is also expected to put bank credit growth at process, as both house sales and new construcbetween 6 and 9 percent this year. tion have registered significant advances. Retail The Committee members agreed that the mon- sales also picked up toward the end of 1982 and etary ranges should be reviewed in the spring in held steady in January; auto sales in particular light of the accumulated evidence available at have been at improved levels in recent months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • March 1983 In the business sector, inventory liquidation ap- pansion: barring some unexpected reemergence parently has become less of a depressant of real of serious inflationary pressures in 1983, the activity, as both industrial production and em- monetary growth targets established by the ployment showed appreciable gains in January. FOMC should provide the liquidity needed to To be sure, because of the length of the support a recovery in real activity. recession and the stresses and uncertainties it A resurgence of inflation seems unlikely in the has generated, consumers and businesses may near term, even though some commodity prices follow cautious economic strategies in coming may rebound from cyclically depressed levels as quarters. In the business sector a high degree of the recovery takes hold. The underlying trend in unused industrial capacity probably will discour- labor costs appears to have moved down. In age investment spending for some time, as firms addition, the current supply situations in agriculboost the operating rates for existing plant and tural and energy markets appear conducive to equipment, rather than investing in new physical continuing progress against inflation; indeed, recapital; commercial construction in the office cent developments in the international oil market building area may be particularly weak for a seem to portend quite favorable price movewhile. The export sector may well continue to be ments for this key commodity. a drag on U.S. economic activity well into 1983. There still are, however, reasons for concern Exports fell sharply in the second half of last about the longer-run outlook for the economy. year, and given the widespread weakness in One major source of concern is the prospect that foreign economies and the still high value of the federal deficits will continue to be massive in the dollar, a quick turnaround in export demand is years ahead, even as the economy is well along not likely. in the expansion. This prospect suggests a seri- Although the January employment report pro- ous risk that pressures on credit markets will vided encouraging signs of improved labor de- mount as the credit demands of private borrowmand, the gains in coming months, on balance, ers grow with the recovery. In addition, the may be relatively moderate in view of the uncer- prospective deficits tend to cast doubt on the tainties still present in the business environment. commitment of economic policy to gain control As demands pick up initially, businesses appear of inflation over the long run. For these reasons, likely to boost output in part by lengthening work the budgetary picture continues to have an unsetschedules or improving efficiency, rather than by tling influence on financial markets, and lenders committing themselves fully to higher levels of remain hesitant to commit funds for a long periemployment. Therefore, during the early stages od, except at interest rates that are high relative of the recovery, the unemployment rate probably to the current pace of inflation. will be slow to retrace the increases sustained Overcoming the still deep skepticism about the during the past recession. The difficulties of anti-inflation effort is crucial in other ways to the bringing unemployment down quickly may be achievement of strong and sustained economic compounded by structural changes now apparent growth. Generally recognized is that periods of in the U.S. economy; although the service sector slowing inflation in the past two decades have and industries in the forefront of technology will proved to be temporary, and unless the commitbe adding employees, job opportunities in some ment to see the present effort through is made traditional industries may be trending lower over fully credible by the actions of the fiscal and a long period, and legitimate concern exists monetary authorities, there will be a danger that about the ability of displaced workers to find new as markets improve with recovery we will see a employment readily in the expanding sectors. reversion to aggressive patterns of wage and Nevertheless, once the recovery is under way, price behavior. If this came to pass, the viability the chance that it can be sustained appears good. of economic expansion would be severely jeop- Fiscal policy is providing significant near-term ardized. support for the economy through a continued We need, too, to deal with the strains existing rise in defense spending, countercyclical transfer in the international financial arena. Timely action payments, and further tax cuts. The current to enhance the resources of the International monetary policy, too, is consistent with an ex- Monetary Fund is essential. But more generally, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to Congress 139 we must maintain the spirit of cooperation critical importance to the interest rate outlook— among borrowers, lenders, and governmental and one certainly not divorced from the budget authorities that has been the hallmark to date of picture—is the behavior of inflation and expectathe effort to resolve the difficult problems con- tions of inflation. Lower rates of inflation confronting us. tribute directly to the reduction of demands for money and credit, and sustained progress in The members of the Federal Open Market slowing the advance of wages and prices would Committee, together with other Federal Reserve do much to relieve the concerns of investors as Bank presidents who alternate as Committee to the future course of interest rates. members, believe that the economic expansion 2. Economic projections for 1983 that now appears to be starting will result in a solid gain in real GNP over the four quarters of FOMC members and 1983. The increases expected are moderate in other Bank Presidents AAddmmiinnii-comparison with the first year of most past IItteemm ssttrraattiioonn CCBBOO Central recoveries, and the consensus is that these gains Range tendency can be achieved without a resurgence in infla- Changes, fourth tionary pressures, especially in light of the favor- quarter to fourth quarter, percent able underlying trend of unit labor costs. Nominal GNP 7'/4 to 11 '/4 8.0 to 9.0 8.8 8.9 Real GNP 3 to 516 3.5 to 4.5 3.1 4.0 In formulating these projections for 1983, GNP deflator 3Vi to 5Vi 4.0 to 5.0 5.6 4.7 members of the FOMC and the presidents of the Average level in the fourth Reserve Banks took account of the target ranges quarter, percent Unemployment rate1 .. 9Vi to 101/2 9.9 to 10.4 10.4 n.a. established for the various monetary and credit ... aggregates, and assumed that the Congress and 1. Percent of total labor force, including persons in the Armed the administration will make progress in the Forces stationed in the United States, n.a. Not available. months ahead in reducing federal deficits for coming years, thereby diminishing the threat Projections of the majority of the Committee those deficits would otherwise pose to long-run members (and other presidents of Reserve price stability and sustainable economic growth. Banks) for growth in the real GNP from the No specific allowance was made for a large fourth quarter of 1982 to the fourth quarter of decline in oil prices; also, the special restraining 1983 were in a range of 31/2 to just over 4 percent, influence on prices exerted by the appreciation a little higher than the recent forecast of the of the dollar in 1982 is not expected to be administration, and similar to the projection of repeated in 1983. the Congressional Budget Office (table 2). Sever- The ranges of growth in money and credit al expected significantly more growth. Nearly all specified by the Committee for 1983 would ap- believed that prospects were excellent for less pear compatible with some further decline in inflation than the 5.6 percent increase in the GNP market rates of interest as inflation abates. How- deflator projected by the administration, with the ever, the direction of fiscal policy decisions will majority expecting an increase of 4.5 percent or play a major role. Decisive action to reduce the less. The combination of real growth and infla- Treasury's demands on the credit markets in the tion resulted in a central tendency of 8 to 9 years ahead would be well received by investors percent in nominal GNP growth. Unemployment and would contribute greatly to a relaxation of was expected to remain high during the first year the continuing pressures on interest rates. Of of recovery. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • March 1983 APPENDIX series considered. The private borrowing aggregate clearly performed least well. Note on Credit Aggregate A.l Behavior of domestic nonfinancial sector debt The specific measure of aggregate credit used by Changes in percent, fourth quarter to fourth quarter the FOMC in establishing a range for growth is the total debt of domestic nonfinancial sectors, Year Change in Change in ratio of debt debt to GNP as derived from the Board's flow of funds accounts. This measure includes borrowing by 1960 5.2 3.1 1961 5.7 -1.6 private domestic nonfinancial sectors and by the 1962 6.7 .9 1963 6.9 .3 federal and state and local governments in U.S. 1964 7.2 1.2 markets and from abroad; it excludes borrowing 1965 7.2 -3.0 by foreign entities in the United States. 1966 6.9 -1.1 1967 6.8 .5 Various statistical tests were used to compare 1968 8.4 -.9 1969 7.1 .3 this measure with other potential credit aggregates—such as totals that included borrowing by 1970 6.9 1.9 1971 9.3 -.3 foreign entities or by financial institutions, or 1972 10.0 -1.4 1973 11.3 -.2 that were augmented by equities. Comparisons 1974 9.3 2.1 also were made with less comprehensive totals 1975 8.9 -1.0 such as aggregate private borrowing or financial 1976 10.7 1.3 1977 12.3 .1 assets other than equities held by nonfinancial 1978 12.9 -1.6 sectors. In these comparisons, which involved 1979 12.3 2.4 examining the stability and predictability of rela- 1980 9.9 .4 1981 10.1 .4 tionships to GNP and other economic variables, 1982 9.1 5.7 the domestic nonfinancial debt total generally MEMO: average annual performed as well as or better than the other change 8.7 .4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

141 Treasury and Federal Reserve Foreign Exchange Operations This 42d joint report reflects the Treasury-Feder- ment their liquidity positions, especially in dolal Reserve policy of making available additional lars, against potential funding or cash-flow probinformation on foreign exchange operations lems and in advance of important statement from time to time. The Federal Reserve Bank of dates, particularly around the end of September. New York acts as agent for both the Treasury In this environment, market participants became and the Federal Open Market Committee of the wary about the credit exposures of potential Federal Reserve System in the conduct of foreign counterparties in the interbank market. Their exchange operations. heightened perception of risk was reflected to an This report was prepared by Sam Y. Cross, extent in the widening yield spread between U.S. Manager of Foreign Operations for the System government obligations and private credit instru- Open Market Account and Executive Vice Presi- ments. dent in charge of the Foreign Group of the In part, the dollar's buoyancy also reflected Federal Reserve Bank of New York. It covers the market perceptions that the outlook for the U.S. period August 1982 through January 1983. Previ- economy was favorable relative to those for ous reports have been published in the March other countries. Inflation in the United States and September [October 1982] BULLETINS of was rapidly receding in product and labor mareach year beginning with September 1962. kets, and the previously adverse inflation differentials that the United States had experienced The dollar rose against all major foreign curren- vis-a-vis Germany and Japan were quickly erodcies from August through mid-November 1982, exceeding the peaks of the previous year and 1. Federal Reserve reciprocal currency arrangements reaching the highest levels on a trade-weighted Millions of dollars basis of the floating-rate period. The dollar then Amount of Amount of reversed course through the middle of January, facility, Effective facility, Institution August 30, ending the six-month period lower on balance Ja 1 n 9 . 8 2 1 , 1982 Ja 1 n 9 . 8 3 3 1 , against the Japanese yen and the Swiss franc, but Austrian National Bank 250 250 higher against most other major foreign curren- National Bank of Belgium 1,000 1,000 cies. Bank of Canada 2,000 2,000 National Bank of Denmark.... 250 250 The dollar was strongly bid in the exchange Bank of England 3,000 3,000 Bank of France 2,000 2,000 markets early in the period under review even as German Federal Bank 6,000 6,000 U.S. interest rates dropped sharply and as inter- Bank of Italy 3,000 3,000 est differentials favoring dollar-denominated as- Bank of Japan 5,000 5,000 Bank of Mexico sets narrowed appreciably. In part, bidding for Regular facility 700 700 Special facility 0 325 325 dollars reflected a deepening apprehension about Netherlands Bank 500 500 the international banking system. As evidence Bank of Norway 250 250 Bank of Sweden 300 300 emerged of the liquidity pressures facing first Swiss National Bank 4,000 4,000 Mexico and then other developing countries, Bank for International doubts spread in the markets about the willing- Settlements Swiss francs/dollars 600 600 ness or the ability of one or several of these Other authorized European currencies/dollars 1,250 1,250 borrowers to meet their external obligations. In response, individual institutions sought to aug- Total 30,100 325 30,425 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • March 1983 ing. Widely anticipated shifts in balance of pay- early October when the dollar was bid up sharply ments positions against the United States follow- to higher levels in unsettled markets. The Federing the dollar's two-year rise were slow to al Reserve and the U.S. Treasury purchased materialize. Moreover, the outlook for economic $57.0 million equivalent of Japanese yen and growth remained more positive for the United $45.0 million equivalent of German marks. Of the States than elsewhere. total Japanese yen acquired, $38.5 million was Meanwhile, the prospect of recovery in the for the Federal Reserve and $18.5 million for the near term and of looming fiscal deficits over the U.S. Treasury. The German mark purchases medium term were seen as limiting the scope of were evenly split between the Federal Reserve future interest rate declines in the United States. and the Treasury. At the dollar's peak, it had To be sure, Federal Reserve authorities had risen 11 and IV2 percent from levels in late indicated during the summer that they would August against the yen and the mark respectively tolerate monetary expansion at somewhat higher to levels not seen in five years or more. Against than the targeted annual rate in view of economic some of the other continental currencies, the uncertainty and strong liquidity demands. Short- dollar had moved up to record levels. term interest rates had declined from their mid- By mid-November, the international economic year peaks in response to the sluggishness of the climate had changed significantly. Expectations economy and of credit demands by some 6V2 of a U.S. economic recovery had been disappercentage points through late August and then, pointed, and recent statistics were suggesting after some backing-up in September-October, by that recession, while deepening further abroad, a further V2 percentage point by late October. had not yet ended in the United States. The In the meantime, the Federal Reserve lowered unemployment rate in the United States had shot its discount rate in five steps from 12 percent to up quickly to IOV2 percent just before the con- 9V2 percent in three months. But no fundamental gressional elections, and a number of political change in Federal Reserve operating procedures campaigns had focused on economic issues, had been indicated. Compared with other coun- leaving market operators sensitive to the possitries, the decline in U.S. nominal interest rates bility that more policy initiatives might be understill lagged behind the reduction of inflation so taken to stimulate the economy. By this time, that real interest rates remained high, both abso- also, the U.S. trade position had posted several lutely and relative to other countries. Further- large monthly deficits. The anticipated deterioramore, because of the weakness of economies tion in net exports not only appeared to have abroad, foreign monetary authorities were ex- materialized, but coming at a time of weak pected to take full advantage of any decline in domestic demand, suggested that the potential U.S. interest rates that appeared to be sustain- drop into deficit and the resulting drag on the able to ease credit conditions in their own econo- U.S. economy might be far deeper than previmies. These expectations were confirmed when ously envisaged. Press and official commentary official and market interest rates in major Euro- associated the dollar's past appreciation with the pean countries declined in late August and again weakness of U.S. trade and employment. in October. In addition, market participants came to the For all these reasons the dollar was bid higher judgment that the prospects and priorities for the in the exchange markets in frequently active international financial system had changed. The trading through mid-November. The uptrend immediate risks of a major international loan was uneven. In view of the heightened percep- default receded, as first Mexico and then other tion of risk that prevailed at the time and uncer- countries negotiated adjustment programs with tainty over the timing and profile of the anticipat- the International Monetary Fund (IMF) and esed recovery in the United States, the markets tablished procedures for arranging near-term fiwere susceptible to abrupt shifts in sentiment or nancing needs. However, the success of these movements in exchange rates. Under these cir- countries' stabilization programs and of their cumstances, the U.S. authorities intervened on efforts ultimately to meet their heavy external one day in early August and on three days in obligations was seen as requiring a more buoyant Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 143 international economy and substantially reduced edged up somewhat during January. With interfinancing costs. est rates abroad generally holding steady or Accordingly, market participants continued to declining slightly, differentials favorable to dollar anticipate further easing of U.S. short-term inter- assets once again widened. By the close of est rates for a time. But, during the winter, they January, the dollar was trading slightly higher began to question the scope for further substan- against most European currencies than at the tial interest rate drops in light of recent behavior beginning of the six-month period under review. of the monetary aggregates. In the event, the It remained lower, however, against the Japa- Federal Reserve reduced its discount rate in two nese yen and the Swiss franc than it had been on more steps to 8'/2 percent by mid-December. July 30. In trade-weighted terms, the dollar rose But, at least in the market for medium- and slightly over the six months. The U.S. authorilonger-term securities, the downtrend in interest ties did not intervene after early October. rates was beginning to meet resistance. As discussed later, the Federal Reserve and Under these circumstances, market partici- the U.S. Treasury provided credits to Mexico pants were willing to diversify their portfolios by through a combination of long-standing facilities liquidating some of their dollar-denominated as- and new arrangements. On the first day of the sets. Investors chose to realize the capital gains period under review, the Bank of Mexico repaid they had earned on their investments in the a one-day $700 million drawing on its swap line United States and to participate in the rallies in under the Federal Reserve's reciprocal currency capital markets abroad that were being triggered arrangement, used to finance a short-run liquidby expectations of further interest rate cuts ity need. Then, with the Mexican authorities there. In addition, market professionals were proceeding with discussions with the IMF of a willing to take positions on expectations that a new stabilization program, the Bank of Mexico long-awaited reversal of the dollar's sustained requested and was granted on August 4 a $700 advance had finally arrived. million drawing on that same swap line. As of Consequently, the dollar declined from mid- January 31, $373 million was still outstanding November through mid-January 19 percent under that facility. against the Japanese yen and \4Vi and 10!/2 Also, over the August 14-15 weekend, the percent respectively against the Swiss franc and Mexican authorities arranged a temporary new German mark. Of all the major currencies, the $1 billion swap facility with the Exchange Stabilidollar rose only against the pound sterling, zation Fund (ESF) of the U.S. Treasury to meet which, like the dollar, had begun a decline in immediate cash needs pending the conclusion of mid-November and then depreciated more rapid- an agreement for a $1 billion advance payment ly in response to the prospect of declining oil for oil from the U.S. Department of Energy for prices to touch a record low in terms of the dollar the U.S. strategic reserves. The Mexican auby the second week of January. thorities drew $825 million against the ESF facili- After mid-January, the decline in the dollar ty and then, on August 24, repaid the entire stalled or was partially reversed. Whereas indus- drawing. The Treasury and the Federal Reserve trial economies abroad remained weak, the first participated on August 30 in a $1.85 billion clear signs appeared that the U.S. recession was multilateral financing program for the Bank of bottoming out. Moreover, the prospect of large, Mexico in cooperation with several other moneprojected U.S. fiscal deficits, together with the tary authorities, under the aegis of the Bank for recent, more rapid monetary growth, raised un- International Settlements (BIS), through swap certainty whether the Federal Reserve might arrangements of $600 million and $325 million, tighten credit market conditions again. Both respectively. The Bank of Mexico had outstand- Treasury and Federal Reserve officials stressed ing drawings of $299 million on the Federal the longer-term need to reduce the deficits and to Reserve and $556 million on the U.S. Treasury maintain the anti-inflationary resolve of mone- under the facility as of January 31. tary policy. Thus, expectations faded of further During the period, the U.S. monetary authoriinterest rate declines and, in fact, market yields ties provided or participated in the provision in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • March 1983 2. Drawings and repayments Millions of dollars; drawings, or repayments (- Outstanding, 1983 Outstanding, Bank, or drawings Jan. 1, 1982 11998822:: 11 11998822:: 22 11998822:: 33 11998822:: 44 Jan. Jan. 31,1983 Foreign central banks and the Bank for International Settlements under regular reciprocal currency arrangements Bank drawing on Federal Reserve System 800.0 1,400.01 Bank of Mexico -217.4 -109.8 373.0 -600.0 -900.0 J Bank for International Settlements2 (against 124.01 0 0 German marks) -124.0 J 800.0 J 1,400.01 f 124.01 Total -600.0 1-900.0 J 1 341.4 J -109.6 373.0 Bank of Mexico under special swap arrangements Drawings on U.S. Treasury special temporary facility for J 825.01 $1,000 million 1-825.0J Special combined credit facility Federal Reserve special facility for $325 J 89.8" 211.2 42.0 299.3 million I- 43.8, J 166.8" U.S. Treasury special facility for $600 million I- 81.3, 392.2 78.0 555.8 Jl,081.6 Total 1-950.0- 603.5 20.0 855.0 Central Bank of Brazil under special swap arrangements with the U.S. Treasury Drawings on U.S. Treasury special facilities for 500.01 $500 million -500.0 J $280 million 280.0 0 280.03 $450 million 450.0 0 450.0 J 250.01 $260 million 1-104.2J -145.: Jl,480.01 Total 1-604.2 J -145.: 730.0 1. Data are value-date basis. Because of rounding, details may not 2. BIS drawings and repayments of dollars against European curadd to totals. rencies other than Swiss francs to meet temporary cash requirements. 3. This swap drawing repaid at maturity on February 1, 1983. October and November of $1.23 billion of short- billion credit facility, which was later increased term financing following adoption of economic to $1.45 billion. In anticipation of this arrangepolicies at the October meeting of Brazil's Na- ment, the Treasury through the ESF provided on tional Monetary Council. The financing was pro- December 13 an advance of $250 million through vided under three swap facilities in anticipation a swap arrangement, which has since been reof Brazil's drawings under the compensatory paid. As part of the liquidity-support arrangefinancing facility of the IMF as well as on its ments for the BIS provided by the participating reserve position with the IMF. The first $500 monetary authorities, the ESF has agreed to be million facility was drawn on October 28 and substituted for the BIS for $500 million of the November 3 and repaid on December 28. Other total credit facility in the unlikely event of defacilities totaling $730 million were made avail- layed repayment by the Central Bank of Brazil. able in November and remained outstanding at With respect to Argentina, on January 24 the the end of the period." BIS announced, with the support of a group of its Meanwhile, on December 23 the BIS, acting member central banks and the U.S. monetary with the support of the U.S. Treasury and mone- authorities, a $500 million bridging loan to the tary authorities in other industrial countries, Central Bank of Argentina to be repaid by the provided the Central Bank of Brazil with a $1.2 end of May as other funds become available to that country. In this case, the Federal Reserve has agreed to be substituted for the BIS at its request for up to $300 million of the total credit 1. Of this amount, a swap drawing of $280 million was repaid at maturity on February 1, 1983. facility in the unlikely event that the credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 145 3. U.S. Treasury securities, foreign commitments, currency denominated1 Millions of dollars equivalent; issues, or redemptions (-) Amount of Amount of 1983, Issues commitments, 1982: 1 1982: 2 1982: 3 1982: 4 commitments, January Jan. 1, 1982 Jan. 31, 1983 Public series Germany 3,622.3 0 -451.0 -1,231.9 -664.1 0 1,275.2 Switzerland 458.5 0 0 0 0 -458.5 0 Total 4,080.8 0 -451.0 -1,231.9 -864.1 -458.5 1,275.2 1. Data are on a value-date basis. Because of rounding, details may not add to totals. remains outstanding for a longer period of time eign currency-denominated securities. The Treathan is now contemplated. sury general account gained $84.9 million on the In other operations, the U.S. Treasury re- redemption of German mark- and Swiss francdeemed at maturity on September 1 and Decem- denominated securities. Valuation gains or ber 14 German mark-denominated securities losses, as presented in table 4, represent the equivalent to $671.2 million and $664.1 million increase or decrease in the dollar value of outrespectively, and on January 26 the Treasury standing currency balances if valued at end-ofredeemed at maturity the last of its Swiss franc- period exchange rates compared with those at denominated securities equivalent to $458.5 mil- which the assets and liabilities were acquired. As lion. After these redemptions, the Treasury had of January 31, 1983, valuation losses on outoutstanding $1,275.2 million equivalent of notes standing balances were $573.7 million for the (public series), which had been issued in the Federal Reserve and $965.2 million for the ESF. German market with the cooperation of the Ger- The Treasury general account had valuation man authorities in connection with the dollar- gains of $360.6 million related to outstanding support program of November 1978. All these issues of securities denominated in foreign curnotes are scheduled to mature by July 26, 1983. rencies. In the six-month period from August through The Federal Reserve and the Treasury invest January, the Federal Reserve had no profits or foreign currency balances they acquire as a relosses on its foreign currency transactions. The sult of their foreign exchange operations through ESF recorded a gain of $4.2 million in connection a variety of investments that yield market-related with sales of foreign currency to the Treasury rates of return and provide a high degree of general account, which the Treasury used to quality and liquidity. Under the authority providfinance interest and principal payments on for- ed by the Monetary Control Act of 1980, the Federal Reserve had invested some of its own foreign currency resources and those held under warehousing agreements with the Treasury in 4. U.S. Treasury and Federal Reserve current securities issued by foreign governments. As of foreign exchange operations' January 31, the Federal Reserve's holdings of Net profits or losses (-); in millions of dollars such securities were $1,367 million. The Treasury had invested $2,536 million in such securi- U.S. Treasury FFeeddeerraall ties as of the end of January. Period RReesseerrvvee Exchange General Stabilization account Fund 1982—Q1 0 15.9 - 4.2 JAPANESE YEN Q2 0 1.5 78.5 Q3 0 - 2.3 89.4 Q4 0 4.3 16.0 Japan's economic performance, though still im- January 1983 0 0.5 38.3 Valuation profits and losses on pressive by international comparison, had by outstanding assets and liabilities as of January 31, midsummer fallen short of earlier expectations in 1983 573.7 -965.2 360.6 many important respects. Externally, exports 1. Data are on a value-date basis. had declined under the influence of the world- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • March 1983 wide recession, increasing barriers to Japanese further easing of interest rates for fear of stimugoods, and import cutbacks by several financial- lating even greater outflows of capital, even ly strapped developing countries previously though a rapid deceleration in inflation had left among Japan's fast-growing export markets. Al- Japan's interest rates in real terms high by histhough imports had also dropped and the current torical standards. Instead, the Bank of Japan account remained in surplus, the trend of contin- kept short-term rates around 7 percent. Against uous trade balance improvement, which had this background the yen remained on offer, flucreemerged after the second rise in oil prices late tuating closely in response to changes in liquidity in the 1970s, was now broken. Moreover, the conditions in the United States. When interest current account surplus was overshadowed by rates abroad fell sharply during mid-August, the large outflows of capital that reflected in part yen firmed temporarily, only to give way to lower interest rates in Japan than in other cen- renewed selling pressures when the downtrend in ters. Internally, efforts to generate a domestic foreign interest rates seemed to lose momentum economic recovery faltered as a modest upturn later on. in consumer expenditures earlier in the year During September and October sentiment topetered out and investment stagnated. With ward the yen remained cautious as the markets' slower-than-expected growth leading to a re- earlier presumption that the dollar would soon newed shortfall in tax revenues and an overrun in ease came to be challenged. In the United States, the government's borrowing requirement, Ja- the scope for further interest rate cuts in the near pan's bond market came under pressure while term had come into question. More importantly, the stock market was depressed by the deterio- the flare-up of debt problems in Mexico and rating economic outlook. These developments other developing countries triggered a strong also contributed to the outflows of capital from demand for dollar-denominated assets, even Japan. though market participants were initially con- Thus, the Japanese yen had become the victim cerned about the credit exposures of individual of repeated disappointment about the prospects U.S. banks. The Japanese yen became caught up for the economy and large net capital outflows. in these concerns. Meanwhile, at home, atten- Commercial leads and lags built up strongly tion again focused on the government's efforts to against the currency. By the end of July it had wrestle with its fiscal deficit, especially after fallen 20 percent against the dollar from the highs Prime Minister Suzuki announced that the govof November 1981 to ¥ 255.60, while easing 8 ernment's finances were in a "state of emergenpercent against the German mark. The authori- cy" and the goal of balancing the budget by 1984, ties had intervened at times to cushion the yen's to which his government had emphasized its decline, and Japan's foreign currency reserves strong commitment, would have to be abanhad dropped $3.2 billion during the eight months doned. Steps were taken to cut some expendito $21.8 billion. tures to make room for selective stimulus via Meanwhile, monetary policy was being relied new public works spending and housing loan on to provide stimulus to Japan's economy while subsidies. But these measures were viewed as fiscal policy was constrained by concern over the not sufficient either to contain the growing deficit budget deficit and the commitment to eliminate or to revive private demand. In October the the borrowing gap by 1984. But the yen's contin- Prime Minister's surprise announcement that he ued weakness greatly reduced the maneuverabil- would not seek reelection led to a difficult fourity of the monetary authorities to respond during way succession struggle. the summer months to evidence of a further In this atmosphere the yen fell irregularly, weakening of demand and a rise in unemploy- dropping 9 percent from levels at the end of July ment. The yen's steep fall had boosted the inter- to a 5V2-year low of ¥ 278.60 on November 4 national competitive position of Japanese indus- against the generally strong dollar. It had weaktry, and in the current recessionary environment, ened also against other currencies, falling 4 perthis development was attracting strong criticism cent against the mark by early November. The from abroad and aggravating trade frictions. Bank of Japan at times sold dollars both in Tokyo Thus, the authorities were reluctant to risk any and in New York to support the currency in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 147 exchange markets. These sales were greater than begun actively to sell dollars forward. The electhe $2.8 billion decline in Japan's foreign ex- tion of a new prime minister by an unexpectedly change reserves over the three months to $19.1 wide margin in late November and Prime Minisbillion by the end of October. The U.S. authori- ter Nakasone's first statements affirming continties joined in concerted intervention operations uation of most of the previous government's with the Japanese authorities to counter disor- policies helped dispel earlier political uncertainderly markets on August 4 and October 4-6, as ties. Japan was seen as relatively free of the the dollar rose sharply. A total of $57.0 million of immobilizing policy disagreements that were takyen was purchased, of which $38.5 million was ing place in so many other countries and as on behalf of the Federal Reserve System and continuing to follow a clear and consistent path $18.5 million was for the account of the U.S. of macroeconomic restraint. The yen thus came Treasury. into demand and rose nearly 19 percent against During November the Japanese yen finally the dollar between early November and early began to recover, buoyed at first by a major shift January to ¥ 226.55 by January 10. Against the in international investment flows. By this time, German mark the currency rose some 10 percent the four-month rally in U.S. capital markets over the same period. showed signs of peaking, encouraging many in- By early January, market participants began vestors from Japan and elsewhere to take profits reassessing the outlook for further interest rate on dollar investments and to shift into other declines abroad in light of indications that the markets. Since the Japanese monetary authori- U.S. economy might be recovering more quickly ties had so far refrained from following interest than had been thought and the prospect that the rate cuts abroad, market participants assessed U.S. fiscal deficit might again exert upward that there might be considerable latitude now for pressure on long-term U.S. interest rates. Meanrates in Japan to ease, generating expectations of while, expectations had become firmly enpotential capital gains. trenched that the Japanese authorities would At the same time, the outlook for economic soon lower official short-term interest rates. growth globally had deteriorated considerably, Also, Japanese institutional investors had aland the prospect that Japan's economy would ready begun to invest once more abroad. After still expand, however slowly, made investment locking in some capital gains on their domestic in the stock market in Tokyo relatively more securities, many took advantage of "partly paid" attractive than in other financial centers. Foreign bonds in the Eurobond market to make an initial investors, therefore, became large net purchas- installment on a new issue and, if the yen were to ers of Japanese securities, contributing to a strengthen, benefit from this before completing strong rally in the Tokyo stock and bond mar- their subscriptions. Once the balance in the kets. Long-term bond yields were brought down market began to tip against the yen, many traders nearly 1 percentage point in the rally, even while in the interbank market and on Chicago's Interthe Bank of Japan's discount rate was unchanged national Monetary Market (IMM), who apparand short-term interest rates held steady. Net ently were holding large long yen positions, overseas investment by Japanese residents de- moved to cover their positions. The ensuing clined, and long-term capital outflows slowed. selling brought the yen down quickly to ¥ 242.10 Although these tendencies had begun to appear on January 24. In these circumstances, the Japain earlier months, the turnaround in investment nese authorities did not proceed with the cut in had a particularly strong impact in November, the discount rate the market had come to expect when the long-term capital account registered its would occur after Prime Minister Nakasone's first surplus in eighteen months. This news was visit to the United States. As a result, the Japviewed in the market as evidence that the yen anese yen moved up to close the period at was finally embarked on a sustainable recovery. ¥ 240.90, well below its highs in early January but up almost 6 percent on balance over the six- Before long, the bidding for yen broadened. month interval. The Bank of Japan made only Reports circulated that some large Japanese exmodest intervention sales of dollars in the last porting firms, which had postponed dollar sales three months of the period. Therefore, the counin earlier months when the yen was weak, had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • March 1983 try's foreign exchange reserves closed at $19.5 the rise of the mark in effective terms, to lower billion, little changed from the level at the end of its official discount and Lombard rates. At the October but still down $2.3 billion from their same time, fiscal policy was geared to a reduclevels at the end of July. tion of the public-sector deficit. Another complication was an unexpected deterioration in the economic climate in Germany. GERMAN MARK As foreign demand weakened sharply after midyear, Germany's economic stagnation gave way By August 1982 the German mark had strength- to recession. The sag in new foreign orders ened against most foreign currencies, while con- reflected the weakness of the global economy, tinuing to decline against the U.S. dollar. The dwindling Organization of Petroleum Exporting mark's performance vis-a-vis other European Countries (OPEC) surpluses, and severe financcurrencies reflected primarily a moderation of ing constraints facing many non-oil developing inflation and the greater progress made by Ger- countries. Already liquidity difficulties had many than by most of its neighbors in gaining emerged for a number of firms including AEGbalance of payments equilibrium. Capital out- Telefunken, generating talk of the need for govflows continued to weigh against the dollar-mark ernmental action to support the economy and exchange rate, however, attracted by higher employment. But, at the same time, an accord on U.S. interest rates and concern that Germany the 1983 federal budget reached just weeks bewas more vulnerable to the political and financial fore was beginning to be questioned on the strains then developing. Internally, proposals for grounds that it rested on overly optimistic asdealing with persistently large fiscal deficits had sumptions for the economy. Thus, prospects led to protracted debates within Germany's co- grew of enlarged official borrowing needs, and alition government. Also, financial strains in the Germany's bond market again had come under private sector had left market participants wary pressure. about individual German financial institutions. Against this background, market participants Moreover, the openness of Germany's economy expected that the authorities would take advanexposed it to possible disruptions of oil flows tage of any opportunity that might arise to lower arising from conflict in the Middle East, the interest rates and thereby deflect pressure for spread of recession among industrialized coun- further fiscal stimulus. When U.S. interest rates tries, and repercussions of economic sanctions resumed their downtrend after mid-August, inadopted by the United States against the Soviet terest differentials adverse to the mark sharply Union. narrowed. As a result, the interest differential for Consequently, the mark, which had already three-month Eurodeposits shrank to 2 Vi percentfallen 11 percent from its November 1981 high age points from more than IVi percentage points against the dollar to DM 2.4430 by the end of two months before. Under these circumstances, July, dropped further to a low of DM 2.5315 by the mark recovered strongly to DM 2.41. The early trading in the Far East on August 11. Bundesbank then moved on August 27, in con- During August the German authorities continued cert with the Swiss and Dutch central banks, to to sell dollars in modest amounts to facilitate the cut the discount and Lombard rates to 7 from IVi fixings in Frankfurt. Early in the month the U.S. percent and to 8 from 9 percent respectively. The authorities operated once, purchasing $5 million action was described by Bundesbank President equivalent of marks for the Federal Reserve and Poehl as an important step to provide support to the U.S. Treasury. the domestic economy. The continued decline of the mark through Except for the short-lived recovery late in midsummer was one of the complications facing August, the mark continued to decline through the authorities as they tried cautiously to steer early November. Although the mark's continuthe economy out of protracted stagnation. For ing weakness during the fall reflected in part the almost a year, the Bundesbank had taken advan- overall strength of the dollar, the situation at tage of improvements in Germany's external home also contributed. The market's expectation position and price performance, together with that the German authorities would take ad van- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 149 tage of any opportunity to cut interest rates in while, German exporters, who had previously Germany was confirmed by the Bundesbank's postponed hedging their dollar receipts, moved action of late August. The renewed drop in eco- to sell dollars forward. nomic activity was a source of discouragement In this environment, the German mark in Germany and was reflected in a rise in unem- strengthened considerably against most currenployment close to the psychologically important cies. Against the dollar it rose steadily, surpasstwo million level for September. In October the ing by early December its high point of August government recognized that the weak perform- and moving to a seven-month peak of DM 2.3295 ance of the economy would necessitate revision by January 10. At this level, it was up nearly IOI/2 of the government's budget forecasts, and debate percent from its lows in mid-November. Within intensified over the choice to accept a larger- the European Monetary System (EMS), the than-expected deficit or to cut welfare expendi- mark had previously moved from the bottom of tures drastically. The Bundesbank continued to the new intervention points established after the ease monetary conditions after interest rates last realignment. Now, as the dollar weakened abroad moved lower and adverse interest differ- and funds were shifted into German marks, the entials began to narrow. Effective October 1 it mark emerged near the top of the EMS band. As reduced banks' minimum reserve requirements, the mark strengthened, it was used increasingly thereby releasing about DM 5.5 billion of liquid- as an intervention currency by other EMS counity on a permanent basis. Effective October 22, tries. the Bundesbank cut its discount and Lombard After January 10, however, the mark lost some rates, both 1 percentage point to 6 percent and 7 of its gains. At this time, the dollar generally rose percent respectively. as signs of a bottoming-out of the U.S. recession Thus the mark remained under fairly steady and the pressures of large Treasury financing downward pressure against the dollar. It fell to needs seemed to limit prospects for further de- DM 2.6050 in European trading on November 11, clines in U.S. interest rates. Moreover, the outshortly after news of the death of Soviet Presi- look for the mark was clouded by political uncerdent Brezhnev, down nearly 8 percent from its tainties and capital again flowed out of Germany. highs touched in late August. Operating on two In addition, German stock and bond prices occasions early in October when the mark fell dropped, reports circulated in the market that abruptly in unsettled market conditions through German residents were moving to hedge or repay the low levels of early August, the U.S. authori- their Swiss franc liabilities, and foreign entities ties purchased a total of $40 million equivalent of postponed planned investments in Germany. At marks, shared equally between the Federal Re- the end of January the mark was trading at serve and the U.S. Treasury. DM 2.4735, down about 6 percent from its highs In mid-November, when the demand for dol- in early January and down about 1 percent from lar-denominated liquidity subsided and sterling levels at the end of July. came on offer, the German mark appeared to The earlier strengthening of the mark afforded market participants as an attractive alternative an opportunity for the Bundesbank again to currency for investment. Germany's current ac- reduce its discount and Lombard rates a full count was again improving, with most forecast- percentage point to 5 and 6 percent respectively ers expecting balance for 1982. The November on December 3, while providing liquidity to bring current account registered one of the largest short-term interest rates in line with the new surpluses on record. In addition, German banks Lombard rate. In addition, the Bank announced were no longer alone in having international that it would maintain the target range of 4 to 7 exposures that, even if an immediate problem percent for the growth of central bank money, had been diverted, might impinge on earnings continuing to aim at the upper half of the range as later on. Reflecting the more favorable outlook long as economic activity remained weak and the for the mark and declining adverse interest dif- inflation performance and external situation perferentials, German portfolio managers moved mitted. In the wake of these actions, domestic quickly to shift funds out of dollars and sterling money market rates eased significantly so that, into mark-denominated investments. Mean- despite some further softening in U.S. rates, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • March 1983 mark's adverse interest differential widened count surplus. Consequently, by the end of July, slightly. During January, however, no further the franc had fallen 19 percent against the dollar cuts in official interest rates were made, though and 8 percent against the German mark from its the Bundesbank did raise rediscount quotas peak in the closing months of 1981. Meanwhile, DM 4 billion effective February 1. Switzerland's foreign exchange reserves had ris- From August through January, Germany's for- en to $11.8 billion, largely reflecting the use of eign currency reserves were subject to diverse foreign exchange swaps to provide liquidity to tendencies. For the most part, the Bundesbank the banking system. intervened only modestly as a seller of dollars in By early August, signs of weakness in Switzersupport of the mark throughout the period, with land's economy were spreading. Exports, which most of the operations undertaken to settle im- had held up well earlier in the year and cushioned balances at the fixings in Frankfurt. The German the impact of the recession, were falling victim to authorities also acted as sellers of German marks the sluggishness of demand abroad, especially in in modest amounts against EMS currencies and, Germany, and the lagged effects of the franc's on occasion, against dollars to alleviate strains appreciation the year before. Nevertheless, marwithin the joint float. Germany's reserves stood ket participants began to sense that the monetary at $40.6 billion at the end of January, up about authorities might have less leeway than before to $4.1 billion on balance from the $36.5 billion continue forcefully to ease monetary conditions. level at the end of July. Inflation, which had slowed to about 5 percent, During the period, the U.S. Treasury re- remained stubbornly high by comparison with deemed at maturity $1,335.3 million equivalent both historical experience and other industrial of its German mark-denominated securities. countries. The persistence of inflation in the face These redemptions, which occurred on Septem- of a declining economy partly reflected the imber 1 and December 14, left the Treasury with pact of recent declines in the franc on domestic $1,275.2 million equivalent of mark-denominated prices of imported products. Moreover, the notes (public series) outstanding. growth of central bank money had begun to rise toward the authorities' target. As a result, the franc, while fluctuating widely Swiss FRANC against the dollar in response to day-to-day shifts in current and prospective money market condi- For much of the first eight months of 1982, the tions and international liquidity strains, traded Swiss franc had declined from its strong levels of narrowly against the German mark during the late 1981 under the weight of heavy capital month of August. Although against the dollar the outflows. With Switzerland's earlier policies of franc had declined a further 4 percent to a low of restraint having moderated inflation and the SF 2.1650, it bounced back quickly later in the Swiss economy weakening, the Swiss National month. Under these circumstances, the National Bank aimed at providing sufficient liquidity to Bank joined with other European central banks prevent any further drag on economic activity by in a concerted move to take advantage of the keeping central bank money on an average continued decline in interest rates in the United growth path during the year targeted at 3 per- States to cut rates in their respective countries, cent. In the event, growth of central bank money effective August 27. But, in view of the already had fallen short of the target during the early low level of interest rates in Switzerland, the months, so that fairly substantial injections of National Bank cut its discount and Lombard liquidity were required during the spring. Inter- rates only Vi percentage point to 5 percent and est rates fell and rate differentials adverse to 6I/2 percent respectively. franc placements became extremely wide. In After late August, when all currencies were response, foreign official and corporate borrow- declining against the dollar, the Swiss franc again ers placed heavy demands on Switzerland's capi- began to fall more rapidly than the German mark. tal market. These, together with other capital Although short-term interest rates in Switzerland outflows, more than offset the demand for Swiss declined less rapidly than elsewhere, by late francs arising from Switzerland's current ac- October at 3 to V/i percent they remained the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 151 lowest in all the industrialized countries. As a come and tourist receipts. The Swiss governresult, nonresidents continued to borrow heavily ment's fiscal discipline compared favorably with in the Swiss capital markets and to convert the the experience of most other countries. Renewed proceeds to other currencies. To be sure, the tensions in the EMS prompted some switching of attraction of Switzerland as a safe haven in- funds out of participating currencies and into the creased during the fall, as concern deepened franc. Also, market participants came less to about the potential ramifications of the growing expect further easing of monetary policy. The list of international debt problems, and Swiss Swiss National Bank had kept the same growth financial institutions were believed to be less target of 3 percent for central bank money for threatened by liquidity strains than many others. 1983 as in 1982. Although it again lowered official But much of the flows into Swiss banks were into lending rates on December 3 in coordination with dollar-denominated deposits. On balance, there- similar measures by other European central fore, the persistent interest-sensitive capital out- banks, the Vi percentage point declines of the flows continued to weigh against the franc. bank rate to AVI percent and of the Lombard rate As the Swiss franc resumed its decline with to 6 percent were again less than those abroad. little apparent resistance from the Swiss authori- The authorities were anxious to keep official ties, market participants came to the view that lending rates above market rates in order to the National Bank had put priority on achieving control better the level of liquidity over monthits monetary target for the year and was willing, ends, and with the approach of the important at least while the Swiss economy was weak, to reporting date at the end of December, banks accept a continued gradual decline of the franc, were positioning to ensure adequate levels of especially against the mark. cash resources in Swiss francs. On October 22, however, the Swiss National As a result, during December and early Janu- Bank unexpectedly did not join other European ary the Swiss currency came into strong demand monetary authorities in a reduction of official in the exchanges. As the franc's rise continued lending rates. Later, senior officials from the and as the dollar depreciated against all curren- Swiss National Bank, while indicating concern cies, market participants began to worry that that the recession not be exacerbated, under- much of the earlier borrowings in the Swiss scored the divergent forces operating on mone- capital markets remained unhedged. Therefore, tary policy and pointed to the need to avoid a they came increasingly to expect that, if the weakening of the franc and an aggravation of dollar were to continue to decline, earlier borinflation. Before long, most Swiss money market rowers of Swiss francs would bid for francs to rates steadied or firmed slightly, and by early cover their liabilities. Thus, the upward potential November the Swiss franc's slide against the for the franc was seen as greater than for most mark began to slow. Against the dollar, however, other currencies, prompting market professionthe Swiss franc continued to decline through als and participants on Chicago's IMM to take November 8, when it hit a five-year low of substantial long-franc positions. The franc came SF 2.2410. By this time the franc was IVi percent strongly in demand in the exchanges, rising to down from the end-of-July levels vis-a-vis the SF 1.9150 on January 10 against the dollar, up dollar and at SF 0.86, down 1 percent against the 14'/2 percent from its November lows. Against mark. the mark, which was undermined by political Following the shift in sentiment against the uncertainties and expectations that the Bundesdollar around mid-November, the franc rebound- bank would again lower official rates, the franc ed more strongly than other European curren- rose to SF 0.8144 on January 21, up almost 5'/i cies. As investors sought to shift funds out of percent since early November. dollars and to a lesser degree also out of German After mid-January, the Swiss franc pared back marks, Switzerland's traditional role as a safe some of its gains first against the dollar and then haven and its relative political stability made the against the German mark as well. Money market Swiss franc an attractive alternative. Unlike conditions in Switzerland remained comfortable, most countries, Switzerland had a sizable cur- and interest rates continued to ease, dropping rent account surplus, buoyed by investment in- below 3 percent for three-month Euro-Swiss Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • March 1983 franc deposits. Though the interest differentials double-digit rates. And the borrowing requireadverse to the franc were not so wide as they had ment of the public sector was declining and been in mid-1982, the low level of rates contin- apparently falling short of the rate of £916 billion ued to provide an inducement to borrowers to projected for the current fiscal year. raise funds in Swiss francs. As a result, the franc To be sure, disappointment had deepened eased back to trade by the end of January at about the prospects that Britain would sustain a SF 2.0250 against the dollar and SF 0.8187 recovery from its protracted recession, as eviagainst the mark. At these levels the franc was dence accumulated that output had posted little down nearly 6 percent against the dollar from its gain from its low point of 1981. But progress on earlier January highs and 16 percent lower inflation, the fiscal situation, and monetary conagainst the mark. trol, together with the decline of interest rates Nevertheless, on balance for the six-month abroad and sterling's stability as measured by the period under review, the franc rose 2!6 percent trade-weighted index, were seen in the market as against the dollar and 4 percent against the mark conditions that would permit a further cautious to stand near its record high on a trade-weighted easing of interest rates and help stimulate the basis. Between the end of July and the end of economy. January, Switzerland's foreign exchange re- Additional factors also helped sustain sterling serves rose $368 million to $12.2 billion in re- relative to most other currencies during the late sponse to foreign currency swap operations, summer and early fall. There were worries over interest earnings on outstanding reserves, and potential disruption to the flow of oil from the net market purchases of dollars in intervention Middle East as the result of fighting in Lebanon operations. Intervention by the authorities was and between Iran and Iraq. More important, infrequent and limited for the most part to re- intensifying financial strains and growing conplenishing reserves that had been run down by cerns over international credit exposures made earlier sales to customers. traders and investors more conscious about the On January 26 the U.S. Treasury redeemed at creditworthiness of counterparties and the safety maturity franc-denominated securities equiva- of their assets. In these circumstances, both lent to $458.5 million, thereby completing the Britain's oil self-sufficiency and the favorable redemption of franc-denominated securities to- reputation of London's financial system made taling the equivalent of $1,203.0 million issued in sterling a relatively secure asset. With the marconnection with the dollar-support program of ket expecting British interest rates to ease—but November 1978. to ease more gradually than in many other countries—investment funds were attracted to London to take advantage of the perceived potential STERLING for capital gains. By late October a major rally had become established in the market for U.K. Coming into the period, sterling was trading government securities, and successive records steadily against other European currencies and were being set in British indexes of stock prices, declining against the dollar. At the end of July attracting further capital inflows. the pound was holding around 91.5, according to These factors did not prevent sterling from the Bank of England's trade-weighted effective easing further against the dollar, which was index, but had eased to $1.7475 against the buoyed even more than the pound by concern dollar. over liquidity strains. By the end of October, Sentiment toward the pound reflected in part sterling had moved irregularly lower 416 percent market confidence in the Thatcher government's to $1.6725. But against other currencies, the resolve to maintain the stringent financial poli- pound held steady or even strengthened so that, cies that were already seen to be producing in trade-weighted terms, it rose to 92.5 by the results. The growth of the monetary aggregates end of October. The Bank of England's intervenhad slowed to the government's 8 to 12 percent tion operations were only partly reflected in the target range. Inflation had decelerated to below three-month $93 million increase in foreign ex- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 153 change reserves from July's level of $10.88 bil- measures were announced to make up for some lion. of the shortfalls in government expenditures and As the autumn progressed, however, concern the public-sector borrowing requirement. In this intensified about the outlook for the economy. way the government attempted to counteract the Neither consumption nor investment had gained tendency for fiscal policy to be more restrictive during the early part of the year as had been than intended, aiming new actions at the need to expected; and with the shakeout of labor con- increase the competitiveness of the corporate tinuing, the unemployment rate took a sudden sector. The accompanying economic projection, jump to 14 percent in September. As market however, pointed to a continuing deterioration in participants perceived a possible shifting from Britain's current account, largely because any the policy requirements of fighting inflation to modest recovery or buildup of inventories was those of rekindling economic growth, currencies expected to give strong stimulus to manufacthought to be overvalued came under suspicion. turing imports. In the parliamentary discussion, Meanwhile, a boom in retail sales led to fears government officials deflected proposals for exthat rising imports might contribute to a deterio- plicit action to devalue sterling. But, reports that ration in the British foreign trade balance. Al- appeared in the press over the November 13-14 though actual trade figures published toward the weekend left market participants with the clear end of the year did not show any such deteriora- impression that the British government would tion, attention was drawn to a government fore- prefer a lower, more competitive exchange rate cast that Britain's current account surplus, for the pound. which mainly reflected oil exports, would disap- After that weekend, sentiment toward sterling pear by 1983. Consequently, considerable com- turned decidedly bearish. Foreign investors and mentary focused on Britain's competitive posi- British residents, including large institutional intion, all the more so after the Scandinavian vestors, began to shift funds out of longer-term, devaluations in early October. sterling-denominated securities and into assets The government argued that the problems of denominated in other currencies, taking profits unemployment and competitiveness were closely from the recent sharp price appreciation in the linked: improvement of Britain's trade position London capital market. The pound also came required both continued progress on inflation under broad-based selling pressure from market and more rapid deceleration of pay increases. professionals, corporations, and traders on the But critics of government policy argued that, IMM. Against the dollar the pound fell to $1.5950 despite the recent moderation of labor costs, by November 17, while in trade-weighted terms deceleration of inflation, and depreciation of the it dropped to 87.8. pound, British industry over a period of several Several days after the sharp break in the years had suffered a considerable net loss of sterling rate, U.K. money market interest rates competitive position, ground that would be diffi- rose, British banks raised their base lending rates cult to make up in the future because inflation 1 percentage point or more, and the Bank of and productivity were also improving in competi- England then increased its own dealing rates to tor countries. Early in November, the Confeder- reflect the rise. Thereafter, sterling recovered ation of British industry proposed a major pro- somewhat to trade against the dollar around gram to create jobs and stimulate the economy, $1.6332 by the end of November. But it had including a sharp cut in interest rates. Some broken stride against other currencies, which industrialists continued to advocate overt gov- now were rising against the dollar. ernment measures to devalue sterling by 5 to 10 The market for sterling remained unsettled percent. These proposals, coming from a group during December. By then, the Labour Party had thought to support the Thatcher program, issued its own policy recommendations, calling brought the government's political support into for a sharp acceleration in public spending, subquestion. stantially lower interest rates, and a 30 percent In mid-November, the Chancellor presented a devaluation of the pound over two years. In midyear budget review in which limited fiscal addition, there was increasing talk that oil prices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • March 1983 might decline substantially, raising the possibili- Britain's reserves declined $1.8 billion during the ty of sharply reduced oil-export receipts and three months from November to January to close government revenues. Investment funds contin- at $9.2 billion. ued to be shifted out of sterling assets, despite a further widening of interest rate differentials favoring the pound. In effective terms, sterling FRENCH FRANC declined. Against the dollar, however, sterling traded The French franc was trading firmly near the top without clear direction until early January, when of the EMS as the period opened, although at the pound turned lower once again. Although the FF 6.8025 it was declining to successive lows Bank of England's intervention during December against the dollar. The franc had moved to the had been detected in the market, publication in upper portion of the joint float after its devaluaearly January of December's official reserves, tion in mid-June, supported by stringent foreign showing a decline slightly in excess of $1 billion, exchange controls and wide favorable interest was a surprise. Political elements also played a differentials over most other European currenrole in shaping sentiment, first when strains cies. But reflows, which in the past had often developed between the United Kingdom and followed such devaluations, proved in this inseveral Middle East oil-producing nations over stance to be relatively modest, thus limiting the the Palestine Liberation Organization issue and scope of the authorities to rebuild reserves or then as some observers predicted that the lower domestic interest rates in an effort to Thatcher government would decide to call elec- stimulate economic recovery. This cautious retions well before the mandated time in 1984. sponse reflected concern in the market that the Also, growing expectations of a deterioration in franc's new EMS parity rates might not be British oil-export revenues as a consequence of sustainable in light of France's inflation and the OPEC's apparent failure to agree to produc- rapidly rising budget and current account deficits. tion quotas added to the bearish sentiment to- Inflation in France remained more than 10 ward sterling. Therefore, the spot rate resumed percent at midyear, in contrast to other industrial its decline against all currencies, and it dropped countries, especially Germany. Although at the in effective terms as low as 80.6 on January 11, time of the June EMS realignment, the French 1983. government froze wages and prices for four By mid-January, however, pressures on ster- months, and price and wage increases dropped ling began to abate. In part, interest rate differen- significantly during the summer, many anticipattials favorable to the pound had widened further ed pressure for "catch up" increases when the following an additional rise in British banks' base scheme expired at the end of October. Governlending rates. Also, the impact of declines in oil mental efforts to press both employers and revenues appeared to have been largely dis- unions to accept voluntary price restrictions to counted. Moreover, evidence of increasing sup- replace the freeze met opposition. port for the government and reaffirmation of its Meanwhile, French economic policy had conpolicy approach in a white paper on fiscal year tinued to stress economic stimulus relative to 1983-84 expenditures helped reassure the mar- inflation reduction through the spring, clouding kets. Thus, on an effective basis sterling steadied prospects that inflation differentials could be to close the six-month interval at 80.9, a net reduced soon. Even if proposals made in June decline of 11percent. However, sterling con- were adopted in the September budget to cut tinued to decline against the dollar, which gener- expenditures and increase revenues, the governally appreciated after January 10. The pound set ment faced a large and growing fiscal deficit a series of historic lows toward the end of the expected in fiscal 1983 to climb more than 3 month before closing near the last of them at percent of gross domestic product (GDP). Thus, $1.5210. With sterling trading more steadily on a market participants worried that inflationary fistrade-weighted basis, the Bank of England scaled cal pressure would intensify just as the wage and back its intervention in January. Nevertheless, price freeze was being phased out. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 155 Moreover, the French current account deficit ery. Real private consumption spending decelerhad increased sharply, and for the year as a ated, most categories of investment expenditures whole, the deficit more than doubled to $12 declined, industrial production fell further, and billion. The deterioration reflected a steep de- unemployment remained high at around 2 milcline in export volumes, an acceleration of im- lion. The French authorities introduced several ports buoyed by domestic demand pressure, and new measures over the fall to spur investment a shrinking of the invisibles surplus for the most and employment, and had been quick to lower part because of rising interest charges on foreign domestic interest rates when it appeared that debt. exchange market conditions permitted. They had In this context, beginning in mid-August and also announced measures to promote exports extending over the fall and winter months, the and slow imports. But at the same time the franc came under intermittent bouts of pressure. authorities acted to contain inflationary pres- Speculative selling was particularly intense be- sures. They introduced modified price controls fore weekends, when most EMS realignments following the expiration of the freeze on Novemhad occurred in the past. There was concern not ber 1, and announced in December a substantial only that the franc might be devalued within the reduction in the M2 growth target for 1983 and a EMS, but also that it might be withdrawn alto- tightening of ceilings for growth in bank lending. gether from the currency arrangement or that the In remarks before the National Credit Council, French authorities might institute a two-tier ex- Finance Minister Delors stated that monetary change rate system. By late August the franc policy for 1983 would be geared to defending the dropped to the middle of the EMS band and by EMS parity of the franc and to continuing the early September it had moved down toward its battle against inflation, while also permitting a central rate against the German mark. The Bank continued decline in interest rates. of France intervened frequently in the exchanges In the exchange markets, selling pressures to support the currency, selling both dollars and against the French franc faded somewhat in mid- German marks. During August and September January, as market participants concluded that France's foreign currency reserves declined $2.3 any EMS realignment would not occur before billion to $11 billion, and the authorities an- French and German elections in the spring. As nounced a ten-year $4 billion syndicated Euro- the period drew to a close the usual month-end currency line of credit to bolster reserves. The demand for francs emerged, enabling the Bank of franc remained on offer subsequently, but any France to scale back its intervention support and further decline of the franc against the mark was make modest net purchases of dollars. By the limited. Against the dollar, however, the franc end of January the franc was trading in the upper declined to a low of FF 7.3250 in November, portion of the joint float, as it had been when the down V/i percent from its levels at the end of period opened. Against the dollar the franc was July. trading at FF 7.0100, 3 percent lower on balance After the dollar turned lower in November the for the period under review but some 4 percent franc experienced difficulty keeping pace with higher than its lows in early November. Meanthe strengthening mark. The Bank of France while, France's foreign exchange reserves instepped up its intervention, especially in dollars, creased from the lows at the end of September to and the franc emerged along with the mark in the post a net gain of $4.3 billion over the six-month upper portion of the EMS band. At one point in period to $17.6 billion. December, however, the franc-mark cross rate Throughout the period, French enterprises fell to a low of FF 2.8385, which was still, continued to borrow in foreign markets and however, only V% percent below its bilateral convert the loan proceeds into francs in the parity. exchange market. During February Finance Min- Meanwhile, France's domestic economy, ister Delors affirmed that during 1982 France's which had shown modest growth during the first public external debt increased $8.8 billion, not half of 1982, stagnated thereafter, disappointing including the $4 billion syndicated loan anthe authorities' hopes of a consumer-led recov- nounced in September. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin • March 1983 ITALIAN LIRA ation followed by cutting prime rates 1 percentage point to 20.75 percent. But these cuts were The Italian lira was trading firmly above the generally more than matched by reductions of narrow EMS band at the end of July, but against official and market rates elsewhere on the Contithe dollar it had fallen to a new low of nent so that the lira's wide interest rate differen- Lit 1,367.00. The lira sustained its position in the tial was largely maintained. EMS on the basis of seasonal tourist inflows, After mid-September, the lira eased back withexchange control measures introduced earlier in in the EMS while continuing to fall against the the year to discourage unfavorable shifts in leads dollar through mid-November. With the lira easand lags, and the attraction of high interest rates. ing and prospects of a resolution of Italy's fiscal Because interest rates elsewhere were trending and labor problems becoming increasingly redown, differentials favorable to the lira widened mote, the lira became caught up in the pressures and Italian residents stepped up their borrowing within the EMS. As rumors spread of an immiabroad. The Bank of Italy had taken advantage nent realignment, the lira was identified as a of the lira's relative strength to rebuild foreign candidate for downward adjustment, prompting currency reserves to a level of $13.9 billion by Italian exporters to repay foreign currency debt the end of July. and shift into lira financing. Thus, the lira eased The Bank of Italy's policy of monetary re- back to within the narrow EMS band beginning straint was aimed at reducing Italy's persistent in mid-October, while also declining to a new high inflation rate, countering the effects of record low of Lit 1,489.60 against the dollar in seemingly uncontrollable fiscal deficits, and pre- mid-November. The Bank of Italy tightened doventing a sharp drop of the lira that would mestic credit conditions, pushing up short-term exacerbate inflation. During the period under interest rates even as comparable rates abroad review, the Italian economy, like others among were declining. The authorities required exportthe industrialized countries, fell more deeply into ers to borrow 70 percent of their financing needs recession, thereby complicating efforts to con- in foreign currencies. In addition, the Bank of tain the fiscal deficits. But Italy was one of the Italy began to intervene heavily, and in the three few industrialized countries not to experience a months of September-November, Italy's foreign sharp reduction in inflation. Indeed, the hope for exchange reserves dropped $3 billion from $14.8 any improvement diminished as proposed pro- billion to $11.8 billion. grams to rein in fiscal deficits failed to meet The firming Italian interest rates, together with parliamentary approval, leading to successive the change in sentiment toward the dollar, helped governmental crises, and as negotiations re- bring the market into better balance after midmained deadlocked on reforms to Italy's wage November. By the end of December the lira had indexation system, the scala mobile. once again moved above the narrow EMS band, Consequently, the burden of fighting inflation a position it generally maintained through the continued to fall on the Bank of Italy, which end of January. operated to limit the expansion of credit and to Meanwhile, the pressure of the government's keep liquidity under control. During August and huge financing needs added to the strains in early September, the high interest rates, together Italy's financial markets and generated an accelwith tourist inflows, remained sufficient to keep eration of total credit expansion, thereby underthe lira firm within the EMS while it continued to cutting the Bank of Italy's policy of monetary decline against the dollar. The lira's relative restraint. Accordingly, on December 23 the auposition within the EMS permitted the authori- thorities announced proposed measures to imties to rebuild reserves and to ease short-term prove control over the creation of money in domestic interest rates to help take pressure off future years by shifting from administrative the weak economy. On August 24 the monetary mechanisms toward monetary base control. The authorities lowered the discount rate and the new system was designed in part to force the base rate for advances by the central bank 1 Treasury to compete for funds with the private percentage point to 18 percent, the first change in sector. In the meantime the government pronearly \ Vi years, and the Italian Banking Associ- posed measures designed to hold the 1983 bor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 157 rowing requirement to Lit 70 trillion, some 16 were near the top of the 2!/4 percent band, percent of GDP, and because it had exceeded its followed closely by the Danish krone. The Bellegal monthly borrowing limit at the central gian franc remained near the middle, while the bank, it asked Parliament to approve a special German mark and Dutch guilder traded at the one-year advance. bottom of the joint float. In January agreement was finally reached be- This latest parity adjustment was the third in tween Italian employers and labor unions over eight months. Yet considerable skepticism reways to reform the scala mobile. They agreed to mained that, despite major policy adjustments in cut automatic inflation-linked wage increases 15 many participating countries, there was suffipercent and to undertake further negotiations cient willingness to harmonize economic policies about the exclusion from indexation of those and to narrow the divergent economic perforelements of inflation emanating from future in- mances to permit even the new currency struccreases in value-added taxes, as well as from ture to last. Most participating countries had exchange rate depreciation if inflation exceeds adopted some degree of restraint during precedthe target rate for the year. The pact raised hopes ing years to stabilize their economies from the for reducing inflation and appeared to diminish ravages of inflation following the oil-price inthe threat of industrial strife by clearing the way creases of the late 1970s. But substantial inflation for negotiations over new three-year wage con- differentials remained, and market participants tracts. worried that extraordinarily high rates of unem- Partly in response to these developments, the ployment in some countries would force the Bank of Italy was able first to scale back its authorities there to compromise these efforts. intervention support and subsequently to make Moreover, most countries were attempting to some net dollar purchases to rebuild reserves, bring public-sector deficits under better control except for a brief time in mid-December. By the but with varying degrees of success, and some end of January 1983, the lira was trading at found themselves in divisive internal debates Lit 1,418.00, up nearly 5 percent from its No- over priorities for economic policy. During the vember lows. Nonetheless, over the six-month period under review, these divergencies reperiod under review, the lira declined 3'/2 percent emerged to exert strain on the currency relationagainst the dollar and 2Vi percent against the ships within the EMS. But, as long as another mark. Meanwhile, Italy's foreign exchange re- realignment was thought not to be imminent, serves increased $2 billion during the last two modest amounts of funds flowed back into those months of the period to $13.8 billion by the end currencies that offered the highest interest rates. of January. After mid-August, the currencies of France and Denmark began to weaken within the EMS. Both countries had experienced above-average EUROPEAN MONETARY SYSTEM real growth earlier in the year, boosted in part by the continuing impact of earlier fiscal stimulus Early in August, the currencies participating in and reflected in widening trade deficits, together the intervention arrangement of the EMS were with persistently high inflation. The French govholding to the pattern that first emerged from the ernment had pledged fiscal restraint and imposed realignment of June 12-13. In this adjustment, a price freeze after the mid-June realignment, but the central parities of the German mark and market participants still doubted that policy pri- Dutch guilder were revalued 4'A percent, those ority had in fact shifted from supporting employof the French franc and Italian lira were devalued ment to reestablishing internal and external bal- 53/4 percent and 23A percent respectively, and the ance to the economy. The Danish government bilateral central rates of the remaining currencies was locked in parliamentary debate over budget were otherwise left unchanged. Since this re- proposals for 1983, including expenditure cuts alignment, the Italian lira had traded above the and tax increases to curtail the government's top of the 2 V* percent limit applied to other EMS borrowing requirement. When the government resigned early in September, speculation develcurrencies, utilizing its freedom to trade in a oped that a new government might devalue the wider band. The French franc and Irish pound Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • March 1983 krone. Under these circumstances, both curren- sures within the EMS became more frequent and cies fell to around the midpoint of the 2 lA percent intense. The German mark was strengthening as band toward the end of August amid frequent the dollar depreciated generally in the exchanges bouts of rumors that another realignment was and the mark moved quickly to the top of the imminent. The pressure against the French franc EMS. The guilder had already been trading firmsubsided following the government's presenta- ly at the upper limit. Isolated at the bottom was tion of a budget early in September that con- the Belgian franc, which at times required interfirmed its determination to contain government vention support. spending. The pressures against the Danish Other currencies also became subject to selling krone were renewed during the first half of pressures at this time. The Irish pound joined the October by news of devaluations of other Scan- Belgian franc at the bottom of the band tempodinavian currencies before being put to rest by a rarily, after the British pound began to drop in substantial tightening of Danish monetary and the exchanges from mid-November. The French fiscal policies. franc came on offer and was given official sup- The renewed pressures against these two cur- port to keep pace with the German mark as it rencies spread to the Belgian franc. The Belgian rose within the joint float, when concern develgovernment had taken forceful action earlier in oped in the market over the adequacy of the year to redress the imbalances in Belgium's France's official reserves. Also, the Italian lira economy by devaluation, suspension of wage weakened, falling toward the middle of the band. indexation, a price freeze, and fiscal restraint. In this environment, expectations revived of Already some progress had become apparent as an EMS realignment to include revaluation of the domestic restraint began to cut into imports, German mark and Dutch guilder against the reducing the trade deficit. But Belgium's huge currencies then requiring frequent intervention public-sector deficit had yet to decline in the face support either at their mandatory limits or intraof a weak economy, and questions remained marginally. Thus, from late November through whether the stabilization policies would be suffi- December, there was a pattern of intense market cient to offset earlier losses in competitiveness. speculation ahead of most weekends. Thus the Belgian franc became identified in the These pressures eased in early January after a rumors of realignment as a candidate for devalu- meeting of European Community finance minisation and headed for the bottom of the EMS ters passed without a realignment. Thereafter, band, where it traded during the entire second most market participants concluded that a half of the period under review. change of official parities would be postponed at Meanwhile, the German mark and Dutch guil- least until after elections were held early in der began to move up from the bottom of the March in both Germany and France. Moreover, band, partly in response to bidding in anticipa- after mid-January the mark eased considerably tion of a further realignment. In addition, both against the dollar and other EMS currencies countries had comparatively good price and because of political uncertainties ahead of these trade performances. Of the two currencies, the elections. Even so, the band continued to be guilder was the stronger just as the Netherlands frequently stretched to its limit between the was the only participating country whose current Dutch guilder at the top and the Belgian franc at account was in surplus. the bottom. By mid-September, all the currencies in the Against the dollar, the EMS currencies as a narrow band were clustered closely around the group showed little net change over the sixmiddle of the band. This arrangement contribut- month period under review. All EMS central ed to a relatively calm mood in the European banks, however, took advantage of the opportumarkets through October. At this point, the nity provided by a worldwide decline in interest French franc had eased to about parity vis-a-vis rates to reduce their own lending rates during the the German mark, a relationship that the French period. The easing in official and market interest authorities chose to retain for the rest of the six- rates came later and was less extensive in the month period. other countries than it was in Germany and the Beginning in late November, however, pres- Netherlands. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 159 EMS-related intervention was undertaken fair- differentials favorable to the Canadian currency ly constantly during the period and was heaviest had widened considerably, prompting Canadian during late August and early October and again provincial governments and some private conin late November and mid-January. Although cerns to borrow more abroad and convert the substantial intervention support was conducted proceeds in the exchange market. in EMS currencies, especially the German mark In addition, foreign concerns over Canada's and the Dutch guilder, sizable amounts were also controversial National Energy Policy had also done in U.S. dollars. Official dollar sales were faded. The policy was adopted in the fall of 1980 particularly large, as it turned out, briefly in late to stimulate Canadian ownership and develop- August and during the winter months—times ment of the nation's natural resources. The pace when the dollar was declining in the exchange of implementation had been significantly retardmarkets. ed in 1981, reducing what had been heavy capital outflows. By mid-1982 the government had gone further, with the Foreign Investment Review CANADIAN DOLLAR Agency cutting red tape and eliminating long delays in processing applications in an effort to As the period began, the Canadian dollar was rekindle direct private investment inflows. These recovering from a protracted and deep decline. developments eased market worries that Canada The Canadian currency touched a historic low of faced an extended reversal of the capital inflows U.S. $0.7683 (Can.$1.3016) late in June, but by that traditionally financed development and offthe end of July had moved up nearly 4 percent set current account deficits. to U.S. $0.7987 (Can.$1.2520). The Canadian Moreover, Canada's strong trade performance dollar continued rising to about U.S. $0.8130 bolstered the Canadian dollar. Exports overall (Can.$1.23) in September, after which it traded held steady as shipments of automobile, grain, for the most part within a 2 percent range around and energy products remained robust enough to that level for the remainder of the period. offset declines in demand for other products The recovery and subsequent steadier per- susceptible to declining competitiveness and formance of the Canadian dollar reflected the shrinking foreign markets. Meanwhile, imports subsiding of concerns that had clouded the cur- had plummeted, reflecting weak domestic derency's prospects for several years. Among mand. Canada's current account was heading these was a long-standing and harsh debate over toward surplus for 1982, the first since 1973. Just the appropriate priorities for economic policy. on the basis of the first eight months of the year, Faced with deepening recession and climbing Canada's trade surplus had cumulated to double unemployment on the one hand, and a persistent the $5.5 billion total for all of 1981. double-digit inflation rate fueled by high wage Against this background the Canadian dollar settlements on the other, the government chose continued to move up gradually from earlyto retain a strong anti-inflationary posture for August levels through the fall. However, it falboth fiscal and monetary policy. The choice was tered at times when the decline in U.S. interest convincingly evident in a summer budget mes- rates stalled or temporarily was reversed. The sage that had called for limits on salary increases Canadian authorities were attempting to mainof government employees and price increases in tain a relatively smooth trend for interest rates, federally regulated sectors of the economy, as so that any temporary increases in U.S. rates well as other measures designed to brake infla- resulted in a narrowing of the rate differentials tion during the next two years. Moreover, the favorable to the Canadian dollar, reawakening government's initiative to restrict public-sector concerns that the recession at home would limit wage increases was quickly adopted by some the scope of the authorities to follow should U.S. provincial governments and helped to set a pat- rates continue to rise. But at the same time, the tern for private settlements. Monetary policy currency gained support as evidence accumulatwas also geared to forestalling inflation, includ- ed that the weakness of the economy was finally ing inflationary pressure from a further sharp showing through in a reduction of inflation and decline in the Canadian dollar. Thus, interest an easing of wage pressures. In late October the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin • March 1983 government issued an economic statement percent above its level at the end of July. The stressing its anti-inflation posture and including Bank of Canada was a net purchaser of U.S. only minor changes to the budget for 1982, easing dollars over the three months ending in January worries that significant new fiscal stimulus would so that Canadian foreign currency reserves rose be announced. The Canadian dollar then climbed $475 million. Over the entire six-month period to its highest point of the period at U.S. $0.8213 under review Canadian foreign currency re- (Can.$1.2176) on November 10, a 61/2-month high serves rose $839 million to close the period at and a rise of some 2Vi percent from the end of $2.9 billion. July. With the Canadian dollar firm in the exchanges, the Bank of Canada made substantial MEXICAN PESO net purchases of U.S. dollars during August- October. Canadian foreign exchange reserves At midsummer the Mexican authorities were rose $364 million to $2.4 billion, even though the implementing an economic program, announced authorities had by the end of October repaid all in April, designed to redress the cumulative of the $2.4 billion drawings made by the end of effects of several years of large fiscal deficits and June under standby facilities with commercial aggressive industrialization efforts, slowing oil banks. Also, the government's revolving credit export revenues, and heavy servicing costs on agreement with international banks had been Mexico's large external debt. Although the peso enlarged by $1 billion to $4 billion during Sep- had been allowed to depreciate to Mex.$49 by tember. the end of July from around Mex.$27 six months After mid-November, the Canadian dollar earlier, and other measures had been taken to eased. As a substantial deceleration of inflation reduce the fiscal and balance of payments defiin both consumer prices and wage settlements cits, concern remained that the policy measures became more fully established and Canada's in place were insufficient to meet announced external position continued to improve, market intentions or the problems at hand. Commercial participants became wary that the principal justi- bank and Eurobond lending to Mexico had dried fications for high Canadian interest rates would up, significant arrears had developed in private erode. At the same time, real GNP was reported sector debt payments, and considerable private to have declined at an annual rate of 4 percent in capital had flowed out of Mexico apparently in the third quarter—the fifth consecutive quarterly expectation of further devaluation of the peso. In decline—while the unemployment rate had addition, Mexican foreign currency reserves had climbed to a postdepression high of 12.7 percent fallen to dangerously low levels over the precedin October. Consequently, through early Decem- ing months. The Bank of Mexico had on three ber, the Canadian dollar came off its highs, occasions drawn on its swap line with the Federfalling more than 2 percent to U.S. $0.8029 al Reserve to meet month-end liquidity needs. (Can.$1.2455), even as the U.S. dollar was de- The third of those drawings was for $700 million clining against most other major currencies. on July 30, which was repaid the following Beginning early in December, however, the business day. In view of Mexico's worsening Canadian dollar steadied. Bank of Canada Gov- liquidity position and the government's underernor Bouey forcefully ruled out a policy of taking to speed up implementation of its econompushing interest rates lower or depreciating the ic program after the presidential election had exchange rate and stressed the importance of been completed, the Bank of Mexico requested, consolidating hard-won gains on the inflation and was granted on August 4, a drawing of $700 front. With the Canadian dollar remaining gener- million on its swap line with the Federal Reserve ally firm through December and January, domes- to replenish reserves while an adjustment protic interest rates declined slightly more than gram was worked out with the IMF. The drawing those in the United States. The Canadian dollar was for three-month maturity with possible reclosed the six-month period under review at U.S. newal. $0.8086 (Can.$1.2367), down about IV2 percent As part of its program, the government of from its November highs but nevertheless 1 Mexico announced a series of price increases on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 161 basic consumer goods, effective August 1, in of Mex.$69.50 to apply to withdrawals in pesos order to reduce large subsidies that had bloated from Mexican dollar accounts. When the market the government's deficit. The prospect of a fur- reopened, the free market rate fluctuated bether acceleration of Mexico's roughly 60 percent tween Mex.$100 and Mex.$130. inflation rate generated a renewed surge of capi- Meanwhile, negotiations with monetary autal outflows. thorities of other countries proceeded, leading to With exchange market pressure at an intense the conclusion, on August 30, of a $1.85 billion level, the Mexican government announced on multilateral financing arrangement, with $925 August 5 the introduction of a two-tiered ex- million through the BIS, $600 million from the change system. Designed to avoid formal ex- U.S. Treasury, and $325 million from the Federal change controls while nevertheless channeling Reserve. The funds provided by the U.S. auscarce foreign currency resources to priority thorities were to be drawn on a pari passu basis uses, a preferential rate of Mex.$49 was estab- with those of the BIS. Drawings were to be lished, to apply to the Mexicans' payments of provided in line with progress toward an agreeinterest and principal on public-sector and "pro- ment between Mexico and the IMF on an adjustductive" private debt, as well as for "essential" ment program that would enable Mexico to qualimports. All other foreign exchange purchases ify for drawings under the IMF's Extended Fund were to be executed in a free market where the Facility. The provision of official financing dealt peso would float. On the inflow side, the pro- with only part of the problem. By this time ceeds of Mexican exports of petroleum products considerable worry had developed in the internaand new public borrowings abroad were to be tional financial community that Mexico would be converted in the "preferential" market, the free unable to service its roughly $80 billion in extermarket to receive other sources of revenue. The nal indebtedness, and private sector external free-market peso rate immediately dropped to finance remained difficult if not impossible to more than Mex.$70 but the capital flight contin- arrange. With a heavy burden of international ued, forcing the peso rate rapidly downward. In debt obligations maturing in coming months, response, on August 12 the authorities temporar- Mexico's Secretary of Finance met on August 20 ily closed the foreign exchange market in Mexico with 115 financial institutions with significant and announced that henceforth any withdrawals exposure to Mexico to solicit the banks' cooperfrom deposit accounts at Mexican banks denomi- ation in accepting a 90-day grace period, comnated in U.S. dollars (so-called Mexican dollar mencing August 23, in which maturing loans accounts) would be permitted only in pesos. would be renewed for 90 days at current market rates. In return, the Mexican government would Following high-level negotiations that weekbring all public-sector-interest arrears current, end between the Mexican and the U.S. governpay in full at maturity all publicly issued bonds ments, the U.S. government arranged guarantees and notes, and develop an economic adjustment from the Commodity Credit Corporation for $1 program acceptable to the IMF. An advisory billion in private credit to finance exports of group of commercial banks was established to basic foodstuffs to Mexico during the subsequent conduct negotiations on debt restructuring and year, as well as a $1 billion advance payment by arrange for a new financing of $1 billion from the the Department of Energy for oil to be added to commercial banks. The response of the banking the U.S. strategic reserves. To meet immediate community to this initiative was positive. cash needs, the U.S. Treasury arranged a temporary swap facility with the Mexican government On September 1, however, outgoing President for $1 billion until August 24, the date on which Lopez Portillo surprised the international finanthe Department of Energy advance oil payment cial community when he announced in his final would be executed. A drawing of $825 million state of the nation address decisions to nationalwas made and repaid under this facility. With the ize Mexico's private commercial banks, to imemergency funding from the U.S. authorities in pose formal exchange controls, and to adjust place, the government of Mexico reopened the interest rates in Mexico. Interest rates on several exchange market on August 19, this time on a categories of loans were reduced significantly, three-tiered basis. It established the priority rate while rates on small bank deposits were in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin • March 1983 creased. The new exchange controls had the take office as president of Mexico on December effect of eliminating the free foreign exchange 1, 1982. market, all transactions to be conducted at a new With the letter of intent signed only about two "preferential" rate of Mex.$50 or an "ordinary" weeks before the expiration of the 90-day grace rate of Mex.$70. Foreign exchange would be sold period on maturing external debt obligations, the to Mexican residents at the ordinary rate as government of Mexico asked international banks available. to extend the grace period through March 23, Following these initiatives, interbank trading 1983, under roughly the same terms as before. in pesos continued outside Mexico for a time, During much of the balance of the period under even though the free peso market in Mexico was review, the government worked with the banks closed. But before long, virtually all foreign on the outlines of a program for dealing with exchange receipts other than those derived from Mexico's external indebtedness and financing oil exports or official borrowings were left needs through 1983, to include not only public abroad, either to pay for imports or to be held in sector needs but also arrears of interest payliquid form. Thus, little foreign exchange was ments on private-sector debts. The main eleavailable through the official "ordinary" rate ments in the proposal involved restructuring market established under the exchange controls. about $20 billion in public sector debts and the In addition the overseas branches of Mexican raising of $5 billion of new money from the banks banks encountered considerable difficulty main- to meet Mexican financial needs for 1983. Any taining interbank deposit lines, and the with- new funds were to be drawn in phase with drawals at times placed pressure on the foreign availability of funds under the IMF agreement, exchange reserves of Mexico. Under these cir- that is, subject to the condition that Mexico cumstances, the peso gradually dropped to remain in compliance with the economic adjust- Mex.$125. ment program agreed with the IMF. It was also On November 12, the government agreed in envisaged that banks would maintain the level of principle with the IMF management on an eco- their interbank deposits with Mexican banks nomic adjustment program that would, if ap- operating in overseas markets. proved by the IMF executive directors, provide The new president, in his inaugural address, Mexico with about $3.9 billion of IMF financing endorsed the undertakings Mexico had made over a three-year period. The program, consider- with the IMF, while also indicating that the ably more stringent than the April one, called for exchange controls would be modified. On Dea sharp reduction of Mexico's fiscal deficit as a cember 13 and on December 20 respectively, a share of gross national product, progressive re- presidential decree was signed and Bank of Mexduction of Mexico's net external borrowing ico procedures were published to establish exthrough 1985, exchange rate and interest rate change controls intended to direct more foreign policies to assure competitiveness of Mexican exchange into Mexico's official reserves and exports and promote domestic savings, and a banking system. Toward this end, effective Desubstantially reduced current account deficit. cember 20, two separate markets were estab- The program was expected to result in a sharply lished, one controlled and the second free of lower rate of real domestic economic growth at controls. The controlled market was to include least through 1984. It was designed to reduce all commercial exports, the foreign currency drastically Mexico's inflation rate, then running costs of border trading firms, all operations with at nearly 100 percent, so as to build a foundation respect to public and private debt, costs of from which Mexico could resume the stable and diplomatic and consular services, and contribusustainable real economic expansion required to tions by Mexico to international organizations. service its external obligations and meet domes- The Bank of Mexico specified initial buying and tic demands for improved living standards. The selling rates for the controlled market at letter of intent was signed by the outgoing Lopez Mex.$95.00 to Mex.$95.10 with the rate to be Portillo administration but carried the full en- depreciated steadily in line with the inflation dorsement of Miguel de la Madrid, scheduled to differential between the United States and Mex- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 163 ico, calculated initially at an annual rate of about Mex.$147.90 to Mex.$149.40 at the close of the 50 percent. It was intended that over time the period, while reflows of capital, largely from controlled and free market rates would converge. individuals, permitted the Mexican commercial The free market was intended for all transactions banks to purchase a sizable amount of dollars in not specifically eligible for the controlled market. the free market through the end of January. At It was initially set up with guidance from the the same time, the controlled rate was adjusted central bank to facilitate an orderly opening, the lower daily to Mex.$100.46, a depreciation of 5Vi guidance to be eliminated as soon as possible. percent compared with the level on December When the market opened on December 20, the 20, 1982. rate was set at Mex.$148.50 to Mex.$150.00. The The steadiness of the rate in the U.S. overseas free market eliminated the special border zone interbank market during this interval reflected for foreign exchange established in early Novem- general market perception that the de la Madrid ber. After some nervousness, markets settled administration had made an effective beginning down, and the peso quotations on the interbank on dealing with the problems at hand. This market in the United States moved in line with positive response helped Mexico husband its the free market rate in Mexico. reserves and by the close of the period, a small On December 23, 1982, the IMF announced amount of the combined $1.85 billion U.S.-BIS that its executive board had approved the ex- credit facility remained to be drawn. Negotiatended fund facility for Mexico, and initial draw- tions were not yet complete on the debt restrucings under the facility were made immediately turing or on details of the $5 billion loan, but a thereafter. The Bank of Mexico, using the pro- total of about $4.7 billion in new money had been ceeds of these borrowings made partial repay- pledged by banks that were participants in those ment of its drawing on its regular swap line with negotiations. These matters remained of critical the Federal Reserve in December and January so priority, however, as signs of stress were accuthat, as of January 31, $373 million was outstand- mulating in Mexico. Production bottlenecks ing. were widespread, owing to limited availability of For the remainder of the period under review, imported goods. In addition, commercial banks the peso traded relatively quietly and narrowly in abroad remained concerned about the need to the overseas interbank market, quoted generally deal with overdue principal payments on privatein line with the free market rate in Mexico. sector debt. Thus more work remained to be Between December 20 and January 31, 1983, the done before all necessary elements of a successfree market rate in Mexico was adjusted toward ful adjustment program could be said to be in the controlled market on three occasions to place. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

165 Industrial Production Released for publication March 15 output in February was nearly 2 percent above its low in November 1982 but still about 11 Industrial production increased 0.3 percent in percent below the high in July 1981. February after an upward revised gain of 1.3 In market groupings, production of consumer percent in January. In February, large increases goods increased Vi percent in February. Automoagain occurred in the output of motor vehicles tive output rose for the third consecutive month; and durable materials, particularly steel. At output of home goods declined somewhat after a 137.3 percent of the 1967 average, industrial large January advance; and output of total non- 1967 = 100 1967 = 100 TOTAL INDEX 170 Materials output 150 / Products output 130 Business equipment Consumer goods CONSUMER GOODS Business supplies 170 Nondurable 150 \ A/ \ x \J A ( Durable \J 130 V/ V Construction supplies 110 I I I I 1969-70=100 Annual rate, millions of units 180 - AUTOS_ - -v ^ Stocks 18 140 14 MANUFACTURING Nondurable / r\K J C A p v- 100 10 vSales V V MA " 9 80 60 - v vv \ A / 6 \ / \ ^ Durable V • Domestic assemblies \ / V 40 4 30 i 1 1 1 i I 3 1977 1979 1981 1983 1977 1979 1981 1983 All series are seasonally adjusted and are plotted on a ratio scale. Auto sales and stocks include imports. Latest figures: February. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin • March 1983 1967 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Grouping 1983 1982 1983 FFFeeebbb... 111999888222 tttooo FFFeeebbb... Jan.? Feb.6 Oct. Nov. Dec. Jan. Feb. 111999888333 Major market groupings Total industrial production 136.9 137.3 -1.2 -.6 .2 1.3 .3 -3.9 Products, total 140.9 141.1 -1.1 -.2 .7 .6 .1 -2.4 Final products 140.1 140.2 -.9 -.3 .9 .4 .1 -2.7 Consumer goods 143.7 144.4 -.8 -.6 .6 1.1 .5 1.8 Durable 131.4 134.0 -3.7 -1.5 1.3 4.1 2.0 6.4 Nondurable 148.6 148.6 .2 -.4 .4 .1 .0 .3 Business equipment .. 146.7 145.0 -2.3 -.5 1.3 -1.1 -1.2 -15.5 Defense and space ... 115.9 116.3 2.2 1.5 1.2 .8 .3 9.2 Intermediate products .. 143.7 144.4 -1.5 .1 .1 1.3 .5 -1.3 Construction supplies. 125.6 126.2 -2.4 .7 -.5 2.3 .5 -1.0 Materials 130.8 131.5 -1.5 -1.2 -.5 2.3 .5 -6.3 Major industry groupings Manufacturing 136.3 137.1 -1.5 -.7 .4 1.3 .6 -2.7 Durable 122.1 123.4 -2.6 -.8 .4 1.9 1.1 -4.6 Nondurable 156.9 156.8 -.3 -.6 .3 .7 -.1 -.6 Mining 121.2 116.2 1.0 .8 1.6 2.1 -4.1 -18.4 Utilities 162.4 164.5 .2 -.7 -1.3 -1.3 1.3 -3.5 p Preliminary. e Estimated. NOTE. Indexes are seasonally adjusted. durable consumer goods remained about un- consumer durables advanced sharply. Producchanged. Autos were assembled at an annual rate tion of nondurable materials and total energy of 6.3 million units, up substantially from the materials was essentially unchanged. January rate of 5.6 million units and somewhat In industry groupings, manufacturing output above recent sales levels; industry assembly increased 0.6 percent in February. Production in schedules indicate some decrease for March. durable manufacturing rose 1.1 percent, owing Output of business equipment declined again in largely to Increases in the output of primary February; the decrease of 1.2 percent was due metals and transportation equipment. Output of mainly to reduced activity in oil and gas well nondurable manufactures edged down, as petrodrilling. Production of defense and space equip- leum products declined sharply while most other ment continued to rise. Output of construction industries showed little change. Mining activity supplies advanced moderately after a sharp gain was reduced markedly, with coal mining and oil in January. and gas extraction registering particularly sharp Production of materials increased 0.5 percent decreases. Output of utilities increased in Februin February. Output of durable materials rose 1.1 ary following a January decline that was associpercent, as output of basic metals and parts for ated with milder weather. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

167 Statements to Congress Statement by Paul A. Volcker, Chairman, Board builds that inflation can be held in check, further of Governors of the Federal Reserve System, declines should be sustainable. Business and before the Committee on Banking, Housing, and labor have responded to the market forces by Urban Affairs, U.S. Senate, February 16, 1983. taking measures to cut costs and improve efficiency, and those measures should have a I am pleased to be meeting again with this healthy effect long after the recession has committee to discuss the Federal Reserve's ob- passed. jectives for monetary policy and their relation- At the turn of the year, signs appeared that the ship to the prospects for the economy. You decline in economic activity was ending and that already have received the official Monetary Poli- recovery might soon develop. Housing construccy Report to Congress that is required under the tion, auto sales, and factory orders have all Humphrey-Hawkins Act. My comments today improved in recent months. The sharp downturn will expand upon some of the points raised in in unemployment reported in January should be that report, focusing in particular on our objec- interpreted cautiously in the light of the monthtives with respect to monetary policy and the to-month volatility of those estimates, but indiobstacles that, unless dealt with effectively, cations of some firming in labor demand are could deflect the economy from the path of heartening. sustained expansion we would all like to see. In sum, this has been a time of disappointment Our economy has been going through wrench- and strain—but also a period of great potential ing adjustments during the past year and a half. promise. That promise lies in the prospect that, With production falling into sharp recession, the under the pressure of events, we—in governunemployment rate rose to a postwar high. A ment, in business and labor, and in finance—are large share of our industrial capacity is idle. facing up to what is needed to sustain recovery Profits are depressed, and exceptionally large into long years of healthy growth. numbers of businesses have failed. I know that this has also been for many a time Conditions in most other industrialized coun- of frustration and doubt. Unemployment of a tries, in greater or lesser degree, have paralleled willing worker is always a threat to personal and those in our own economy, and large sectors of family stability; on a wide scale it is an affront to the developing world have faced the need for our sense of social justice. To a generation grown forceful measures to deal with internal and exter- accustomed to accelerating inflation, a year or nal imbalances. All of this has been reflected in, two of progress toward price stability simply and accompanied by, pressures on domestic and isn't enough to quell fears that the earlier trend international banking markets. will resume as the economy picks up speed. We At the same time, out of this turmoil and stress have been disappointed before when early signs we can see elements of change and returning of recovery faded away. Federal deficits persiststrength that bode well for the future. In particu- ing at levels beyond any past experience are lar, striking progress has been made in reducing unsettling to more than financial markets. We inflationary pressures. The measured rate of have been jarred to the realization that a serious inflation in 1982 was the lowest in a decade, and international financial disturbance is not just forces are at work that, carefully nurtured, can something we read about in books of economic continue that progress during recovery. Interest history but could recur unless we are alert to the rates have fallen substantially from the high dangers and deal aggressively with them. levels of the past couple of years; as confidence Uncertainty and confusion are perhaps inev- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin • March 1983 itable in a period of change—even constructive speculative influences, but surely an increase in change. But they can easily be destructive with- some prices that have been severely depressed out a clear conception of where we want to go during recession is not itself a signal of change in and how to get there. My conviction is that much more basic price trends. of the stage has been set for long-lasting, nonin- One widely used index of sensitive industrial flationary expansion. But we also have to be commodity prices—excluding oil—declined realistic and clear-sighted about the threats and about 35 percent from the end of 1980 through obstacles that remain, confident that being late 1982, carrying many of those prices to levels known, they can be cleared away. that could not justify new investment or even maintenance of existing output. Within limits, recovery in those prices would be a natural, and THE PROSPECTS FOR STABLE GROWTH probably necessary, part of any expansion and will not dominate more general price statistics. The unchanging goal of economic policy, embod- In fact, the single commodity of major imporied in the Employment and Humphrey-Hawkins tance to the general price level—oil—is in sur- Acts, has long been growth in employment, plus supply, and the price in real terms has been output, and productivity at relatively stable declining. I cannot prophesy the degree to which prices. That goal for a decade and more increas- the nominal price of oil might decline in coming ingly eluded us, not least because of an illusion weeks or months, if at all. But barring a major for a time that the stability side of equation could political upset, prospects appear exceptionally be subsidiary. Once inflation gained strong mo- good that stable or falling real prices for finished mentum, it was doubly hard to contain without petroleum products—which account for 8 to 9 transitional pain. But after several years in which percent of the gross national product—can reinthe effort against inflation has had high priority, force progress against inflation for some time today solid grounds exist for believing that the ahead. We also have large stocks of basic food signs of incipient recovery can be the harbinger commodities, providing some assurance against of performance that is much more in line with our a sharp run-up of prices in that area. goals. Labor costs account for the bulk of the value We approach our discussion on monetary poli- of what we produce, and our success against cy with the intent of fostering that result. But, of inflation in the longer run will need to be reflectcourse, monetary policy alone cannot do the job; ed in the interaction of wages, productivity, and other instruments of policy and the attitudes of prices. It is also in this area that recent signs of business and labor will be crucial as well. progress can prove most lasting. The latest price statistics confirm the progress The upward trend of nominal wages and salaagainst inflation. But the fact that all the major ries slowed noticeably last year, with average inflation indexes increased 5 percent or less wages rising about 6 percent from the fourth during the course of last year—or that the pro- quarter of 1981 to the fourth quarter of 1982; total ducer price index actually dropped in January— compensation (including fringes) rose just over does not mean that the battle is won. 6'/ percent. The trend during the year seemed to 2 Those gains have been achieved in the midst of be declining, and in the midst of pressures on recession, with strong downward pressures on profits, markets, and employment, could well prices and costs from weak markets. We cannot show further declines. The sharply lower inflabuild a successful policy against inflation on tion figures—below the rate of wage increase— continued recession. The question remains as to moderate one source of upward pressures on how prices will behave as the economy recov- new wage agreements. Longer-term union agreeers—after six months or a year of rising orders, ments negotiated in earlier, more inflationary employment, and production. years are expiring, tending to further moderate the wage trend. In recent weeks, increases in some highly sensitive commodity prices have been cited as a The slower increases in nominal wages have danger sign. Those commodities are subject to been fully consistent with higher real wages for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 169 the average worker precisely because the infla- productivity, to support real income gains, and tion rate has been declining. Continuation of that to keep supply in balance with demand. Lower benign interaction among lower inflation, lower interest rates are certainly important to that nominal wages, and higher real wages—com- outlook, but what is essential is that those lower bined with recovery in profits—must be a central levels can be sustained over time. That is one part of a noninflationary recovery—and thus to reason why policies need to remain strongly sustaining expansion. sensitive to the need to maintain the progress Those prospects will be greatly enhanced by against inflation—uncertainty on that point will improved productivity performance; over time, ultimately be self-defeating in terms of the interonly an increase in productivity can assure high- est rate environment we want. An improved er real wages and profits. Happily, the signs are climate for work, for saving, and for investthat productivity, after dwindling away to practi- ment—the objective of the tax changes introcally nothing during the 1970s, is rising once duced in 1981—should also materialize in an again. Tentative evidence can be found in prelim- economic climate of recovery and disinflation, inary data suggesting productivity rose almost 2 helping to keep the process going. Rising real percent last year in the midst of recession, an incomes will also be reflected in consumer deunusual development when production is declin- mand—an area of the economy already supporting. Those statistics are consistent with reports ed by the large deficits. As living standards rise from business that significant progress has been and fears of inflation fade, pressures for excesmade in improving efficiency and in reducing sive and "catch-up" wage demands should sub- "break-even" points. side. During the early part of recovery, productivity In sum, there are strong analytic reasons to usually grows more rapidly. Consequently, rising believe that the incipient recovery can develop cyclical and "trend" productivity combined with into a long self-reinforcing process of growth and more moderate nominal wage gains should re- stability. The challenge is to turn that vision into duce the increase in unit labor costs further as a reality. recovery takes hold. For example, a rise in hourly compensation of less than 6 percent this year would appear consistent with recent trends. OBSTACLES AND THREATS TO PROGRESS Should productivity increase by 2 to 2Vi percent—an expectation that would appear modest Of course, obstacles to that vision exist; some in the light of recent experience—unit labor costs need to be dealt with promptly, and some will would rise significantly less than 4 percent, low need to be guarded against as we move ahead. enough to maintain and reinforce progress on the The more firmly we move to deal with those price front. threats—by action now and by setting ourselves As confidence grows that the gains against clear guidelines for the future—the faster we can inflation are sustainable, an expectation of fur- end the doubts and restore the confidence necesther declines in interest rates should be rein- sary to success. forced. Today, short- and particularly longerterm interest rates, despite the large declines last year, remain historically high in nominal terms The Federal Deficit and measured against the current rate of inflation. A number of factors contribute to that, The most obvious obstacle that looms ahead is including the present and prospective pressures the prospect of huge federal deficits even as the from heavy Treasury borrowing. But concerns economy expands. I have spoken to the point on that recent gains against inflation may prove a number of occasions and will soon be testifying temporary are checking the decline in interest before the Budget Committee. Today, I will only rates. summarize the problem in a few sentences. We will certainly need higher levels of invest- The bulk—but far from all—of our present ment and housing as time passes to maintain deficit of $200 billion reflects high unemployment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin • March 1983 and reduced income. At a time of recession and falling exports have accounted directly for some relatively low private credit demands, the ad- 35 percent of the decline in our GNP during the verse implications of the current deficit for inter- recession; in past recessions, in contrast, our est rates and financial markets may be muted. exports have typically grown, cushioning other But the hard fact is that the deficit, as things now factors depressing production and employment. stand, will remain in the same range, or rise After earlier periods of exaggerated weakness, further, as recovery proceeds and private credit the great strength of the dollar in the exchange demands rise. In other words, the underlying markets over the past two years contributed to imbalance between our spending programs and the progress against inflation—but it also dethe revenue-generating capacity of the tax sys- pressed our exports. We cannot build the stabiltem at satisfactory levels of employment ("the ity of our economy on extreme exchange rate structural deficit") promises to increase as fast fluctuations. as the "cyclical" deficit declines. Another dimension of the risk is the danger That prospect, essentially without precedent that nations will try to retreat within themselves, in the past, threatens a clash in the financial insulating their economies by protectionist meamarketplace as huge deficits collide with the sures. But, as we learned in the 1930s, such needs for credit of businesses, homebuyers and policies only aggravate the mutual difficulties. builders, farmers, and others. The implication of But today, we face another more immediate higher real interest rates than necessary or con- threat in the international financial area. I will sistent with our investment needs in the future reserve detailed comment for my appearance and of expectations of that future "clash" feeds before you tomorrow. Suffice it to say now that back on markets today. The adverse conse- the potential for an international financial disturquences are reinforced and aggravated by the bance impairing the functioning of our domestic widespread instinct in financial markets and financial markets at a critical point in our recovamong the public at large that such large deficits ery is real. I firmly believe the major borrowers will feed inflation, by creating pressures for and lenders , with the understanding and support excessive money creation or otherwise, leading of governments, central banks, and international to doubts about the success of the disinflationary institutions, can face up to and deal with those effort. problems constructively. But the cooperative That outlook and analysis are essentially agreed pattern we have seen emerge in managing these by the administration, by the Congressional Bud- problems is absolutely dependent on the capacity get Office, by citizen groups that have expressed of the International Monetary Fund to continue alarm about the budgetary situation, and by to play a key role at the center of the internationindependent budget analysts. That broad consen- al financial system. Early congressional approval sus on the nature of the problem provides a base of the enlargement of IMF resources, agreed by for the necessary action. What remains to be the Interim Committee of the Fund last week, done is to take those actions. I fully realize the will be essential to that effort. sensitivity and difficulties of the choices to be made. But I am also aware, as I am sure you are, that a great deal depends on a successful resolu- Attitudes Toward Pricing and Wage tion of those efforts. Behavior I have already described the pricing restraint and The International Economic and Financial the trend toward more moderate increases in Situation wages that have developed in the midst of recession. As best as I can assess it, the mood today is The risks and uncertainties in the present situa- consistent with maintaining that momentum. tion are compounded by the fact that so much of There is realization that competitors at home and the world is in recession, and adverse trends in abroad have large potential capacity, and after all one country feed back on another. For instance, the efforts to cut "break-even" points, outstand- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 171 ing volume will itself produce satisfactory profits perceived as inflationary, may, unfortunately as well as larger employment opportunities. The produce more inflation than stimulus. "smokestack" industries, hit so hard in the period of recession while already faced with the need for structural change and with particularly MONETAR Y POLIC Y IN 1982 high wages by domestic or international standards, have particularly strong incentives for It is in that broad framework and context that caution. monetary policy has been implemented in 1982 But, of course, another possibility exists. Bus- and that we in the Federal Reserve look ahead to iness and labor—habituated to inflation in the 1983 and beyond. Our objective is easy to state in 1970s, highly sensitive to the failure to sustain principle—to maintain progress toward price stapast efforts to restore stability, and eager to bility while providing the money and liquidity restore past price or wage "concessions"—may necessary to support economic growth. In pracbe tempted to test their bargaining and pricing tice, achieving the appropriate balance is diffipowers much more aggressively as orders and cult—and a full measure of success cannot be production expand. If they were to do so, sensi- achieved by the tools of monetary policy alone. tivities of consumers and financial markets to the The year 1982 amply demonstrated some of the possibility of reinflation would only be aggravat- problems facing monetary policy during a period ed, tending to keep interest rates higher and of economic and financial turbulence, and the greatly increasing the difficulty of maintaining need for judgment and a degree of flexibility in the economy on a noninflationary path of pursuing the objectives we set for ourselves. growth. As you know, policy with respect to the This is an area in which government policy can growth of money and credit has been rooted in greatly contribute, by resisting protectionist the fundamental proposition that, over time, the pressures externally, and by removing or relax- inflationary process can only continue with exing obstacles to competition in product or labor cessive growth of money. Conversely, success in markets. Areas of the economy that have seemed dealing with inflation requires appropriate realmost impervious to the disinflationary trend straint on growth of money and liquidity. and market pressures—such as health care and Those broad propositions must, of course, be higher education—seem to me to deserve special reduced to specific policy prescriptions, and for attention. some years the Federal Reserve has followed the Through all those particulars, however, re- practice, now required by the Humphrey-Hawstraint in price and wage setting can reasonably kins Act, of quantifying its objectives in terms of be expected only if government financial policy growth ranges for certain measures of money and remains plainly oriented toward containing infla- credit for the year ahead. In doing so, we have tion. Without a sense of conviction on that score, known that for significant periods of time the the temptation to jump ahead of the pack—to relationships between money and spending may anticipate the worst—as employment and orders be loose, that cyclical patterns recur, and that are restored may become irresistible. The fact is the mix of real growth and inflation can and will that both labor and business have much to gain be affected by factors beyond the control of from stability, and moderation in pricing and monetary policy. But we also count on a certain wages within a framework of financial discipline predictability and stability in the relationships will be consistent with higher real wages, profits, over time between the monetary and credit agand employment. gregates and the variables we really care about— The skepticism that had been built up over output, employment, and prices. many years about the resolve to deal with infla- In 1982, however, those relationships deviated tion has been reduced but not eliminated. There substantially from the patterns characteristic of is little or no leeway at this stage for "mistakes" the earlier postwar period. The simplest reflecon the side of inflation. Policies designed with tion has been in movements of "velocity"—the the best will in the world to "stimulate," but relationship between measures of money and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin • March 1983 credit and the GNP. As shown in table 1 the kets, "above target" growth was accommodated velocity of Ml, which had been trending higher in the conviction that policy, in practical effect, throughout the postwar period, dropped at a rate would otherwise have been appreciably more of almost 4 percent over the past five quarters.1 restrictive than intended in setting the targets. The broader monetary aggregates (and broad The rapid declines in interest rates during the credit aggregates as well) also behaved atypically second half of the year—encouraged in part by in relation to the economy; their "velocity" some actions to restrain the deficit and more dropped during the recession by larger amounts broadly by growing realization of the degree of than usual. More sophisticated statistical tech- progress against inflation—were clearly welniques, taking account of lags, interest rates, and come. Credit-sensitive sectors of the economy, other variables, confirm the fact that "normal" as noted earlier, tended to strengthen. But after relationships did not hold in 1982. leveling off in the second and third quarters, In establishing its various target ranges at the economic activity dropped again in the final start of 1982, the Federal Open Market Commit- quarter in the face of heavy inventory liquidatee specifically noted that a number of factors, tion. In all these circumstances, strong efforts to institutional and economic, would affect the rela- confine Ml growth to the target range seemed tionship of monetary and credit growth to the clearly inappropriate, particularly with the GNP, and contemplated that Ml in particular broader aggregates running quite close to their could deviate from expected patterns for a time ranges. in the event economic and financial uncertainties An important further consideration during the fostered unusual desires for liquidity. In report- final quarter was that some of the monetary ing to you in July of last year, I emphasized that aggregates were greatly influenced by purely the Committee was prepared to accept higher institutional factors. The maturity of a large periods of growth in Ml for a time "in circum- volume of all savers certificates in October temstances in which it appeared precautionary or porarily led to large flows into transaction balliquidity motivations, during a period of econom- ances counted in Ml. Subsequently, highly agic uncertainty and imbalance, were leading to gressive marketing of new money market deposit stronger-than-anticipated demands for money." accounts (MMDAs) by banks and thrift institu- In the event, Ml, after moving close to and tions led to enormous inflows into the highly within the target range around midyear, grew liquid instrument, which is classified within the much more rapidly later, ending the year with M2 aggregate. growth of about SVi percent, substantially higher In the first seven weeks after the introduction than in 1981 and above the target range. Both M2 of the MMDA, which combines some characterand M3 tended to rise through the year some- istics of a transaction account with savings, more what more rapidly than the targets contemplated, than $230 billion of money has flowed into the averaging in the final quarter about 3/4 percent new instrument. The shift of financial resources above the upper end of the target range. (Revised is without precedent in amount and speed. While "benchmark" data and some partially offsetting the great bulk of those funds simply reflected definitional changes since the end of the year movements from lower interest accounts already have reduced the "overshoot" to about !/4 to Vi included in M2, a sizable fraction—estimates percent.) range to about 20 percent—was derived from In the light of the clear indications that veloci- large certificates of deposit or market instruty was declining more rapidly than in earlier ments not included in that aggregate. The result recession periods, the absence of recovery dur- has been a gross distortion of the growth of M2 in ing 1982, and recurrent strains in financial mar- December, and more importantly, in January. No statistical or survey technique available to us can identify with precision the impact on M2 of these shifts of funds. The available data do 1. The attachments to this statement are available on suggest, however, that (taking December and request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. January together) the underlying growth in M2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 173 (that is, excluding shifts of funds formerly placed target ranges will not be exceeded or changed in non-M2 sources) was not markedly different without persuasive evidence, as in 1982, that from the general range established earlier. In institutions or economic circumstances require other words, the exceptionally strong growth of such change to meet our more basic objectives. M2 in January could most reasonably be treated As set out in the formal Humphrey-Hawkins as having no policy significance. report, members of the Federal Open Market Committee and other Reserve Bank presidents participating in our discussions generally look MONETARY POLICY IN 1983 toward moderate recovery in 1983 in a context of declining or stabilized inflationary pressures. In setting out our monetary and credit objectives While the individual forecasts vary over a confor 1983, the Federal Reserve has had no choice siderable range, the majority anticipates real but to take into account the fact that "normal" growth in the 3.5 to 4.0 percent area over the four past relationships between money and the econo- quarters of 1983, fractionally higher than the my did not hold in 1982, and may be in the administration forecast. Nearly all expect the process of continuing change. Part of the prob- GNP deflator to rise less rapidly than the 5.6 lem lies in the ongoing process of deregulation percent projected by the administration. Projecand financial innovation that has resulted in a tions of nominal growth are mostly in the area of new array of deposit and financial instruments, 8 to 9 percent. I believe the Committee, in some of which lie at the very border of "transac- approaching its policy judgments, recognized the tions" and "savings" accounts, defying clear desirability of achieving and maintaining a lower statistical categories. level of interest rates to encourage growth, but Perhaps more significant over longer periods felt that this could only be realistic in a context of of time, both economic and regulatory change building on the progress already made against may affect trend relationships. Both declining inflation. Efforts to force interest rates down at rates of inflation and the growing availability of the expense of excessive liquidity creation could interest on transaction accounts at levels com- not be successful for long. petitive to market rates could induce more hold- Against all this background, the Committee ings of cash relative to other assets over time. decided that, for the time being, it would place The payment of interest rates on transaction substantial weight on the broader aggregates, M2 accounts could also affect the cyclical pattern of and M3, in the belief that their performance Ml. The broader aggregates, by their nature, relative to economic activity may be more preshould be less sensitive over time to innovation dictable in the period ahead. because they encompass a much broader range The target range for M3, which is least affected of assets, but the phased elimination of rigid by institutional change, was left at 6V2 to 9VI ceiling interest rates has changed cyclical charac- percent, measured from the fourth quarter of teristics. 1982 to the fourth quarter of 1983. All of this has greatly complicated the job of The target for M2 was set at 7 to 10 percent setting targets for 1983. In setting the ranges, the and the base was shifted to the February-March Committee believed that monetary growth dur- average of this year to minimize the institutional ing the year would need to be judged in the light distortions. Our assumption is that the flow of of developments with respect to economic activi- funds into M2 from other savings media will have ty and prices, taking account of conditions in sharply subsided in coming weeks. However, the domestic credit markets and internationally. M2 target range does take account of staff esti- At the same time, the FOMC is well aware that mates that residual shifting will probably raise past cyclical expansions have typically been ac- M2 growth 1 percent or a little more over the companied by sharp increases in "velocity," remainder of the year; abstracting from such particularly for the narrower aggregates. We anticipated shifts, the M2 target, in practical assume that, to some degree, that pattern will effect, is the same or slightly lower than the emerge again. A strong presumption is that the target for 1982. Consistent with these targets, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin • March 1983 effective growth (that is, abstracting from the nominal GNP in recognition of some analysis influence of shifts into new accounts) in both M2 suggesting a moderate increase in the ratio of and M3 is expected to be somewhat lower in 1983 debt to GNP may develop. than in 1982. I appreciate the complexity—for the Federal The Ml target was widened and set at 4 to 8 Reserve and for those observing our operapercent. Less emphasis has been placed on the tions—of weighing performance with respect to a Ml target in recent months because of institu- number of monetary and credit targets, of taking tional distortions and the apparent shift in the account of institutional change, and of assessing behavior of velocity. The degree of emphasis the possibility of shifts in relationships estabplaced on Ml as the year progresses will be lished earlier in the postwar period—a possibility dependent upon assessment of, and the predict- that can only be known with certainty long after ability of, its behavior relative to other economic the event. But we also can sense something of measures, and the range may subsequently be the dangers of proceeding as if the world in those narrowed. Over the year, growth in the lower respects had not changed. part of the range would be appropriate if velocity I neither bewail nor applaud the circumstances rises strongly, as has usually been the case that have put a greater premium on judgment and during recoveries. An outcome near the upper less "automaticity" in our operations; they are end would be appropriate only if velocity does simply a fact of life. In making such judgments, not rebound sharply from the declines last year, the basic point remains that, over time, the and tends to stabilize close to current levels. growth of money and credit will need to be Only modest allowance has been made for the reduced to encourage a return to reasonable new Super NOW accounts drawing funds into price stability. The targets set out are consistent Ml from other sources, and the target would with that intent. clearly have to be reassessed should the Deposi- I understand—indeed to a degree, I share—the tory Institutions Deregulation Committee permit longing of some to encompass the objectives for depository institutions to pay market rates of monetary policy in a simple fixed operating rule. interest on business accounts. The trouble is, right now, in the world in which In addition, the FOMC set forth for the first we live, I know of no such simple rule that will time its expectations with respect to growth of also reliably bring the results we want. total domestic nonfinancial debt, and felt that a The basic rule we must observe is that the range of SVi to 11 Vi percent would be appropri- sustained forward progress of the economy is ate. Data for such a broad credit aggregate are dependent on a sense of price and financial not yet available monthly, nor are the tools stability—and without it, we will undercut the available to influence closely total flows of cred- growth we all want. That objective, as I have it. While the credit range during this experimen- emphasized, will require that we avoid excessive tal period does not have the status of a "target," growth of money and credit because, sooner or the Committee does intend to monitor closely later, that growth will be the enemy of the lower developments with respect to credit for what interest rates and stability we need. assistance it can provide in judging appropriate I have given you our best judgment on the responses to developments in the other aggre- appropriate role for monetary policy in 1983. gates. The range would encompass growth of But, success in achieving our objectives is not in credit roughly in line with nominal GNP in the hands of monetary policy alone—and we accordance with past trends; the upper part of look forward to all elements of policy moving the range would allow for growth a bit faster than ahead in pursuit of those common goals. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 175 Remarks by Paul A. Volcker, Chairman, Board The first step is that the borrowing countries of Governors of the Federal Reserve System, themselves must adjust. This means strong and before the Subcommittee on International Fi- forceful measures—basically austerity pronance and Monetary Policy of the Committee on grams—have to be taken by these countries to Banking, Housing, and Urban Affairs, U.S. Sen- cope with their internal and their external imbalate, February 17, 1983. ances, typically with the support and approval of the IMF. For example, the reductions in public I am pleased to have this opportunity to ex- sector borrowing requirements committed under change views with the committee on the interna- IMF programs for Argentina, Brazil, and Mexico tional financial situation and the role of the are demanding: they require roughly a halving of International Monetary Fund. I have elaborated deficits over the course of the year. at some length on these issues in a statement that Forceful adjustment programs will be accom- I presented two weeks ago to the House Commit- panied, for a time, in slow or no growth internaltee on Banking, Finance and Urban Affairs.1 ly, reduced imports, and lower standards of living Today, I would simply like to update that state- in countries where average incomes are already ment and highlight the major points. far below ours. The question is sometimes put as We face extraordinary pressures in the inter- to the wisdom of these programs in a world eager national financial system. While conditions in the for growth. The answer is straightforward. Those market have been calmer in recent months, in programs are fundamentally justified by two balarge part because of responsible actions by all sic considerations: (1) In the absence of coherent the parties involved, the underlying problems adjustment programs that can command support persist. in the international financial community and This is not an abstract, esoteric problem of among other governments, still more severe and marginal interest to our economy. Failure to lasting difficulties would ensue as borrowing address these problems will jeopardize our jobs, countries found their access to external reour exports, and our financial system. Unless it sources abruptly cut off; and (2) well-conceived is dealt with effectively, it could undermine both adjustment programs can lay the base for resumour own recovery and the economies of our ing growth at a sustainable rate for years ahead. trading partners and friends abroad. A second element in dealing with the current I am confident that the situation can be man- problems is that, considering the large imbalaged—but it won't manage itself. My confidence ances the major borrowing countries have faced, is based in part on the fact that I think the nature an orderly adjustment effort will require addiof the problem and the needs are well under- tional external credit support during a transitionstood. Governments have worked together in al period. In important cases, restructuring of analyzing and dealing with the problem; we have existing loans and agreement among bank lendseen the borrowers and lenders working together ers to provide additional credit have become effectively; and the IMF—as the designated in- essential. Because adjustment is contemplated ternational overseer of the system—has been at and is proceeding, those fresh credits can typithe center of the process, fulfilling its key role in cally be provided without increasing exposure of coordination, providing money in some cases, the banks in terms of ratios of loans to capital or and promoting necessary economic adjustment. assets, and in fact with some declines in those As we deal with the heavy indebtedness and ratios. balance of payments problems of some large Third, monetary authorities of some of the developing countries, five interrelated elements industrialized countries have provided tempostand out. rary liquidity assistance while IMF stabilization programs and associated finance are being nego- 1. "Statement by Paul A. Volcker, Chairman, Board of tiated and while the banking packages are being Governors of the Federal Reserve System, before the House put together. This is something that should not Committee on Banking, Housing and Urban Affairs, Februbecome a norm, but it is justified to maintain ary 2, 1983," Federal Reserve Bulletin, vol. 69 (February 1983), pp. 80-89. continuity in payments and confidence when Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin • March 1983 there is a clear threat to the international finan- enjoys perfect foresight, and central to our financial system. cial and economic system is that the individual Fourth, as the earlier points imply, the IMF lenders reach their own credit judgments. But plays an absolutely essential role, and it needs government has the responsibility to establish adequate resources to do its job. It works closely and maintain ground rules and procedures that, with the borrowing countries themselves, partic- without stifling the market, provide assurance ularly in reaching agreement on stabilization that the stability of the system as a whole can be programs to restore economic balance and in protected against the dangers of excessive conmaintaining confidence in their creditworthiness. centration of risk, and that the element of risk is As part of that process, the IMF provides a key appropriately weighed. While our present superelement of medium-term finance in support of visory approaches are aimed at that objective, adjustment programs. Complementing its own the rapid development of international lending resources, it has also helped coordinate the need- and today's problems do point to the need for ed private (and sometimes public) financing. It careful review of present policies and other does not itself replace other sources of financing, ideas. Possible modified or new approaches— but supplements them. touched upon in my earlier statement—are under Finally, the success of the adjustment pro- intensive review by the supervisory agencies, grams and the relaxation of pressures on borrow- and I expect to be able to report conclusions to ers and lenders ultimately is dependent upon the you in a matter of weeks. At the same time, the performance of the world economy. In an envi- danger of overreaction—of encouraging inadverronment of sustained growth in the industrial tently an abrupt retreat from lending—is equally countries, the borrowing countries themselves real. The hard fact is few borrowers, at home or can more easily resume growth, their debt bur- abroad, can suddenly repay substantial debts dens will become more manageable, and their accumulated over years. An attempt to force the adjustment will be less burdensome. "Normal" process would be doomed to failure because financing patterns can be resumed—in the sense borrowers need time to make the adjustments to not of the excessive growth of some recent earn the funds or to restore their market access. years, but in that lenders and borrowers can What may seem logical and appropriate to an freely and individually negotiate mutually ac- individual bank in demanding payment, if generceptable terms free of critical liquidity pressures. alized, would place such strain on the system as That objective of growth coincides, of course, a whole that the system, and the individual banks with our domestic concerns. Conversely, if we within it, could only be damaged. fail to come to grips with the international finan- As I noted earlier, the parties immediately at cial situation, the prospects for growth in the interest in resolving the international debt probindustrialized world, including the United States, lem—lenders and borrowers, governments and would be impaired. Our concern for maintaining the private lending institutions, and international a well-functioning international financial system organizations—have been acting cooperatively is rooted in our self interest, not in altruism. to deal with the major points of pressure to the I will not review now the material in my earlier financial system. The IMF stands in the center of statement about the development of bank lending this effort, and it has responded with force and in earlier years and the lessons for banks and leadership. supervisors alike growing out of that experience. Last week, at the meetings of the Interim Suffice it to say that much of this lending reflect- Committee, member governments of the IMF ed a constructive response by the financial sys- reached agreement—subject to legislative aptem to the need to ease the adjustments associat- proval—to expand the effective resources of the ed with the world oil crisis. International lending IMF, and to do so promptly. Recent events have will continue to have an important role to play in ended any doubt about the need for a substantial a developing world economy. increase in resources of the Fund—a matter that But, of course, there can be excesses, and had been under discussion before the strains had some of the lending proceeded on assumptions become so evident last summer. The amount that, in retrospect, seem invalid. None of us agreed upon last week—at the lower part of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 177 range that had been under discussion—does not demands on the IMF exceed amounts that can be seem to me at all excessive, but it will enable the provided from current IMF resources—and that Fund to discharge its large responsibilities with will only happen in the foreseeable future if, in effectiveness and confidence that the resources it fact, the Fund requires these added funds to deal may need will in fact be available. with a major threat to the system. In a sense, the Last week's decision increased IMF quotas United States and other countries assume the about 47.4 percent, or about $32 billion. The position of insurance underwriter, called upon Group of Ten earlier approved an enlargement with a showing of demonstrated need. What we and broadening of the General Arrangements to are insuring, among other things, is that our own Borrow (GAB) from $7.1 billion to about $19 recovery will not be aborted by international billion, supplementing in time of need the re- financial disturbances. sources available to the Fund. The events of recent months have highlighted Both the quotas and the expanded GAB essen- both the risks and the means for dealing with tially provide a standby commitment, with equi- them. The pressures on the international finantable sharing among countries, to contribute to a cial system have not disappeared, and we cannot pool of funds that can be drawn upon for loans to assume some hidden hand will manage the solu- IMF member countries in time of need. As more tion. funds are borrowed by a country, stricter condi- As the economic, financial, and political belltions are required. wether of the Western World, we cannot escape The increase in IMF quotas and the enlarged the responsibility of leadership and participation GAB require budgetary authority and appropria- in the effort—not if we want the effort to succeed tion for the full amount of these commitments, in our own interest. Early approval of the IMF involving about $8.4 billion for the United States. legislation that will be submitted to the Congress These commitments, however, do not lead to a shortly will be an indispensable step to that end, net budget outlay, in recognition of the monetary reflecting our determination and capacity to do and reciprocal character of the IMF. Moreover, our part in reaching a constructive and effective cash advances will be necessary only when and if resolution of the problem. • Statement by Preston Martin, Vice Chairman, portant social values at stake, I believe that it is Board of Governors of the Federal Reserve Sys- essential that policymakers be acutely aware at tem, before the Subcommittee on Financial In- all times of the effect of public policies on the stitutions Supervision, Regulation and Insurance status of real property ownership in this country. of the Committee on Banking, Finance and Ur- Our strong tradition of homeownership and the ban Affairs, U.S. House of Representatives, part that farm owner-operators play in agricul- February 24, 1983. tural output are important aspects of our standard of living and the long-run performance and Mr. Chairman, I appreciate the opportunity to productivity of our nation's economy. appear before this subcommittee on behalf of the Before addressing the specific questions raised Federal Reserve to discuss the potential effect of by this subcommittee, I would like to make some supervisory policies on the level of home and general observations about the level of mortgage farm loan foreclosures and the need for addition- delinquencies and foreclosures. al measures to assist financially troubled home- Delinquency rates on home mortgages typicalowners. The loss of a home or family farm, or ly increase during business-cycle contractions as even the potential threat that such a loss could the level of unemployment increases; many fulloccur, can be a deeply distressing personal expe- time workers are forced to accept part-time rience that can undermine the economic welfare, employment, and many families relying upon stability, and continuity of family life. Because of two wage earners experience the loss of one of the significant economic considerations and im- their sources of income. Available measures of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 Federal Reserve Bulletin • March 1983 payment difficulties indicate that the proportion since 1979. While this situation is of concern, the of home loans "seriously" delinquent—that is, number of farmers in severe financial stress is a with payments 60 days or more past due—has relatively small percentage of all farmers. risen substantially since 1979. By late last year, Since 1977, many of the financially stressed in fact, delinquency rates were well above the farmers have obtained loans from the Farmers levels recorded during and after the 1974-75 Home Administration (FmHA), under lending economic contraction and the highest of the post- programs designed to aid farmers encountering World-War-II era. As would be expected, mort- special problems. Many of these FmHA borrowgage payment problems have been greater in ers remain in financial distress, and the FmHA those areas of the country where unemployment has been directed to exercise forbearance in has been most serious. Last year, the delinquen- dealing with their plight. Thus while about onecy rate in the north central region of the United fourth of the FmHA's 268,000 borrowers are States was roughly one-third higher than the delinquent, and more than half of these are national average and three-fourths above the rate apparently more than one year behind in their in the South. payments—with some more than four years in The proportion of home loans placed in fore- arrears—only 844 foreclosures are reported to closure clearly has risen in the wake of the have been completed during 1982. substantial increase in serious delinquencies, and The shift of many problem borrowers to foreclosures have been most prevalent in areas FmHA programs during 1978-81, coupled with of the country where unemployment has been the large increase in loans of the Commodity both exceptionally high and protracted. Still, by Credit Corporation, has undoubtedly reduced late last year, the quarterly foreclosure rate for the incidence of problem loans at other farm all types of home mortgages was less than one- lenders much below what otherwise might have fourth of 1 percent, and only about six-tenths of 1 been experienced. Thus the Farm Credit System percent of outstanding loans were involved in reports a delinquency rate of about 3 percent, foreclosure proceedings. This latter figure and a mid-1982 survey of commercial banks amounts to approximately 1 in every 170 mort- conducted by the American Bankers Association gage loans. With many delinquent loans, of found an average delinquency rate of 4 percent. course, lenders decide to exercise forbearance— Liquidations and foreclosures—while up from even when not required to do so by law or the near-zero levels of better times—remain a regulation—and arrange various workout ar- very low percentage of total outstanding loans rangements for normally creditworthy home- and borrowers. In most problem cases, the lendowners until their job situations improve. More- er as well as the borrower benefits from a reover, households facing foreclosure ordinarily structuring of the debt to reduce current paywill sell their homes and pay off their debts as ments, and such actions have been taken far long as they have adequate equity to come out more frequently than the alternative of forcing ahead. This type of solution, however, is not a liquidation. happy situation for the distressed homeowner. In light of these circumstances, one can appre- The financial problems being experienced by ciate this subcommittee's concern with the resome farmers are mainly a result of the fact that cent upward trend of mortgage loan foreclosures in 1976-77, and again in 1980-82, farm profits and its desire to consider ways to assist financialdropped substantially below their rising long- ly pressed homeowners. In the letter announcing term trend. Some farmers who started farming these hearings, this subcommittee requested the since the mid-1970s or who made significant land Board's views on the effect of supervisory and purchases or other major investments during the examination procedures on financial institutions' same period have found themselves in a finan- decisions to institute foreclosure proceedings cially vulnerable position, particularly if they and whether or not new supervisory procedures encountered production problems such as are needed to encourage institutions to exercise drought. Moreover, the difficulties of these farm- greater forbearance. This subcommittee has also ers have been greatly exacerbated by the sharp requested that the Board give consideration to rise in interest rates to unexpectedly high levels ways in which the resources of the discount Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 179 window could be utilized to assist distressed to place such loans in a nonaccrual or renegotiatborrowers in making timely interest payments on ed "troubled" debt status. Consistent with safetheir mortgage loans until their economic circum- ty and soundness considerations, financial instistances improve. tutions are encouraged to work with borrowers who are delinquent in order to return their loans to a current status because such efforts are S UPER VISOR Y PROCED URES obviously in the interest of both lender and borrower. For example, a prudent program to With respect to the foreclosure practices of fi- counsel an individual borrower, to modify or nancial institutions, the Board does not believe extend repayment terms, or to grant a reasonable that supervisory or examination procedures em- grace period would not be criticized so long as ployed by federal agencies encourage financial the program is designed to improve the borrowinstitutions to take premature or imprudent ac- er's ability to service his obligation and does not tion to foreclose on delinquent mortgage loans to result in the bank's failure to recognize and take the detriment of hard-pressed borrowers. Fur- action to address its problem loans. ther, we do not believe that supervisory proce- In practice, foreclosure is an expensive and dures discourage institutions from exercising an time-consuming process that is subject to numerappropriate degree of forbearance so long as ous uncertainties. Moreover, foreclosure during such a course is consistent with an institution's periods of economic recession can be a particusafety and soundness and with banking laws and larly uncertain process because it is far from regulations and holds a reasonable prospect in clear that a financial institution will benefit from the long run of enabling a borrower to strengthen taking possession of or attempting to sell properhis financial position and resume timely loan ty when real estate markets are depressed. Conrepayments. In making this statement, I should sequently, financial institutions have an incenpoint out that the commerical banking system, tive to take reasonable steps and establish over which the Federal Reserve shares jurisdic- prudent workout plans that assist borrowers tion with the other banking agencies, holds only whose financial problems are temporary and about 17 percent of all one- to four-family resi- whose long-term prospects are favorable. Superdential mortgages and approximately 9 percent visory procedures do not discourage such proof farm real estate debt. Our supervisory experi- grams so long as they are sound, well thought ence with commercial banks indicates that insti- out, and consistent with an institution's financial tutions generally view foreclosure as a last resort, condition and overall safety and soundness. to be employed only when other reasonable steps In the past, federal agencies have cooperated to assist the borrower have failed. with congressional actions to encourage forbear- In evaluating the quality of residential and ance in foreclosure proceedings in order to assist farm mortgage loans, supervisory examiners financially pressed homeowners. For example, consider underlying collateral values and the in passing the Emergency Housing Act of 1975, borrower's long-term prospects for repayment, the Congress instructed the federal supervisory as well as the borrower's current performance. agencies for financial institutions to take action, Examiners also take into account the borrower's consistent with safety and soundness considerpresent economic and financial circumstances, ations, to relax supervisory criticisms pertaining his future prospects, and the effect of local or to mortgage delinquencies and to encourage forregional economic conditions. These procedures bearance in residential mortgage loan forecloare designed to ensure that transitory economic sures. In response to this legislation, the banking difficulties or temporary interruptions in loan agencies informed mortgage lenders of the critirepayments do not result in unduly harsh super- cal importance of considering a borrower's longvisory criticism. In addition, I should point out term prospects and of the need to exercise forthat the recently implemented supervisory re- bearance in mortgage foreclosures. Specifically, porting guidelines for commercial banks, while the Federal Reserve instructed its field examinrequiring information on the past-due status of ers to refrain from criticizing forbearance in residential mortgage loans, do not require banks residential mortgage foreclosures as long as the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 Federal Reserve Bulletin • March 1983 institution's efforts did not threaten the safety would likely involve a relatively large increase in and soundness of the institution or violate bank- discount-window credit would obviously tend to ing statutes. Nonetheless, in light of the passage complicate the reserve management task of the of time and the continuing hardship associated Federal Reserve and undermine its ability to with high unemployment and loss of income, we control growth in the money supply. But, while believe that it may be useful to reiterate to the complications that might be created by this supervisory examiners that workout plans and program alone are of concern, I am much more forbearance programs that assist homeowners worried about the precedent that would be set. If will not be subject to supervisory criticism so Federal Reserve credit were to be made available long as they are not inconsistent with banking to assist in handling this special problem, many statutes and an institution's overall safety and other economic groups—all with credit needs soundness. that they sincerely believe to be as pressing as those of distressed homeowners—would soon be submitting requests to the Federal Reserve and USE OF THE DISCOUNT WINDOW to the Congress for access to the discount window. As a result, the Federal Reserve's ability to In considering the proposal to implement a mort- control the general availability of reserves and gage workout program by the provision of credit the money supply would be threatened. I would from the Federal Reserve discount window, a emphasize that my reading of central bank expevital point must be kept in mind: a special type of rience in other countries suggests that when money is provided through discount window central banks have been given the dual assignloans—money that serves as the reserve base for ment of carrying out monetary policy and of a multiple expansion of money and credit in our providing credit assistance—either to special economy. Consequently, Federal Reserve lend- economic groups or for special economic puring is critically important to the conduct of poses—political pressures have inevitably tendmonetary policy, and the volume of reserves ed to arise that worked to undercut effective available to depository institutions must be kept discipline over money and credit growth, leading under disciplined control if we are to avoid a ultimately to higher inflation. resurgence of the inflationary pressures that I should point out that mortgage loans may be have recently shown signs of abating. In the used as collateral by depository institutions that Board's view, a special assistance program that borrow from the discount window. Such credit is utilizes the resources of the discount window available for temporary adjustment purposes or would erode the Federal Reserve's ability to for seasonal needs when warranted by the liquidexercise control over the reserve base and the ity circumstances of the institution. But in such money supply. situations the risk remains with the original lend- The Federal Reserve, in its traditional lending er, as it should, and the discount window does activities, has been able to keep the volume of not become an open tap for special assistance reserves provided through Reserve Bank dis- that could adversely affect the discount wincount windows within manageable bounds, in dow's critical central banking function. part because discount officers have enforced Another important matter raised by proposals rules that limit the purposes and conditions un- is to have the Federal Reserve extend credit to der which Federal Reserve credit is made avail- special economic groups. In its efforts to exert able. With the level of borrowed reserves thus control over the volume of total credit being generally held under effective constraint, the extended through the discount window, the Fed- Federal Reserve has been able to respond to an eral Reserve would be placed in the position of unexpected increase in borrowed reserves that having to decide how resources are to be allocatseemed inconsistent with the general require- ed among competing economic groups. I believe ments of monetary policy by making offsetting all would agree that, in line with our social values sales of government securities in the open mar- and our economic and political system, decisions ket to absorb reserves. on resource allocation should normally be left to individuals and consumers operating within a Adoption of a mortgage workout program that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 181 free market system. However, when decisions assist borrowers and evaluate the need for such are to be made concerning the allocation and use programs in light of competing social demands of public resources, such decisions should be and budgetary imperatives. As I have stated, the made by the people's elected representatives in Board does not believe that it would be approprithe Congress. ate to utilize the discount window to provide Finally, I would note that credit extended by direct financial assistance to individuals or to the Federal Reserve is reflected in neither the mix the provision of special risk-oriented assistunified nor the credit budgets of the federal ance with the central banking function. If such government. Thus, directing the Federal Reserve assistance is deemed necessary, we believe that to provide credit assistance would constitute yet the Congress should consider programs in the another program involving the government in the context of the budgetary review and approval economy without having this involvement re- process. Adoption of special subsidies or other flected in the budget. This is a practice that the forms of aid would, however, add to budgetary Congress has for some time recognized to be or federal credit program outlays and would counterproductive to the long-run health of our logically necessitate offsetting cutbacks in other economy and our society in general. areas if the discipline of tight federal expenditure The Congress may wish, of course, to consider constraints is to be maintained in the effort to special risk-oriented programs to aid homeown- lower deficits and further reduce inflation and ers and farmers who are having a difficult time interest rates. If such programs were to be fimaking their mortgage payments. In considering nanced through additional federal borrowing, the such plans, the Congress must weigh the costs end result could very likely be greater upward and benefits of special measures to subsidize or pressure on interest rates. • Statement by Paul A. Volcker, Chairman, Board more likely toward further improvement. Thus, of Governors of the Federal Reserve System, the opportunity presents itself for an orderly before the Committee on the Budget, U.S. Sen- recovery in business activity that will bring with ate, February 24, 1983. it the increases in job opportunities and real income that we all desire. The challenge is to see I appreciate the opportunity to appear before this the present signs of incipient recovery evolve committee to discuss the current economic and into a long-lasting, noninflationary expansion. budgetary situation and the Federal Reserve's A key element in the improved outlook is the goals for monetary policy. Last week I presented change in financial market conditions over the to the Banking Committees the specific numeri- past year. Short-term interest rates are now as cal targets for the growth of money and credit in much as 10 percentage points below their earlier 1983 set by the Federal Open Market Committee peaks, while long-term rates are down about 4 to (FOMC). This morning I will focus on the broad 5 percentage points. Reflecting these developissues confronting monetary policy and their ments, activity has been improving in the creditrelationship to other aspects of domestic and sensitive sectors of the economy. international economic policy. The most notable turnaround has been in the housing market. Production and sales of new single-family homes have now risen substantially CURRENT ECONOMIC CONDITIONS over the depressed levels of late 1981 and the first half of 1982. With personal debts relative to Recessionary forces were ebbing at the end of income lower than in several years and with 1982, and activity has turned upward in several liquid assets rising, activity in consumer markets sectors. Moreover, we have made impressive also has shown some signs of improvement. progress against inflation over the past year, and Auto sales, in particular, have responded to the the underlying trends of inflation point at least lower interest rates offered under special protoward consolidating that progress in 1983, and grams as well as to improvements in design and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 Federal Reserve Bulletin • March 1983 pricing policies that have made domestically ing confidence in our ability to make continuing produced autos more competitive and more at- progress against inflation in the years ahead. tractive to consumers. Moreover, consumer pur- Interest rates and inflation rates freqently do not chases of other "big-ticket" items also appear to bear a close relationship to each other for short be improving. time periods—and those periods can extend over As is usually the case, the inventory cycle has several years. Over time, however, there are played a large role in the recession, and will strong analytic reasons to expect a closer reladetermine the speed and shape of recovery in its tionship because borrowers and lenders alike are early stages. Businesses made vigorous efforts to interested in real returns—that is, in assessing control the accumulation of unwanted stocks the costs or returns of investments after allowearly in the recession and again in the final ance for changing prices. What counts, in that months of 1982 when recovery failed to develop, respect, is expected prices, which we cannot as had been widely anticipated, earlier in the measure directly. To the extent that substantial year. Inventories generally are now back to the doubts exist that the progress against inflation levels of early 1981. Consequently, if final sales may not be maintained, interest rates currently— continue to strengthen, increases in production particularly long-term rates—will remain higher could be more than proportionate. than otherwise necessary. That situation is fur- For the time being, with excess capacity large ther aggravated, as I will discuss later, by the and profits depressed, business investment in prospect of outsized federal budget deficits in new plant and equipment is likely to continue to future years. To the extent interest rates are an fall. Some delay in the recovery of capital spend- obstacle to sustained, well-balanced recovery ing is not out of line with previous cyclical and to improved economic performance generalexperience, as many firms initially intensify the ly, we must deal with these doubts and concerns. use of existing capital rather than invest in new Looking back, the gains in the fight against plant and equipment. Nonetheless, there are inflation are striking. All broad measures of some encouraging signs in this sector. In particu- prices rose less than 5 percent last year, the lar, new orders for capital goods have firmed in slowest rate of increase in a decade. To be sure, recent months. Moreover, lower costs for long- part of the improvement reflected unusually faterm borrowing and equity financing have al- vorable developments in food and energy prices lowed firms to begin restoring their balance as well as abnormally low commodity prices, the sheets to more liquid conditions—thereby put- effects of the sharp appreciation of the dollar, ting the business sector on a sounder footing for and more generally, the cyclical weakness of the expansion. economy. The U.S. economy has become increasingly Potentially more important, however, trends integrated into the world economy over the years. of underlying costs are now moving lower, and In contrast to most earlier recessions, exports those trends should be sustainable as the econodropped sharply in 1982, reflecting both the my recovers its upward momentum. One elerecessionary tendencies in the rest of the world ment suggesting optimism is the recent behavior and substantial appreciation of the dollar in 1981 of productivity. After languishing in the late and much of 1982. The sluggishness of business 1970s and early 1980s, labor productivity turned activity abroad is a major reason that recovery up last year, somewhat unusual in the midst of here is likely to be significantly less rapid than recession. Beyond those statistics, which at this after most previous recessions. point can only be suggestive of a changing trend, there is increasing evidence of efforts by both workers and management under the pressures of THE OUTLOOK competition and recession to increase efficiency and reduce "break-even" points. The fruits of FOR INFLATION AND INTEREST RATES those efforts should be more apparent during recovery. If combined with continuing modera- The outlook for a sustained expansion of ecotion in nominal wages, the result should be longnomic activity depends in major part on the lasting reductions in cost pressures and expansuccess of monetary and fiscal policies in foster- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 183 sion of real incomes. Increases in nominal wages industrial economies has affected the volume of slowed to a range of 6 percent last year, and exports of developing countries and contributed seem to be rising at a slower pace than that now. to substantial declines in commodity prices. That slowing of nominal wage increases has been Those factors, in turn, have made it more diffifully consistent with rising real wages for those cult for some heavily indebted developing counworking because price increases have come tries to deal with those debt burdens. Growing down more rapidly than wages. With real wages recognition of the potential strains on the interrising, one source of pressure for aggressive national banking system—after a decade of rapid wage bargaining should subside. growth in lending to developing countries—was Clearly, the more restrained wage increases precipitated in part by interruptions in debt serlast year were directly related to the pressures in vice by Mexico last summer. the labor market. Employment fell throughout One danger has been that lending banks would 1982. Although layoffs were concentrated in the attempt to protect their individual positions by industrial sector of the economy, even the ser- rapidly retreating from new lending. But borrowvice-producing sector—the primary source of ers who have built up large debts over a period of employment growth in recent years—experi- years are not in a position to repay suddenly. An enced declining payrolls. The extent of these uncoordinated attempt to force such repayment employment cutbacks was reflected in sharp would undercut the stability of the borrowers, increases in the unemployment rate. While the the lenders, and the international financial sys- January drop in joblessness was encouraging, tem alike. We could not fully insulate our domescurrent unemployment rates are still obviously tic banking and credit system—and our own high and may decline only slowly. economy—from such developments. Conse- Success in dealing with inflation cannot be quently, we have the strongest kind of selfbased on an economy that stays in recession, interest in measures to contain and deal with the with unacceptable levels of unemployment. But threat. we will need to maintain moderation in wage Management of that situation has required, settlements and pricing policies as the economy and will continue to require, the active cooperexpands. The favorable near-term outlook in that ation of borrowing countries, banks, central respect is reinforced by the current softness in banks and treasuries of leading countries, and the price of one of our most important raw international financial institutions. The Internamaterials—oil. But sustained improvement will tional Monetary Fund has a special, and indisdepend on a sense of conviction that government pensable, role to play. In that connection, I policy will remain alert and forceful in dealing believe it is essential that the Congress approve with inflationary threats as the economy ex- enlarging the resources of the IMF at an early pands. That is the same environment in which date so that it can, with some assurance, proceed interest rates can decline, and stay lower, help- in the knowledge that its resources will be adeing to support a recovery in investment and quate to meet its responsibilities. As you know, sustained growth. that action will require budgetary authorization and appropriation, even though the operations of the IMF do not significantly affect net budget INTERNATIONAL CONSIDERATIONS outlays or the deficit. Other industrialized countries have been attempting to deal with some of the same basic MONETAR Y POLIC Y IN 1983 problems that we have been facing. Most of them have been fighting stubborn inflationary pres- Not so long ago the American public felt confisures. Subnormal economic performance has dent—in retrospect overly confident—about the been pervasive, and unemployment of labor and ability of government to keep the economy on a the underutilization of other resources have risen stable growth path. Since the mid-1960s, long to levels unprecedented in the postwar period. years of accelerating inflation and rising unem- The sluggishness of activity in the advanced ployment, instability in financial markets and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

184 Federal Reserve Bulletin • March 1983 economy, and concern about continual budget effects of excessive deficits in a growing econodeficits have eroded that confidence. We can my. The present budgetary outlook—until correstore it—not in the earlier sense that a high rected—can only maintain skepticism about fudegree of "fine tuning" is thought to be feasible, ture prices and interest rates, narrowing the but in the sense that government can encourage a flexibility for monetary policy now. sense of price and financial stability and a funda- I reported in detail on the specifics of monemental environment for growth. tary policy with respect to our various monetary In one important sense—dealing with infla- and credit aggregates last week. I would only tion—we have come a long way in the past two note now that the relationships between money years, even though a good deal of skepticism and economic activity did not follow "normal" remains, and we must not assume the battle is cyclical and trend patterns last year, partly beover. That effort has been accompanied by cause of the introduction of new deposit acstrains and tensions in financial markets at home counts but also because of broader economic and abroad, extraordinarily high interest rates, reasons. Demands for money and liquidity apand, of course, a serious recession. But now we peared to be enlarged by the uncertainty of can also begin to see prospects for recovery and individuals and businesses about the economy more settled conditions in financial markets. and financial developments. There is also the Changes in the fiscal structure adopted in recent possibility that the combination of declining inyears should, in time, help encourage investment flation, lower market interest rates, and the and savings. increasingly common practice of paying interest But there are also obstacles that must be on transaction accounts may have a lasting imremoved if we are to capitalize on the progress pact on trends in "velocity," and therefore on that has been made and to make the happier the appropriate supply of money over time. vision a reality. Both monetary and fiscal policy Looking through all the complications and will have large and complementary roles to play taking account of institutional distortions, our in dealing with those obstacles and providing a targets for money and credit growth in 1983 are solid base for renewed confidence. similar to those in 1982. Because actual growth The role of monetary policy is to build on the last year generally exceeded the target ranges, progress against inflation while providing enough the effective growth this year should be less than money and liquidity to meet the needs of recov- in 1982. Based on present evidence and allowing ery. to some degree for usual cyclical patterns, that In some respects, the line is a narrow one, and amount of liquidity should be fully consistent it can't be determined with mathematical preci- with the anticipated growth in the economy and sion. But in approaching our policy decisions, with sustaining the progress against inflation— two things are clear. First, renewed inflation—or consistent, in fact, with the kind of projections policies that seem likely to lead to that result—is you have from the administration and the Conneither a satisfactory nor a practical option. The gressional Budget Office. In a context of declinsensitivity of the public and the markets to signs ing inflation, the monetary targets themselves of renewed inflation is all too likely to produce are not inconsistent with further reductions in precisely the reactions in financial markets—and interest rates—but I must add that other factors, in wage bargaining and pricing policies—that including the budget deficit, impinge strongly on would soon weaken or abort recovery. The result interest rate levels. would be a replay of the past decade or worse. The variety of monetary indicators we use and Second, the problems for monetary policy in the rapidity of institutional change are potentially meeting the needs of the economy are vastly confusing. In the circumstances, some undercomplicated by the present prospect that huge standably yearn to encompass all policy considfederal deficits will preempt so much of our erations in a simple, relatively rigid rule. But I credit and savings as a recovery proceeds. I know of no such rule reliably suited to our spoke a moment ago of the "narrow path" for present circumstances. Elements of judgment monetary policy, but I must also emphasize that seem to me inevitable in interpreting the data, no path can resolve the economic and financial and the targets will need to be judged and re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 185 viewed at suitable intervals in the light of devel- activity and higher unemployment have cut opments with respect to economic activity and deeply into revenues and boosted outlays for prices and conditions in the domestic and inter- unemployment benefits and other automatic stanational financial markets. At the same time, the bilizers. At a time when investment is weak and targets do provide a needed discipline, and we private credit demands have slackened, these mean to be within them over relevant spans of cyclically induced deficts have helped support time. They will be changed only if evidence for spendable income and buoy the economy. They such change is strongly persuasive. have not, in the midst of deep recession, been We do take as a point of departure in our inconsistent with declines in interest rates—but judgments the critical importance of maintaining interest rates have, as you know, remained high the momentum against inflation. In fact, most relative to the current rate of inflation. members of the Federal Open Market Committee As the economy recovers, the cyclical portion believe that, taking the broader price indexes, of the deficit will recede. But as things now the inflation outcome in 1983 is likely to be better stand, the deficit itself will not. Higher revenues than that projected by either the administration from economic growth and reduced spending for or the Congressional Budget Office. The recent unemployment compensation will be offset by— developments with respect to oil prices only and possibly more than offset by—growth in reinforce that outlook. Given the supply of mon- other spending programs and the effects of earliey and credit, such an inflation outlook implies er tax changes. In other words, through the midlower interest rates than otherwise and more and late-1980s, a huge imbalance would remain room for real growth. even if the economy were operating at much lower levels of unemployment—and assuming inflation remains under control. THE FEDERAL BUDGET All that is familiar to you—and it is equally AND MONETARY POLICY familiar to the financial markets, where the prospect of a major structural imbalance in the gov- The most obvious obstacle to sustained recovery ernment's finances has an impact on current is the prospect of huge federal deficits even as interest rates. Not just the direct demand for the economy expands. In the last fiscal year, the funds to finance the Treasury is of concern but federal deficit was a record $111 billion. The the fear that ballooning federal borrowing needs President's new budget report projects a deficit will, in effect, bring extraordinary pressure on in the current fiscal year nearly double last year's the Federal Reserve to monetize the deficits, figure and further growth into the foreseeable with implications for inflation itself, for inflation future in the absence of determined action to expectations, and for inflation premiums in nomalter that outlook. inal interest rates. One implication is that, to the The members of this committee, of course, are extent the budget deficit appears to be intractawell aware of the enormity of these projected ble, the burden placed on monetary policy to deficits, but there may be a danger that numbers demonstrate the government's resolve to follow in the range of $200 billion plus have been cited a noninflationary course is intensified. The conso frequently as to make them seem almost verse is equally true: meaningful action to demcomfortable and familiar. No matter how readily onstrate the government's economic discipline $200 billion slips off the tongue, the hard fact on the fiscal side would reinforce confidence that remains that deficits of that magnitude would monetary policy over the years ahead can do its preempt an unprecedented share of our net sav- job in maintaining a course consistent with price ings, keep "real" interest rates high, and divert stability without intolerable market pressures. funds from the investment and the housing we Some are tempted to suggest that the budget need and want. problem and its consequences for the perform- To be sure, a substantial part of the current ance of the economy could be solved by monedeficit—projected at about 6V2 percent of the tary policy. But excessive money creation to gross national product—reflects the impact of meet the needs of the government would only the recession on the budget. Slack economic reinforce and validate the fears of renewed infla- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

186 Federal Reserve Bulletin • March 1983 tion, and sooner or later, higher interest rates. In with energy and force. Basic budget trends take the end, excessive monetary growth would put time to change, but the knowledge that they will us in an even more unsatisfactory situation, with be changed will affect markets now. The still more deeply ingrained inflation expectations amounts involved are large, but certainly not and greater skepticism about the ability of our beyond our capacity. nation to manage its economic affairs. Nothing It is obviously beyond my competence, or the real would be gained for long, and hard-won province of the Federal Reserve, to deal with all ground in the battle against inflation would be the particular priorities that must be balanced. lost. The administration has set forth its program in In concept, any inflationary impact from the that respect. The general order of magnitude budget can be contained by appropriate mone- seems to me appropriate, although some of the tary policy. But the harsh implications of exces- measures proposed would, in my judgment, be sive deficits for other credit-dependent sectors of more effective if brought forward in time. Others the economy would clearly remain. have proposed different specifics, and I am sure I don't want to suggest there is a simple trade- they will receive consideration. off, as sometimes suggested, between future bud- From the standpoint of general economic poliget policy and current monetary policy. Reduc- cy, the more that can be done in restraining ing the threat of those large structural deficits expenditures the better. You, of course, have to stretching out to the end of the decade in and of reconcile that with other priorities, and the basic itself should have favorable effects on current point is that the sheer arithmetic of the problem interest rates and in damping concerns about does suggest that changes will be necessary over future increases. In that real sense, budgetary a broad range of programs—both on the spending virtue will provide its own tangible reward. and revenue side. I believe recognition of that But those benefits would ultimately be lost if fact is becoming increasingly widespread both in monetary policy were to abandon its continuing and out of Washington. and necessary concern with restoring reasonable Your committee is in the critical position of price stability. That point remains central. converting that wide consensus on generalities What can be said is that a better fiscal outlook, into a specific program, and I have some idea with all it implies, would certainly provide a how difficult that is. But I also have some idea better environment in the financial markets to- how important it is to our future. day, reduce concern about future inflation and an early rebound in interest rates, and moderate preoccupations that the Federal Reserve itself might somehow be forced to retreat from its CONCLUSION basic anti-inflationary course. As things stand, with monetary policy assumed to be the only I need not dwell on the fact that we are negotiatbulwark against renewed inflation and a high ing a most difficult period in our nation's ecodegree of sensitivity to the past failures in efforts nomic history. But I also believe we are in the to contain inflation, every twist or turn in the process of laying the base for more vigorous, and monetary aggregates or short-term policy actions lasting, noninflationary growth. In looking to the interpreted as "easing" is closely scrutinized as rest of the decade and beyond, in my view, a sign or symbol of intentions over a longer strong forces are at work that should lead to a period. Clear progress in dealing with the budget kind of self-reinforcing process of growth, greatcould, in that sense, somewhat enhance our er price stability, higher real income and profits, operating flexibility, so long as we succeed in and declining unemployment. But there are obreinforcing the basic point that the effort to stacles to that prospect. Monetary and fiscal sustain the progress against inflation is intact. policies alike need to be directed, and work in As you know better than I, the process to cut concert, toward removing those obstacles and down those future deficits must start now, and achieving that bright promise. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 187 Statement by Paul A. Volcker, Chairman, Board flecting these developments, activity has been of Governors of the Federal Reserve System, improving, especially in the credit-sensitive secbefore the Committee on the Budget, U.S. tors of the economy. House of Representatives, March 8, 1983. The most notable turnaround has been in the housing market. Production and sales of new I appreciate the opportunity to appear before this single-family homes have now risen substantially committee to discuss with you directly—as I over the depressed levels of late 1981 and the have with other committees—the current eco- first half of 1982. With personal debts relative to nomic and budgetary situation and the Federal income lower than in several years and with Reserve's goals for monetary policy. A few liquid assets rising, activity in consumer markets weeks ago I presented to the Senate Banking also has shown some signs of improvement. Committee the specific numerical targets for the Auto sales, responding in part to the lower growth of money and credit in 1983 set by the interest rates offered under special programs and Federal Open Market Committee (FOMC), and 1 greater pricing restraint, are running above the believe you have the Monetary Policy Report to recession lows, although still far below pre- Congress before you. Therefore, I would like to recession norms. Moreover, orders and consumfocus this morning on the broad issues confront- er purchases of other "big-ticket" items also ing monetary policy and their relationship to appear to be improving, partly in association other aspects of domestic and international eco- with the upturn in home sales. nomic policy. As is usually the case, the inventory cycle has played a large role in the recession, and will be a determinant of the speed of the recovery in its CURRENT ECONOMIC CONDITIONS early stages. Businesses made vigorous efforts to control the accumulation of unwanted stocks In order to put these issues in context, I should early in the recession and again in the final begin with a few comments on where the econo- months of 1982 when the previously anticipated my stands today. After a long period of reces- upturn in sales failed to develop. With further sion, activity is showing signs of increasing liquidation in January, inventories generally are strength in several sectors. Meanwhile, we have now back to the levels of early 1981. Consemade impressive progress against inflation over quently, as final sales strengthen more broadly, the past year, and the underlying trends, com- increases in production could be more than probined with the weakness of oil prices, suggest portionate. Nonetheless, tight inventory manthat progress can be extended. Altogether, much agement—against a background of declining inof the stage has been set for a sound recovery in flation, ample production capacity, and business activity that will bring with it the in- relatively high interest rates—is likely to remain creases in job opportunities and real income that a factor in making this recovery more moderately we all desire. But the setting is not complete; paced than most past upturns. more needs to be done to provide reasonable For the time being, with excess capacity subassurance that the present signs of recovery in stantial and profits depressed, business investfact evolve into a long-lasting, noninflationary ment in new plant and equipment is also likely to expansion. lag. Some delay in the recovery of capital spend- A key element in the improved outlook is the ing is not out of line with previous cyclical change in financial market conditions. Short- experience, as many firms initially intensify the term interest rates are now as much as 10 per- use of existing capital rather than invest in new centage points below their cyclical peaks, while plant and equipment. Nonetheless, some encourlong-term rates are down about 4 to 5 percentage aging signs have appeared in this sector. In points. Bank loan rates—particularly rates for particular, new orders and appropriations for consumer credit, which are typically less flexi- capital goods have firmed in recent months. ble—have tended to lag behind market rates, but Moreover, lower costs for long-term borrowing have come down further in recent weeks. Re- and the surge in stock prices have encouraged Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

188 Federal Reserve Bulletin • March 1983 firms to begin restructuring their balance slowest rate of increase in a decade. Part of the sheets—thereby putting the business sector on a rapid improvement reflected unusually favorable sounder footing for expansion. food and energy price developments, abnormally The U.S. economy has become increasingly low commodity prices generally, the effects of integrated into the world economy over the the sharp appreciation of the dollar, and more years. In contrast to most earlier recessions, broadly, the cyclical weakness of the economy. exports dropped sharply in 1982, reflecting both The need is to "build in" a trend toward more the recessionary tendencies in the rest of the stable underlying costs even as the economy world and substantial appreciation of the dollar recovers its upward momentum. One encouragin 1981 and much of 1982. The sluggishness of ing element is the recent and prospective behavbusiness activity abroad is an important reason ior of productivity. After languishing in the late that recovery here is likely to be less rapid than 1970s and early 1980s, labor productivity turned after most previous recessions. up last year—somewhat unusual in the midst of recession. Beyond those statistics, which at this point can only be suggestive of a changing trend, OUTLOOK FOR INFLATION AND increasing evidence has come to light of efforts INTEREST RATES by both workers and management—under the pressures of competition and recession—to in- Ultimately much more important than the speed crease efficiency. The fruits of those efforts of the "start up" is the staying power of the should become more apparent as recovery takes recovery. A long and sustained expansion in the hold. economy will depend in major part on our suc- Increases in worker compensation slowed to cess in maintaining the progress against inflation about 6V2 percent last year, and the pace seems in the years ahead, not least because of the to be slowing further. Given the increases in implications for interest rates. productivity and the other factors that contribut- Interest rates and inflation rates often do not ed to lower prices last year, that slowing of bear a close relationship to each other for short nominal wage increases has been fully consistent time periods, and those periods can sometimes with a significant increase in real wages for those extend over several years. Over longer periods, working; in fact, the real income of the average however, strong analytic reasons exist to expect worker rose in 1982 for the first time in four a closer relationship, because borrowers and years. lenders alike are interested in real returns—that With real wages rising, one source of pressure is, in assessing the costs or returns on invest- for aggressive wage bargaining should subside. ments after allowance for changing prices. What For the time being, the high levels of unemploycounts, in this respect, is expected prices, which ment and intense competitive pressures point in we cannot measure directly. If substantial fears the same direction. Some industries, characterexist that the progress against inflation may not ized by major structural as well as cyclical probbe maintained—and those concerns do remain— lems and wage levels far above national averinterest rates, and particularly long-term rates, ages, have negotiated concessions from previous will remain higher than otherwise would be nec- compensation patterns, potentially improving essary. That situation is greatly aggravated, as I their competitive position and the outlook for will discuss in a few minutes, by the prospect of reemployment of those laid off. outsized federal budget deficits in future years. Plainly, success in dealing with inflation can- Because high interest rates can be an obstacle to not be based on an economy that stays in recesthe financial health of households and firms and sion, with unacceptable levels of unemployment. to well-balanced recovery generally, we must But neither can we anticipate continuing imdeal with these doubts and concerns. provement in the economy and lower interest Looking back, the gains in the fight against rates if fears of reacceleration of inflation are inflation are striking. All broad measures of stimulated and justified by events. Continued prices rose less than 5 percent last year, the moderation in wage settlements and pricing poli- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 189 cies as the economy expands will be a key signal that context we have to shape our monetary and of success in the effort to maintain the disinfla- fiscal policies. tionary process. In concept, the role for monetary policy is The favorable near-term outlook in that re- simple: build on the progress against inflation by spect is reinforced by the current softness in the avoiding excessive growth in money and credit price of oil. Petroleum prices are important be- while providing enough liquidity to meet the cause they, directly or indirectly, affect the cost needs of recovery. In practice, the path is strewn of so much that we buy: finished petroleum with obstacles; indeed, the possibility of meeting products account for 8 to 9 percent of the gross both criteria simultaneously will be a function of national product. Furthermore, a decline in the policies and circumstances beyond the scope of price of those products, which led the inflation- any monetary policy, however wisely conductary process in the 1970s, is highly visible to every ed. citizen, and can help symbolize the fact that the In the best of circumstances, the line between climate of inflation has in fact changed—that too much money and too little cannot be plotted prices are a two-way street. with mathematical precision. Rapid institutional But a favorable break in oil markets must not change, reflected in the development of new distract us from the larger truth. Continued mod- deposit accounts and the payment of market eration in pricing and wages and attention to rates on existing accounts, huge federal financing cost-cutting and productivity are dependent on a needs, and the close linkage of financial markets sense of conviction that financial discipline will internationally, all complicate the job further. be maintained, and that aggressive pricing or Elements of judgment are inevitably involved. neglect of costs will not "pay off"—that it will But in making those judgments, we are guided by instead threaten markets, profits, and jobs. In one fundamental: renewed inflation—or policies other words, government policy will need to that seem likely to lead to that result—is neither remain demonstrably alert and forceful in dealing a satisfactory nor a practical option. The sensiwith inflationary threats as the economy ex- tivity of the public and the markets to signs of pands. With that conviction, interest rates can be resurgent inflation would be all too likely to both lower and less volatile, helping to support produce precisely the reactions in financial marthe expansion in investment and sustained kets—and in wage bargaining and pricing poligrowth we need. cies—that would soon weaken or abort recovery. The result would be a replay of the past decade or worse. MONETAR V POLIC Y IN 1983 The prospect of federal deficits that, as things now stand, will preempt a large portion of avail- As you well know, the long years of accelerating able credit and savings as the recovery proceeds inflation after the mid-1960s undermined any threatens a "no win" situation. No monetary sense of confidence that stability would be re- policy can successfully resolve the economic and stored. Nor did the inflationary process, in the financial tensions that would arise from the clash end, "buy" us more employment and produc- of demands in the money markets from excessive tion; instead we harvested the bitter fruits of deficits in a growing economy—the kind of econrising unemployment, instability in financial mar- omy that would generate growing credit demands kets and the economy, and historically high for investment, for housing, and for other purinterest rates. Now, after attaching high priority poses. Moreover, the present budgetary outto the effort over several years, we have a clear look—until corrected—can only maintain skeptiopportunity to restore a more stable environment cism about our success in dealing with inflation, and a climate for growth—indeed, we have come narrowing the flexibility for monetary policy a long way in that direction. But, inevitably, a now. year or two of progress against inflation has not The specifics of Federal Reserve policy with erased the skepticism rooted in the events of respect to the various monetary and credit aggremore than a decade; the battle is not over. And in gates are contained in the material that has been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

190 Federal Reserve Bulletin • March 1983 made available to you with this statement.1 I the data, and the targets will need to be judged would only note now that the relationships be- and reviewed at suitable intervals in the light of tween money and economic activity did not developments with respect to economic activity follow "normal" cyclical and trend patterns last and prices and conditions in the domestic and year, in part because of the introduction of new international financial markets. At the same types of deposit accounts but also because of time, the targets do provide a needed discipline, broader economic reasons. Demands for money and we mean to be within them over relevant and liquidity appeared to be enlarged by the spans of time. They will be changed only if uncertainty of individuals and businesses about evidence for such change is strongly persuasive. the economy and financial developments. There As I have already suggested, we do take as a is also the clear possibility that the combination point of departure in our judgments the critical of declining inflation, lower market interest importance of maintaining the momentum rates, and the increasingly common practice of against inflation. In fact, most members of the paying interest on transaction accounts may Federal Open Market Committee believe that, have a lasting impact on trends in "velocity"— measured by the broader price indexes, the inflaperhaps working to lower the postwar trend tion outcome in 1983 should be better than that increase—and therefore on the appropriate projected by either the administration or the growth of money over time. Congressional Budget Office. The recent devel- Looking through all the complications and opments with respect to oil prices are consistent taking account of institutional distortions, our with that outlook. Within a given supply of targets for growth of money and credit in 1983 money and credit, such an inflation outlook are similar to those in 1982. Because actual implies lower interest rates than otherwise and growth last year generally exceeded the target more room for real growth. ranges, the effective growth this year should be The more difficult question may be whether less than in 1982. Based on present evidence and the momentum toward price stability can be allowing to some degree for usual cyclical pat- maintained in later years. As you know, both the terns, that amount of liquidity should be fully administration and the Congressional Budget Ofconsistent with anticipated growth in the econo- fice project that inflation will settle down at a my. In a context of declining inflation, the mone- rate within 1 percent of recent levels. While such tary targets themselves should be consistent with a rate represents a vast improvement from the somewhat greater growth than the administration 1970s, to me it would be an unsatisfactory result. projected in February (and probably with the Inflation increasing at 4 to 5 percent a year is somewhat higher projections of the Congression- large enough to have distorting influences on al Budget Office as well) and with further reduc- financial markets, the budget, and the economy, tions in interest rates. But I must immediately and it would tend to keep alive fears of a resuradd that other factors, importantly including the gence of inflation as unemployment and excess present and prospective budget deficits, impinge capacity decline. We can do, and have done, strongly on interest rate levels. better, and a clearer path toward price stability The variety of monetary indicators we use and would, in my judgment, provide a sounder footthe rapidity of institutional change are potentially ing for financial stability and sustained expanconfusing. In the circumstances, some under- sion. standably yearn to encompass all policy consid- Current interest rates, particularly long-term erations in a simple, relatively rigid rule. But I rates, still appear to carry a large premium know of no such rule reliably suited to our against the risks of higher inflation. Whatever present circumstances. Elements of judgment you or I—or the administration or the Congresseem to me inevitably necessary in interpreting sional Budget Office—may judge a realistic forecast, the false starts of the past in dealing with inflation have understandably left a residue of 1. The attachments to this statement are available on reskepticism about the progress that has been quest to Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. made. Like it or not, the market's assessment of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 191 the future will be judged by performance now, revert to a low range historically, house our and a strong sense of conviction that inflation citizens the way they wish, invest what we need will stay down will emerge only over time and to support growth and productivity, and avoid with consistent effort to keep noninflationary drawing on the savings of other countries (at the policies in place. expense of an abnormally strong dollar and a That is one reason why a number of public huge trade deficit) if Treasury financing absorbs policies, apart from general monetary and fiscal one-half to three-quarters of the net domestic policies, will be important beyond their more savings we are capable of generating in a more specific effects. For instance, a retreat to protec- prosperous economy. tionism is both directly inflationary and indirect- To put the point in its starkest form, if no ly a signal that moderation in pricing and wage action is taken, deficits in the general range behavior and productivity is not essential to projected by the administration and the Congresmaintain competitiveness. Emphasis on indexing sional Budget Office—which broadly encompass betrays a lack of conviction in the effort to deal those of other informed analysts, including those with inflation and offers an illusion of escape in the Federal Reserve—do not seem to me from its consequences. At a time when the compatible with the assumption of a smoothly budgetary deficits ahead already threaten to clog growing economy upon which the projections are the money markets, building in still more spend- based. No conceivable manipulation of monetary ing programs—certainly those with an added policy provides an escape; to the contrary, the "spend out" into 1984 or beyond—raises more implication is that monetary policy would need questions about whether offsetting cuts can be to carry a still heavier burden to demonstrate the made, and the benefits to one group can poten- government's resolve to follow a noninflationary tially be swamped by adverse effects elsewhere. course. The converse is equally true: meaningful action to demonstrate the government's economic THE FEDERAL BUDGET AND discipline on the fiscal side would reinforce con- MONETAR Y FOLIC Y fidence that monetary policy over the years ahead can do its job in maintaining an appropri- In the last fiscal year, the federal deficit was a ate degree of restraint on the growth of money record $111 billion. The President's new budget and credit without intolerable pressures on the projects a deficit in the current fiscal year nearly private sector. Reducing the threat of rising double last year's figure—or about 6V2 percent of structural deficits stretching out to the end of the the GNP. Further increases are projected into decade, by damping concerns about future inthe foreseeable future in the absence of deter- creases in interest rates, should in and of itself mined action to alter that outlook. have favorable effects on current interest rates. The members of this committee, of course, are In that real sense, setting a firm course toward well aware of the magnitude of these projected future budgetary restraint should have immedideficits. In fact, numbers in the range of $200 ate benefits, as well as safeguarding prospects billion plus have become so familiar in recent for future investment. weeks—while interest rates have declined and I am not suggesting a simple tradeoff between the economy has shown signs of recovery—that growth in the money supply and budget deficits. a temptation may arise to "wait and see," to step If monetary policy were to abandon its continuback for now from hard choices of where to cut ing and necessary concern with restoring reasonor where to tax, and to look to monetary policy able price stability, the benefits of budget reto solve the interest rate problem. But a passive straint in encouraging confidence would be lost. approach just won't work. What can be said is that a better fiscal outlook, In the midst of recession, we can manage a big with all it implies about less pressure to monetize deficit, even though it does keep interest rates the federal debt and reduced concern about higher than they would otherwise be. But over strong pressures on interest rates as the recovery time, we can't expect "real" interest rates to is extended, would provide an environment in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

192 Federal Reserve Bulletin • March 1983 which monetary policy could better reconcile the the kind of oil tax proposed by the administration goals of economic growth and financial stability. on a standby basis in fiscal 1986. As you know better than I, basic budget trends take time to change. The size of the needed reduction in the deficit increases progressively INTERNATIONAL FINANCE AND THE IMF over a number of years, but the effort must start now, and with energy and force. The amounts I would like to touch upon one other specific involved are large, but certainly not beyond our matter that has virtually no implications for the control. deficit but great potential significance for our It is obviously beyond my competence or the economic health. That item is the proposed inprovince of the Federal Reserve to deal with all crease in the resources of the International Monthe particular priorities that must be balanced. etary Fund. The administration has set forth its program in Our economic recovery is complicated by the that respect. The general order of magnitude of fact that the world generally has been mired in the cuts in the structural deficit proposed by the recession. One reflection of that has been to administration—running to $125 billion and more aggravate the strong pressures on the financial for fiscal 1986 and beyond—seems to me appro- position of developing countries that have accupriate at this time. However, more of the actions mulated a large debt burden in the years since the should, in my judgment, be brought forward into first oil crisis. For that and other reasons, the fiscal 1984 and 1985, with the objective of, at the past six months and more have been characterminimum, keeping the "structural" deficit well ized by interruptions in debt service by a number below $100 billion. I recognize estimates of defi- of large international debtors and strong prescits a number of years ahead, structural or other- sures on the international financial system. wise, are subject to considerable margin of error, One danger has been that lending banks would and those projected by the administration are attempt to protect their individual positions by considerably larger than those of the Congres- rapidly retreating from new lending. But borrowsional Budget Office. But the direction and gen- ers who have built up large debts over a period of eral magnitude of what is necessary seem clear years are not in a position to repay suddenly. An enough; there is, as a practical matter, no danger uncoordinated attempt to force such repayment of "overshooting" the mark. And finer adjust- would undercut the stability of the borrowers, ments can be made, year by year, as more the lenders, and the international financial sysevidence accumulates. tem alike. We could not fully insulate our domes- The possibility of a large reduction in oil prices tic banking and credit system—and our own could offer new options in dealing with the economy—from such developments. Consebudget. As I noted earlier, the prospect for quently, we have the strongest kind of selfdeclining oil prices helps to reinforce the outlook interest in measures to contain and deal with the for further progress against inflation in the near threat. term. It would also act, analogously with a tax Management of that situation has required, cut, to increase domestic purchasing power and and will continue to require, the active cooperinvolve a direct loss of windfall profits tax reve- ation of borrowing countries, banks, central nues, further complicating the structural deficit. banks and treasuries of leading countries, and In the circumstances—and taking account of the international financial institutions. The Internaeffects on domestic energy prices and conserva- tional Monetary Fund has a special, and indistion—a deep decline in oil prices would suggest pensable, role to play. In that connection, I early reexamination of the case for energy taxes. believe in the essentiality that the Congress The case would be reinforced to the extent a approve an enlargement of the resources of the sharp oil price cut now, with a relaxation of the IMF at an early date so that it can, with some conservation and exploration effort, implies the assurance, proceed in the knowledge that its possibility of a strong rebound in oil prices in the resources will be adequate to meet its responsifuture. One possibility would be to bring forward bilities. As you know, that action will require Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 193 increased budget authority, even though the op- tional markets—would be far greater from failure erations of the IMF do not directly affect unified to provide resources to the IMF than from the budget outlays or the deficit. limited amount of added Treasury borrowing. In I look upon the proposed increase in IMF other words, a strong IMF, with resources adequotas and borrowing resources as a kind of quate to do the job, seems to me very much in insurance policy. If the need to draw on the our national interest. added resources does not materialize, there will be no cost. But if the need does come about, we must be prepared to deal with it expeditiously. In CONCLUSION that event, the provision of funds to the IMF will be reflected in additional borrowing needs by the I need not dwell on the fact that we are negotiat- Treasury. The extent to which those needs ing a most difficult period in our nation's ecowould be an additional net demand on credit nomic history. But I also believe we are in the markets is hard to foresee, because some of the process of laying the base for more vigorous, and funds are likely to, temporarily or more perma- lasting, noninflationary growth. In looking to the nently, find their way back into dollar markets rest of the decade and beyond, in my view, for investment, and the United States would be strong forces are at work that can lead to a kind providing only a fraction of the funds required. of self-reinforcing process of growth, greater More important, I believe the policies and per- price stability, higher real income and profits, formance of the IMF make clear that these funds and declining unemployment. would only be called upon to meet a clear threat To be sure, obstacles are in the way. Monetary to the orderly functioning of the international and fiscal policies alike need to be alert to those financial system. In those circumstances, the obstacles; working together, I am confident that potential for disturbance to our domestic mar- they can be removed and that we can realize the kets—which cannot be insulated from interna- bright opportunities before us. • Statement by J. Charles Partee, Member, Board had been restricted by limitations on the availof Governors of the Federal Reserve System, ability of suitable investment outlets in foreign before the Subcommittee on Domestic Monetary countries. We estimate that the annual rate of Policy of the Committee on Banking, Finance earnings on our current holdings of foreign curand Urban Affairs, U.S. House of Representa- rencies is about $32 million greater than it would tives, March 10, 1983. have been without the expanded investment authority. Because the Federal Reserve turns over I am pleased to testify about the Federal Re- essentially all of its net earnings to the Treasury, serve's operations under section 105(b) of the the authority contained in the act is of commen- Monetary Control Act of 1980. This amendment surate value to the taxpayer. The only use we of section 14 of the Federal Reserve Act autho- have made of the investment authority has been rizes the Federal Reserve to invest its holdings of to invest foreign-currency holdings arising from foreign currencies arising from foreign exchange our foreign exchange operations, and we believe operations in interest-bearing obligations of for- that is the only use compatible with the purpose eign governments. Such investment authority and legislative history of the provision. was needed in order to enable the Federal Re- Section 105(b) also expanded the list of assets serve to earn interest on its holdings of foreign that may be used as collateral for Federal Recurrencies acquired through exchange market serve notes to include all the assets that may be intervention at rates of return comparable with purchased by the Federal Reserve under section those prevailing in the market. Before passage of 14 of the Federal Reserve Act. Therefore, both the act, our ability to earn market-related rates the new foreign-currency investments and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

194 Federal Reserve Bulletin • March 1983 foreign currencies held under our former section tions. The legislative history of the act is very 14 authority became eligible for use as collateral clear on this point. In testimony before the for Federal Reserve notes. Senate Banking Committee on September 26, By way of background to a more detailed 1979, Chairman Volcker stated that the purpose description of the Federal Reserve's use of its of the provision was to enable the Federal Reauthority under section 105(b), I should note that serve to invest its holdings of non-interest-earnsignificant Federal Reserve holdings of foreign ing foreign currencies in interest-bearing obligacurrencies are relatively recent in origin. They tions. On March 27, 1980, during the Senate's arose as a result of active intervention in foreign consideration of the Monetary Control Act, Senexchange markets by the Treasury and the Fed- ator Proxmire indicated that the purpose of the eral Reserve during the period between Novem- authority to purchase obligations of foreign govber 1978 and April 1981. Federal Reserve hold- ernments is "to provide a vehicle whereby such ings on January 31, 1983, of $5.3 billion foreign currency holdings could be invested in equivalent in foreign assets were chiefly the obligations of foreign governments and thereby result of our own intervention activities and of earn interest. This authority would be used only our warehousing for the U.S. Treasury of $1.1 to purchase such obligations with foreign currenbillion equivalent of foreign currencies. (Ware- cies balances acquired by the Federal Reserve in housing is a procedure whereby the Federal the normal course of business."1 Reserve buys the currencies spot from the Trea- Further restrictions on the use of the new sury and simultaneously resells them forward to investment authority were issued by the Federal the Treasury at the same exchange rate.) Accu- Open Market Committee, which authorizes Fedmulated interest earnings on the assets are also eral Reserve open market operations. At its included in the total. annual review of continuing authorizations and As Federal Reserve holdings of foreign curren- directives on March 31, 1981, the FOMC amendcies—primarily German marks, Swiss francs, ed its authorization for foreign-currency operaand Japanese yen—increased, the limited invest- tions to provide that investments of foreignment opportunities available to us under the currency balances "shall be in liquid form and Federal Reserve Act constrained our ability to generally have no more than 12 months remaininvest our holdings at market-related rates of ing to maturity." As indicated by the record of return. As a practical matter, the only available FOMC policy actions, this limitation applies to outlets were deposits or forward transactions all Federal Reserve investments of foreign-curwith foreign central banks and the Bank for rency holdings, including specifically those made International Settlements (BIS), because the under section 105(b)(2). Federal Reserve Act did not explicitly authorize As noted in the authorizations, the FOMC has purchase of government debt instruments. For limited the Federal Reserve's authority to buy, their part, the foreign central banks were in some sell, and hold foreign currencies by specifying 14 cases legally prohibited from paying interest on currencies. Since the investment authority under deposits. Other facilities they could offer us did section 105(b)(2) applies only to foreign currennot always yield returns equal to those on high- cies acquired in the course of normal foreign quality, liquid instruments in the market. exchange operations, this limitation also speci- Section 105(b)(2) of the Monetary Control Act fies the countries whose obligations we are emof 1980 amended the Federal Reserve Act to powered to acquire under that section. The list of provide that the Federal Reserve may buy and eligible currencies has always comprised only sell obligations of, or fully guaranteed as to currencies of those countries with whose central principal and interest by, a foreign government banks the Federal Reserve has reciprocal currenor agency. The sole purpose for including this provision in the act was to overcome the barriers I have just noted, thereby enhancing the Federal 1. The attachments to this statement are available on request to Publications Services, mail stop 138, Board of Reserve's ability to earn a competitive return on Governors of the Federal Reserve System, Washington, D.C. its assets arising out of foreign-currency opera- 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 195 cy or "swap" arrangements. No country has U.S. Treasury and the BIS. The peso holdings been added to that list since 1967. are invested in an interest-bearing account at the In light of the clear legislative history of sec- Bank of Mexico. When the swap drawing is tion 105(b)(2), including Chairman Volcker's unwound, the pesos will be exchanged with the testimony in 1979 on behalf of the Board, the Mexican central bank for dollars at the same rate further restrictions issued by the FOMC, and the of exchange at which they were acquired. This limited list of currencies that have traditionally traditional procedure under the swap arrangebeen eligible for Federal Reserve purchase and ments was also followed as the Bank of Mexico sale, I believe that there are ample safeguards to repaid in full the $700 million swap drawing prevent section 105(b)(2) from being used by the provided directly by the Federal Reserve last Federal Reserve as a basis for assisting foreign August. governments in financial difficulties. Turning to the use of Federal Reserve invest- The Federal Reserve first invested in debt ments in foreign assets as collateral for Federal obligations of a foreign government in October Reserve notes, this matter is mainly technical in 1980. Renewals of maturing investments and nature, and details of our procedures are providadditional purchases have been made at various ed in the technical note. Under section 16 of the times since then. The only holdings of currencies Federal Reserve Act, each Reserve Bank is we have invested in this way are German marks, obligated to designate as collateral a portion of Swiss francs, and Japanese yen—a small subset its assets equal in value to the notes it individualof the eligible list of currencies—all representing ly has issued. Since the notes themselves (also amounts obtained through exchange market op- under section 16) are first and paramount liens on erations. all the assets of the Reserve Bank, not just the Our investments of foreign currencies in obli- designated collateral, and are moreover obligagations of foreign governments have generally tions of the United States, the collateral desigbeen made with the understanding between the nated in no way limits the security of note- Federal Reserve and foreign authorities that the holders. Eligible collateral specified in the details of our transactions will not be made Federal Reserve Act before passage of the Monpublic. In view of these understandings, data are etary Control Act of 1980 consisted of gold available on the average size of our transactions certificates, special drawing rights certificates, in all currencies during three-month intervals U.S. government and agency obligations, and since October 1980 and the average period that small amounts of certain other Federal Reserve securities purchased were held in our portfolio. assets. While the System as a whole has always Federal Reserve investments made under the had sufficient eligible collateral for the aggregate authority of section 105(b)(2) and still outstand- of all Reserve Bank notes in circulation, the ing totaled $1.4 billion equivalent on January 31. distribution of the collateral among the Reserve These investments are in short-term obligations Banks is not necessarily in proportion to their of or guaranteed by the governments of Germa- note liabilities. The Reserve Banks issue notes to ny, Japan, and Switzerland, denominated in the meet the demand for currency in their region, currencies of those countries. Most of the rest of while their holdings of U.S. government securithe $5.3 billion equivalent of Federal Reserve ties depend on an allocation of System holdings holdings are also German marks, Swiss francs, and flows of funds between Federal Reserve and Japanese yen, and they are held at the Districts. central banks that issue those currencies and at It was foreseen that the Monetary Control Act the BIS in investments that yield a market- would lower reserve requirements on liabilities related rate of return. In addition, the Federal of depository institutions, and the Federal Re- Reserve holds Mexican pesos acquired in con- serve would have to sell U.S. government securinection with the Bank of Mexico's drawing on ties in order to eliminate the excess liquidity that the $325 million swap arrangement with the would otherwise be provided to the financial Federal Reserve that was put in place in August system. Therefore, it seemed to us entirely possi- 1982 in parallel with facilities provided by the ble that some Reserve Banks might occasionally Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

196 Federal Reserve Bulletin • March 1983 experience a shortage of assets eligible as collat- under the provisions of section 14, or gold certifieral for their note issues. To prevent this devel- cates, or special drawing right certificates, or any opment, section 105(b)(1) was added to the Mon- obligations that are direct obligations of, or fully etary Control Act. Besides eliminating the guaranteed as to principal and interest by, the previous obligation of the Reserve Banks to United States or any agency thereof, or assets designate collateral for notes still in their own that Federal Reserve banks may purchase or vaults, this section enlarged the list of eligible hold under section 14 of the act. collateral to encompass all foreign-currency in- Each day, an employee at the Board of Govervestments—both those the Federal Reserve was nors in Washington representing the Federal newly authorized to purchase under section Reserve Agent at each Reserve Bank insures that 105(b)(2) and those it could purchase under pre- sufficient collateral is designated to meet each vious authority. Reserve Bank's note liabilities. Eligible assets Four Reserve Banks have used foreign-curren- are used in the following order: all gold and cy assets as collateral on various occasions. No special drawing rights certificates and, to the specific instruments are earmarked in connection extent available, sufficient U.S. government and with such designation of collateral: the amounts agency securities to meet full collateral requireused represented undivided portions of each ments. Only if a Reserve Bank requires addition- Bank's participation in the System's foreign- al collateral are foreign-currency assets used. A currency account. At most, $515 million equiva- list of dates on which foreign currencies were lent of our investments were used at any one used in order to collateralize fully note liabilities time; generally the amounts were much smaller. at individual Reserve Banks is available. New procedures are now under study for colla- On a System wide basis, sufficient collateral is teralization of Federal Reserve note liabilities. available without use of foreign-currency assets. These procedures, if they can be implemented, However, using only gold and SDR certificates would reduce sharply, if not eliminate, any fore- and their government and agency securities, indiseeable need to use foreign-currency assets as vidual Reserve Banks may experience a shortfall collateral for issuance of Federal Reserve notes. if seasonal increases in their notes outstanding (for example, at Christmas or during vacation periods) happen to coincide with reductions in TECHNICAL NOTE ON COLLATERALIZATION holdings of government securities resulting from OF FEDERAL RESERVE NOTES the conduct of monetary policy. In December 1982, for example, it was necessary to use for- Section 16 of the Federal Reserve Act (as amend- eign-currency investments to collateralize some ed) requires that Federal Reserve notes issued by Banks' note liabilities 27 times, even though Reserve Banks be fully collateralized. A Reserve Systemwide excess collateral, excluding foreign- Bank's notes held in its own vaults do not require currency investments, averaged approximately collateral. Assets eligible for use as collateral are $14 billion on a daily basis. specified by section 16 as follows: notes, drafts, Section 16 of the Federal Reserve Act further bills of exchange, or acceptances acquired under stipulates that, in addition to the eligible assets the provisions of section 13 of the Federal Re- designated as collateral for note liabilities on a serve Act, or bills of exchange endorsed by a daily basis, Federal Reserve notes issued to each member bank of any Federal Reserve District Reserve Bank become a first and paramount lien and purchased under the provisions of section 14 on all the assets of the Reserve Bank and are also of the act, or bankers acceptances purchased obligations of the U.S. government. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 197 Statement by Nancy H. Teeters, Governor, cates that, as of the middle of last year, a dozen Board of Governors of the Federal Reserve Sys- states had at least partially overriden the federal tem, before the Subcommittee on Consumer law. Among these twelve states, however, eight Affairs and Coinage of the Committee on Bank- had no usury ceilings on business loans and four ing, Finance, and Urban Affairs, U.S. House of had either usury ceilings that were indexed or Representatives, March 10, 1983. ceilings that were fixed so high they had no effect on credit flows. Those states that were most I am here on behalf of the Federal Reserve to affected by usury ceilings generally have not discuss the expiration of the federal preemption acted to override the preemption. In fact, many of state usury laws governing business and agri- states have moved to relax their regulation of cultural loans and the effect of high interest rates interest rates since the passage of the Deregulaon farmers and businesses. The preemption was tion Act. Currently, only about ten states have passed as a provision of the Depository Institu- fixed usury ceilings on business and agricultural tions Deregulation and Monetary Control Act of loans, and less than half of these could be 1980. It authorized lenders to charge a rate up to considered binding. 5 percent above the Federal Reserve discount In this respect, the focus of federal law prerate on business and agricultural loans of $1,000 empting state interest rate ceilings may have or more in those states with ceilings less than this narrowed. But at the same time, it should be variable limit. The preemption is scheduled to emphasized that permitting the federal preempexpire at the end of this month. tion of state business and agricultural loan usury The Board has been concerned about the ad- laws to expire will not resolve the financial verse impact that usury ceilings can have on the problems of businesses and farmers. These probavailability of funds in local credit markets. Usu- lems have resulted from more fundamental ecory ceilings tend to reduce the supply of credit in nomic difficulties. Fortunately, economic and states subject to unrealistic limits by encouraging financial conditions are now beginning to imlenders to channel funds into other investments prove. Interest rates are now well below their or to geographic areas permitting a more compet- levels of one or two years ago, with short-term itive return on similar investments. Credit thus rates as much as 10 percentage points below their may become unavailable to all but the strongest earlier peaks, and long-term rates down about 4 potential borrowers, as nonrate lending terms to 5 percentage points. More important, the and credit standards are set to compensate for economic recovery that appears to be under way the uncompetitive interest rates that are legally should bolster business activity and help to repermissible. Moreover, given the growth in mon- store a more profitable base for operations. ey market mutual funds into a large competitive Continued success in lowering interest rates industry and the rapid deregulation of deposit depends on our reducing the lingering doubts rates at our financial institutions, the cost of about the progress against inflation and on our funds to financial institutions in local communi- cutting back on credit-absorbing federal budget ties has become increasingly sensitive to national deficits. Monetary and fiscal policies need to be money market developments. This situation cre- directed toward removing these obstacles and ates a much greater need for these institutions to achieving vigorous, and lasting, noninflationary earn a competitive return on their assets. growth. Despite the Board's opposition to artificial To summarize, the Board feels that, with reconstraints on credit availability, we continue to gard to usury ceilings, state action rather than have reservations about federal intrusion into an federal law should prevail whenever possible. area long regulated by the individual states. The Many states have acted to reduce the constrain- Board prefers that usury ceilings be addressed by ing effect of their usury ceiling on credit availcorrective action at the state level. In this regard, ability, and financial conditions have improved the law did provide states with the authority to considerably. These factors generally weaken override the federal preemption of their ceilings. the current need for a national law preempting Information collected by the Board's staff indi- state usury ceilings on business and agricultural Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

198 Federal Reserve Bulletin • March 1983 loans, but do not eliminate the need for further tied. The discount rate has an important role in action to relax interest rate ceilings at the state the conduct of monetary policy and cannot allevel. ways be counted on to reflect an appropriate If the Congress desires to extend the current base rate for the cost of funds. Moreover, belaw, I would like to note again a feature that is of cause the discount rate is an administered rate concern to the Federal Reserve Board. The law that applies generally to very short-term borrowestablished a variable rate ceiling based on the ing by banks and other depository institutions, Federal Reserve discount rate. The Board con- movements in this rate may not be representative tinues to be opposed to use of the discount rate of interest rate movements in markets that inas an index to which the federal usury ceiling is volve longer-term lending. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

199 Announcements CHANGE IN OPERATING PROCEDURES • All interterritory check deposits to be proc- FOR FLOAT essed in order of receipt. Because of the time needed by depository The Federal Reserve Board has approved a institutions and Reserve Banks to make changes program that represents changes in Federal Re- to their systems, this portion of the program will serve operating procedures to reduce and to be implemented on July 1, 1983. price Federal Reserve interterritory check float Because of the operational changes resulting and Federal Reserve check holdover float. from the check float program, the pricing of The Board acted under the provisions of the holdover float will be phased in later in 1983 as Monetary Control Act of 1980 that require the follows: Federal Reserve to charge for its services. The Monetary Control Act requires that any Federal February 24- During this period the Reserve float that remains after operational im- July 1 cost of holdover float provements also be priced. Federal Reserve float above 1 percent of the is the value of checks for which the Federal value of checks collect- Reserve has given credit to the institution that ed daily by the Federal deposited the checks with the Federal Reserve Reserve Banks will be for collection, but for which the Federal Reserve incorporated in the cost has not yet received payment. of check services to be On November 1, 1982, the Board published for recovered in 1983. comment three proposals to eliminate or price July 1- During this period the about 80 percent of Federal Reserve float: (1) September 30 cost of holdover float changing crediting procedures for interterritory above Vi percent of the check deposits; (2) adopting a new accounting value of checks collectprocedure to eliminate float associated with large ed daily by the Federal dollar interterritory returned checks; and (3) Reserve Banks will be pricing holdover and intraterritory check float. incorporated in the cost After reviewing the comments, the Board ap- of check services to be proved a Reserve Bank program to reduce and to recovered in 1983. price interterritory and holdover check float. The October 1 At this time the cost of interterritory check float program calls for the all holdover float will be following: added to the cost of • All Reserve Banks to offer fixed and frac- check services. tional availability crediting options with various methods of payment for float in connection with these crediting options. MONEY STOCK REVISION • All Reserve Banks to offer the same crediting options for interterritory check deposits at the On February 11, 1983, the Board published resame time. vised measures of the money stock, incorporat- • All interterritory check deposits (whether ing minor definitional changes, benchmark reviprocessed at the sending or receiving Federal sions, and updated seasonal factors. Data Reserve office) to be subject to the same credit- reported in tables 1.10 and 1.21 in this issue of ing procedures. the BULLETIN reflect these revisions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

200 Federal Reserve Bulletin • March 1983 1. Monthly seasonal factors for currency, traveler's checks, and deposit components of the money stock Commercial banks Thrift institutions DDeemmaanndd NNoonnbbaannkk ddeeppoossiittss DDeemmaanndd MMoonntthh CCuurrrreennccyy ttrr cc aa hh vv ee ee cc ll kk ee ss rr ''ss OO pp CC lluu DD ss 11 ddeeppoossiittss'' d S e a p v o in si g t s s de S t p i m m o a s e l i l t s de L t p i a m o rg s e i e t s d S e a p v o in si g t s s de S p ti m o m s a e i l t l s2 de L t p i a m o rg s e i e t s 1982 January .9942 .9497 1.0234 1.0224 .9901 1.0003 1.0141 1.0027 1.0044 1.0095 February .9868 .9543 .9748 .9740 .9888 1.0053 1.0176 .9976 1.0050 1.0166 March .9889 .9521 .9809 .9795 .9957 1.0079 1.0097 1.0020 1.0046 1.0098 April .9950 .9447 1.0247 1.0154 1.0069 1.0043 .9925 1.0081 1.0047 .9947 May .9985 .9674 .9804 .9816 1.0051 1.0059 .9943 1.0027 1.0025 1.0006 June 1.0006 1.0481 .9910 .9928 1.0037 1.0050 .9867 1.0042 1.0004 .9947 July 1.0077 1.1114 .9949 .9981 1.0103 .9979 .9847 1.0103 .9990 .9923 August 1.0033 1.1005 .9850 .9877 1.0057 .9971 .9936 .9957 .9958 .9957 September .9978 1.0547 .9932 .9951 1.0007 .9956 .9967 .9899 .9950 .9951 October .9997 1.0041 1.0055 1.0065 1.0043 .9958 .9989 .9953 .9978 .9970 November 1.0059 .9594 1.0130 1.0126 .9929 .9947 1.0033 .9909 .9973 .9926 December 1.0181 .9533 1.0312 1.0331 .9899 .9922 1.0111 .9955 .9952 .9962 1983 January .9925 .9503 1.0255 1.0239 .9908 .9990 1.0114 1.0054 1.0035 1.0113 February .9860 .9553 .9762 .9751 .9916 1.0047 1.0149 1.0003 1.0042 1.0191 March .9881 .9525 .9816 .9797 .9986 1.0072 1.0077 1.0039 1.0038 1.0142 April .9956 .9443 1.0249 1.0147 1.0084 1.0039 .9917 1.0092 1.0041 .9956 May .9970 .9666 .9806 .9821 1.0066 1.0053 .9939 1.0035 1.0022 1.0015 June 1.0002 1.0488 .9901 .9922 1.0048 1.0047 .9886 1.0036 1.0007 .9934 July 1.0082 1.1110 .9933 .9971 1.0099 .9982 .9876 1.0091 .9995 .9897 August 1.0024 1.0999 .9840 .9872 1.0039 .9980 .9964 .9940 .9967 .9940 September .9974 1.0537 .9923 .9946 .9983 .9967 .9982 .9878 .9958 .9944 October .9979 1.0039 1.0052 1.0062 1.0022 .9970 .9993 .9939 .9982 .9966 November 1.0055 .9592 1.0135 1.0129 .9925 .9945 1.0027 .9912 .9971 .9920 December 1.0181 .9540 1.0319 1.0338 .9895 .9916 1.0093 .9958 .9946 .9962 1. In constructing Ml, the seasonal factors for transaction depos- deposit seasonal factors. Other checkable deposits seasonally adjustits are used to derive the sum of demand deposits and other ed equal transaction deposits less demand deposits, both seasonally checkable deposits (OCD), seasonally adjusted. The demand deposit adjusted. component seasonally adjusted is constructed using the demand 2. Includes retail repurchase agreements. Two changes were made in the definition of derived from commercial bank call reports for the broader monetary aggregates. First, shares in December 1981 and for March, June, and Septax-exempt money market funds, previously ex- tember 1982. Adjustments for savings and loan cluded, were added to the monetary aggregates associations were derived from December 1981 on the same basis as taxable money funds: that and June 1982 call reports. These benchmark is, balances in general purpose and broker-deal- revisions had minimal effects on both levels and er funds were added to M2 and those in institu- growth rates, raising Ml slightly and lowering tion-only funds were added to M3. This change other deposit components of the broader aggreincreased growth of both M2 and M3 about V2 gates marginally. percentage point in 1982. The second definitional The repurchase agreement and Eurodollar dechange was to eliminate from M2 and M3 all posit components of M2 and M3 also were reindividual retirement accounts-Keogh balances vised. Revisions to overnight and term RPs were held at depository institutions and money market based on a special survey of RPs at depository mutual funds. This change reduced M2 growth institutions and more complete information for just over 1 percentage point and M3 about 1 holdings of RPs by money market mutual funds. percentage point in 1982.1 The net effect of these changes was to reduce the Benchmark revisions for deposit and currency level of net overnight RPs and raise the level of components of the monetary aggregates were term RPs; in 1982 growth of M2 was affected only slightly by these revisions, and M3 was boosted a bit. The revision to the overnight 1. In addition, club accounts (principally Christmas and Eurodollar component of M2 resulted from vacation club accounts) were transferred from the small time broadening the panel of U.S. banks (previously deposit component to the savings deposit component of M2, with no affect on the aggregate series. consisting of selected Caribbean offices) to in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 201 se currency and deposit components of Ml and commercial bank components of ' aj Commercial banks DDeemmaanndd Demand Currency ppll dd uu ee ss pp oo OO ss CC iitt DD ss 11 deposits' Savings S t m im a e l l L t a im rg e e deposits deposits2 deposit 1 1.004 1.012 1.014 .99057 .99586 1.0101 8 1.019 1.028 1.026 .99424 .99259 1.0113 15, 1.017 1.030 1.033 .99324 .99231 1.0126 22, 1.022 1.029 1.034 .98918 .99235 1.0102 29, 1.020 1.020 1.026 .98709 .99319 1.0202 5, 1.009 1.082 1.085 .99156 .9972 1.0199 12, 1.001 1.050 1.045 .99432 .99882 1.0141 19 .993 1.029 1.026 .99109 1.0006 1.0094 26, .983 .986 .982 .98706 1.0013 1.0125 2, .980 .982 .986 .98560 1.0027 1.0173 9 .994 .984 .982 .98907 1.0044 1.0206 16 .991 .982 .981 .99019 1.0045 1.0174 23, .981 .962 .960 .98881 1.0053 1.0156 2 .980 .975 .973 .98821 1.0067 1.0185 9 .996 .988 .984 .99177 1.0083 1.0133 16 .992 .989 .989 .99413 1.0091 1.0088 23 .986 .974 .973 .99657 1.0084 1.0078 30 .981 .969 .967 1.00160 1.0067 1.0094 6, 1.003 1.031 1.023 1.0124 1.0044 .99983 13, 1.004 1.037 1.024 1.0130 1.0039 .99509 20, .994 1.041 1.026 1.0041 1.0042 .98737 27. .985 1.002 .994 1.0009 1.0039 .99306 4, .993 .999 1.000 1.0033 1.0041 .98643 11. 1.005 .987 .985 1.0060 1.0054 .99054 18. .998 .982 .985 1.0062 1.0062 .99272 25. .992 .965 .966 1.0047 1.0064 .99898 1. .995 .978 .980 1.0037 1.0071 .99934 8. 1.007 .997 .996 1.0054 1.0080 .99370 15. 1.004 1.004 1.005 1.0043 1.0070 .98690 22. .999 .986 .988 1.0020 1.0044 .98162 29. .991 .973 .976 1.0034 1.0010 .98440 6. 1.018 1.018 1.020 1.0105 .99963 .98413 13. 1.014 1.009 1.010 1.0124 .99859 .98157 20. 1.006 .990 .997 1.0108 .99767 .98150 27. .997 .966 .970 1.0081 .99713 .98946 3. 1.002 .985 .992 1.0073 .99706 .99011 10. 1.014 .994 .995 1.0085 .99770 .99228 17. 1.008 .992 .994 1.0076 .99723 .99111 24. .999 .975 .977 1.0051 .99662 .99391 31. .989 .977 .980 1.0024 .99606 1.00050 7. 1.012 1.005 1.003 1.00290 .99756 1.00010 14. 1.001 1.011 1.013 1.00320 .99681 .99361 21. .995 .990 .992 .99919 .99548 .99356 28. .984 .961 .967 .99759 .99452 1.00090 5. .997 1.008 1.010 1.0057 .99447 .99588 12. 1.008 1.016 1.017 1.0083 .99568 1.00190 19. 1.000 1.010 1.010 1.0055 .99687 1.00010 26. .992 .985 .986 1.0012 .99651 .99729 2. .992 1.006 1.011 .99728 .99574 .99831 9. 1.011 1.020 1.019 .99633 .99463 .99841 16. 1.008 1.024 1.024 .99391 .99451 1.00040 23. 1.006 1.003 .999 .99074 .99461 1.00550 30. 1.003 1.007 1.008 .99024 .99637 1.00970 7. 1.017 1.029 1.029 .99424 .99259 1.0113 14. 1.017 1.028 1.027 .99324 .99231 1.0126 21. 1.021 1.030 1.033 .98918 .99235 1.0102 28. 1.023 1.020 1.027 .98709 .99319 1.0202 ruci il factors for transaction deposits factors. Other checkable deposits seasonally adjusted equal transaceri\ ted deposits and other checkable tion deposits less demand deposits, both seasonally adjusted. )), The demand deposit component 2. Includes retail repurchase agreements, iust ing the demand deposit seasonal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

202 Federal Reserve Bulletin • March 1983 elude additional Caribbean offices as well as ulation G (Securities Credit by Persons Other offices in other locations, principally London; than Banks, Brokers, or Dealers). The Board the net impact of these changes on both levels asked for comment on its proposals by April 22, and growth rates was minor after allowing for 1983. The proposed revision is part of the such holdings by money market mutual funds. Board's Regulatory Improvement Project in Seasonal factors were revised using the X-l 1 which the Board is reviewing and revising all its ARIMA procedure adopted last year. As in the regulations to update them, simplify their lanprevious revision, data were preadjusted to mini- guage, eliminate obsolete or unneeded language mize the effects of large nonseasonal fluctuations or provisions, and lighten the burden of compliassociated with the credit control period of 1980 ance. and with large shifts of balances into negotiable order of withdrawal accounts in 1981; data for December 1982 were excluded from these com- CHANGES IN BOARD STAFF putations to avoid distortions associated with the large shifts of balances into the newly authorized The Board of Governors has announced the money market deposit accounts. Revisions to following appointments. seasonal factors tended to be greater than in Brent L. Bowen as Assistant Controller in the other recent years because data for 1982 tended Office of the Controller, effective February 20, to confirm evolving patterns that had been ob- 1983. Mr. Bowen, who joined the Board's staff in scured by unusual circumstances associated with September 1973, holds a B.A. degree from the the credit control period of 1980. Revised month- U.S. Air Force Academy and an M.B.A. from ly seasonal factors for 1982 and 1983 are provid- the University of Alaska. ed in table 1, and weekly factors for late 1982 and S. David Frost as Staff Director for Managefor the year 1983 are shown in table 2. ment, effective around April 1, 1983. Mr. Frost, Revised historical data for the period 1959-82 currently Deputy Comptroller of the U.S. Navy, are available on request from the Banking Sec- is a graduate of the U.S. Naval Academy and tion, Board of Governors of the Federal Reserve holds an M.B.A. from Stanford University. System, Washington, D.C. 20551. The Board has also announced the resignation of Robert E. Mannion, Deputy General Counsel PROPOSED ACTIONS in the Legal Division, effective February 8, 1983. The Federal Reserve Board has proposed for comment an amendment to Regulation Y (Bank SYSTEM MEMBERSHIP: Holding Companies and Change in Bank Con- ADMISSION OF STATE BANKS trol) to add discount securities brokerage and securities credit lending to the list of nonbanking The following banks were admitted to memberactivities permissible for bank holding compa- ship in the Federal Reserve System during the nies. The Board asked for comment by April 8, period February 11 through March 10, 1983. 1983. The Federal Reserve Board has also published California for comment proposals to revise in their entirety Rosemead First American Bank Regulation U (Credit by Banks for the Purpose of Colorado Purchasing or Carrying Margin Stocks) and Reg- Longmont Pioneer Bank of Longmont Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

203 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ment spending would rise only 2 percent in the ON DECEMBER 20-21, 1982 first half of 1983 from the level in the second half of this year; in real terms, the survey results 1. Domestic Policy Directive implied a decline of more than 2 percent. Along with capital spending, inventory investment was The information reviewed at this meeting sug- exerting a dampening influence on economic gested that real GNP, which had increased at an activity, as businesses continued their efforts to annual rate of 0.7 percent in the third quarter, reduce inventories. declined in the fourth quarter, although final The index of industrial production fell again in sales apparently were maintained. The rise in November, but the decline of 0.4 percent was average prices, as measured by the fixed-weight half that in each of the preceding two months. price index for gross domestic business product, Most major sectors registered reductions in outremained much less rapid than in 1981. put, with cutbacks especially pronounced in du- The nominal value of retail sales rose about 2XA rable goods industries. Defense and space equippercent in November, after having increased Wi ment continued to be the only major category of percent over the preceding two months. Al- final products showing strength. Capacity utilizathough gains in November were recorded for all tion in manufacturing declined to 67.8 percent, a major categories of stores, the rise was attribut- new postwar low. able mainly to a sharp increase in sales at auto- Nonfarm payroll employment fell 165,000 in motive outlets. Unit sales of new domestic auto- November, about the same as the average mobiles increased to an annual rate of 63A monthly decline earlier in the year. Job losses million, as buyers responded to interest rate were concentrated in the manufacturing sector, concessions and other special promotions of- particularly durable goods manufacturing. The fered primarily on 1982 models. In the first 10 unemployment rate rose 0.4 percentage point to days of December, however, sales fell back to an 10.8 percent. Initial claims for unemployment annual rate of 53A million units. insurance, although down from the peaks in early Private housing starts, both single-family and autumn, remained relatively high. multifamily, rose substantially in November, and The producer price index for finished goods at an annual rate of 1.4 million units, were nearly rose 0.6 percent in November. More than half of 500 thousand units higher than the rate in the first the rise was attributable to sharp increases in half of the year. Newly issued permits for resi- prices of energy-related items; prices of consumdential construction also strengthened, rising 6 er foods declined somewhat, while prices of percent in November after increasing 17 percent other consumer goods rose moderately. Over the in October. first 11 months of the year the index increased at Business fixed investment spending appeared an annual rate of about 33A percent. The consumto be continuing the downtrend that began in er price index edged up only 0.1 percent in mid-1981 as shipments and orders for nondefense November, as homeownership costs declined capital goods declined in October, the latest and price increases for most other major expenmonth for which data were available. According diture categories slowed. Thus far in 1982 the to the Department of Commerce survey taken in index had risen at an annual rate of about 4Vi late October and November, plant and equip- percent, half the pace in 1981. The advance in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

204 Federal Reserve Bulletin • March 1983 index for average hourly earnings slowed appre- and IP/4 percent in October and November reciably to an annual rate of 4V2 percent from June spectively, and M3 grew at an annual rate of to November, compared with an annual rate of about 9V4 percent in both months. On average, 6V2 percent over the first half of 1982 and about expansion in these broader aggregates had re- 8V2 percent during 1981. mained at about or somewhat below the rates of In foreign exchange markets the trade-weight- earlier in the year. On the basis of partial data, ed value of the dollar against major foreign however, it was estimated that expansion in M2 currencies had declined about 4V2 percent from and M3 had slowed substantially in recent peaks reached in early November. A major fac- weeks. Growth of Ml had remained rapid in tor in the decline apparently was the market's recent months, influenced by shifts of funds reassessment of prospects for the U.S. foreign associated with the maturing in early October of trade and current accounts. In October the U.S. a large volume of all savers certificates and foreign trade deficit rose sharply further: agricul- possibly with the recent and prospective introtural exports declined somewhat from the re- duction of new deposit accounts at depository duced third-quarter rate, and nonagricultural ex- institutions. ports fell substantially while imports rose. Expansion in total credit outstanding at U.S. At its meeting on November 16, the Commit- commercial banks slowed to an annual rate of 1V2 tee had agreed that it would seek to maintain percent in November. Banks again acquired a expansion in bank reserves needed for an orderly sizable volume of U.S. Treasury securities, but and sustained flow of money and credit, consist- their total loans outstanding fell. Business loans ent with growth of M2 (and M3) from September contracted at an annual rate of nearly 8 percent to December at an annual rate of around 9V2 and security loans declined markedly, while real percent. The Committee also decided that some- estate and consumer loans remained sluggish. what slower growth in M2 and M3, to the extent The outstanding volume of commercial paper of of reducing their expansion for the year to nearer nonfinancial businesses contracted substantially the upper part of the ranges set for 1982, would for the third successive month, as firms continbe acceptable and desirable if such growth were ued to raise funds in the longer-term capital associated with declining interest rates. On the markets. other hand, somewhat more rapid growth would Short-term market interest rates declined be tolerated if continuing economic and financial about 3/8 to 3/4 percentage point on balance over uncertainties should appear to be reflected in the intermeeting period, while bond yields rose a exceptional demands for liquidity. The Commit- little in response to unusually heavy borrowing tee had also decided that it would continue to by businesses and governments. The Federal place much less than the usual weight on the Reserve announced reductions in the discount movements of Ml during the period from Sep- rate from 9V2 to 9 percent on November 19 and to tember to December and would not set a specific 8V2 percent on December 13. In recent weeks objective for its growth over the fourth quarter. federal funds had traded in the area of SV2 to 9 The intermeeting range for the federal funds rate, percent, compared with about 9V2 percent over which provides a mechanism for initiating further the previous intermeeting interval. The prime consultation of the Committee, was set at 6 to 10 rate charged by most commercial banks on shortpercent. term business loans was reduced V2 percentage The demand for reserves remained strong in point to 11V2 percent in late November. Average November, reflecting particularly the continuing rates on new commitments for fixed-rate convenrapid growth of transaction balances. Nonbor- tional home mortgage loans had edged down rowed reserves grew rapidly, although less so further in recent weeks. than in October, and adjustment borrowing (in- The staff projections presented at this meeting cluding seasonal borrowing) rose to an average continued to suggest that real GNP would grow of $433 million in November from an average of moderately during 1983. The projections also $337 million in October. suggested that unemployment would remain at a M2 grew at annual rates of about 8 lA percent high level. The rate of increase in prices, as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 205 measured by the fixed-weight price index for range for bank credit was 6 to 9 percent. The gross domestic business product, was expected Committee had agreed that growth in the moneto drift down. tary and credit aggregates around the top of the The views of Committee members with re- indicated ranges would be acceptable in the light spect to the economic situation and outlook had of the relatively low base period for the Ml target changed little in the period since the Committee and other factors, and that it would tolerate for meeting in mid-November. Moderate growth in some period of time growth somewhat above the real GNP over the year ahead accompanied by target range should unusual precautionary desome further improvement in the performance of mands for money and liquidity be evident in the prices continued in general to be regarded as a light of current uncertainties. The Committee reasonable expectation. had also indicated in July that it was tentatively Since mid-November, it was observed, addi- planning to continue the current ranges for 1983. tional signs of a near-term strengthening in activ- That decision will be reviewed at the Committee ity had appeared, particularly in markets for meeting scheduled for February 8-9, 1983, taking housing and consumer goods, and there were into account the latest economic developments indications of some improvements in business and institutional changes associated with the new confidence in many parts of the country. At the deposit accounts authorized by the Depository same time, conditions in the industrial sector Institutions Deregulation Committee (DIDC). remained severely depressed, reflecting the sus- In the Committee's discussion of policy for the tained downtrend in business fixed investment, near term, the period from December 1982 to the ongoing efforts to pare business inventories, March 1983, the members considered objectives and the continued weakness in export markets. for monetary growth against the background of In some industries, the expansion in orders for the tentative ranges for 1983 as a whole. In the defense equipment was providing at least a par- discussion, it was recognized that the behavior of tial offset to the weakness in demands for nonde- the aggregates would continue to be distorted by fense equipment, but the translation of such institutional developments relating to deregulaorders into production and employment often tion of interest rates on deposits. Depository involved extended lags. On balance, an upturn in institutions had begun to offer the new money economic activity appeared to be in the offing, market deposit account that had been authorized although the evidence was not conclusive and by the DIDC, effective December 14, 1982. This some Committee members stressed that there account had limited transaction features and, were substantial risks of a shortfall from the staff while included in M2, was excluded from Ml. projection. The DIDC had also authorized a minimum bal- As in mid-November, it was noted that finan- ance NOW account free of interest rate ceilings, cial market conditions had eased significantly effective January 5, 1983, which would be includsince midyear, and fiscal policy over the second ed in Ml. half of 1982 had become highly stimulative. In The impact of the new accounts on the behavfact, some members continued to express con- ior of the monetary aggregates was highly uncercern that an overly expansive combination of tain, especially in the case of Ml for which even fiscal and monetary policies might reinvigorate the direction of the impact was currently unclear. inflationary expectations, thereby fostering a rise A staff analysis referred to the large pool of liquid in long-term interest rates that would limit or assets that could be shifted into the new acabort the expected recovery. counts, possibly during a relatively short period At a meeting in July 1982, the Committee had of time. The magnitude of such shifts and the reaffirmed the monetary growth ranges for the allocation of funds between the two new acperiod from the fourth quarter of 1981 to the counts would depend on the competitive pricing fourth quarter of 1982 that it had set at its and promotion of the accounts by depository meeting in early February. These ranges were institutions and on the response of depositors to 2!/2 to 5>/percent for Ml, 6 to 9 percent for M2, interest rate relationships and to the elements of 2 and 61/2 to 9Vi percent for M3. The associated convenience. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

206 Federal Reserve Bulletin • March 1983 At one extreme, shifts of funds could be domi- the broader aggregates, and also of Ml, appeared nated by flows into the new NOW accounts, to have declined at an unusually sharp rate over thereby causing Ml to rise sharply during some the year. transition period. At the other extreme, money With respect to M2, most Committee members market deposit accounts might attract most of indicated a preference for setting a first-quarter the shifted funds, including those from deposits growth rate that would allow for some modest in Ml, retarding the growth of Ml if not actually shift of funds into components of that aggregate reducing its level. from market instruments and large-denomination The shifts of funds would clearly work in the certificates of deposit. They were prepared, direction of expanding M2, although the magni- however, to accept greater growth if analysis of tude of the effect was very uncertain. A large incoming data and other evidence from deposipart of the shifts would probably represent a tory institutions and market reports indicated redistribution of funds among the components of that the new money market accounts were gener- M2, but in addition funds would shift into M2 ating substantial shifts of funds into those aggrefrom market instruments and from large-denomi- gates from outside sources. nation certificates of deposit. Growth in M3 was During the Committee's discussion, the obserexpected to be affected the least because deposi- vation was made that the uncertainties that had tory institutions would probably curtail their generated unusual demands for liquidity in relaissuance of large-denomination certificates of tion to GNP during 1982—and the accompanying deposit in response to the availability of funds decline in the velocity of the monetary aggrethrough the new accounts. The timing of the gates—could be expected to abate as economic various shifts was also subject to a great deal of activity strengthened and consumer and business uncertainty, although earlier experience with the confidence improved. Thus, abstracting roughly introduction of NOW accounts suggested that a from the impact of the new deposit accounts, the large part of the transition to the new accounts velocity of money could be expected to show would be concentrated in a relatively short peri- much less weakness in 1983 than in 1982, though od of time. whether it might continue to be affected by At its meetings held in October and Novem- strong liquidity demands was open to question. ber, the Committee had decided to place much At the conclusion of the discussion, the Comless weight than usual on Ml in the fourth mittee decided to seek to maintain expansion in quarter and not to set a specific objective for its bank reserves consistent with growth of M2 at an growth, because of the difficulties of interpreting annual rate of around 9V2 percent and growth of its behavior in a period of major institutional M3 at an annual rate of about 8 percent for the changes. At this meeting, the members generally period from December to March. The objective favored continuance of that reduced attention to for M2 would allow for a modest amount of Ml during the first quarter. Thus, the Committee growth resulting from shifts into the newly aufocused on setting objectives for growth of M2 thorized money market deposit accounts from and M3. large-denomination certificates of deposit or Reference was made to the fact that, despite market instruments. For both M2 and M3, the some evidence of a deceleration in the growth of Committee indicated that greater growth would these broader aggregates most recently, their be acceptable if analysis of incoming data and expansion over the year ending in the current other evidence from banking and market reports quarter would be somewhat above the growth indicated that the new money market deposit ranges that had been set by the Committee. At accounts were generating more substantial shifts recent meetings, however, most Committee of funds into these broader aggregates from marmembers had endorsed the view that monetary ket instruments. The intermeeting range for the growth somewhat above those ranges was appro- federal funds rate, which provides a mechanism priate in light of the indications of strong de- for initiating further consultation of the Commitmands for liquidity during a period of relatively tee, was set at 6 to 10 percent. weak economic activity. The income velocity of The following domestic policy directive was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 207 issued to the Federal Reserve Bank of New Specification of the behavior of M1 over the months York: ahead remains subject to substantial uncertainty because of special circumstances in connection with the The information reviewed at this meeting suggests public's response to the new deposit accounts availthat real GNP declined in the fourth quarter, although able at depository institutions. The difficulties in interfinal sales apparently were maintained, and that the pretation of Ml continue to suggest that much less rise in prices remained much less rapid than in 1981. than usual weight be placed on movements in that Retail sales and housing activity have strengthened in aggregate during the coming quarter. The institutional recent months, but business fixed investment appar- changes also add a degree of uncertainty to the behavently has weakened further and efforts to reduce ior of the broader monetary aggregates. inventories have continued. In November industrial In all the circumstances, the Committee seeks to production and nonfarm payroll employment declined maintain expansion in bank reserves consistent with further, and the unemployment rate rose 0.4 percent- growth of M2 of around W2 percent at an annual rate, age point to 10.8 percent. Initial claims for unemploy- and of M3 at about an 8 percent rate, from December ment insurance, although down from the early autumn to March, allowing in the case of M2 for modest peaks, have remained relatively high. In recent shifting into the new money market accounts from months the advance in the index of average hourly large-denomination CDs or market instruments. The earnings has slowed appreciably further. Committee indicated that greater growth would be The weighted average value of the dollar against acceptable if analysis of incoming data and other major foreign currencies has declined from peaks evidence from bank and market reports indicate that reached in early November. The U.S. merchandise the new money market accounts are generating more trade deficit rose sharply further in October. substantial shifts of funds into broader aggregates from Growth of Ml has remained rapid in recent months, market instruments. The Chairman may call for Comwhile growth of M2 and M3 has continued at about or mittee consultation if it appears to the Manager for somewhat below the rates of earlier in the year. On Domestic Operations that pursuit of the monetary balance short-term market interest rates have declined objectives and related reserve paths during the period since mid-November, while bond yields have risen before the next meeting is likely to be associated with somewhat in response to unusually heavy borrowing a federal funds rate persistently outside a range of 6 to by businesses and governments; mortgage rates have 10 percent. edged down further. The Federal Reserve announced reductions in the discount rate from W2 percent to 9 Votes for this action: Messrs. Volcker, Solomon, percent on November 19 and to 8V2 percent on Decem- Balles, Gramley, Mrs. Horn, Messrs. Martin, Parber 13. tee, Rice, Mrs. Teeters, and Mr. Wallich. Votes The Federal Open Market Committee seeks to fosagainst this action: Messrs. Black and Ford. ter monetary and financial conditions that will help to reduce inflation, promote a resumption of growth in output on a sustainable basis, and contribute to a Mr. Black dissented because he preferred to sustainable pattern of international transactions. In direct policy in the weeks immediately ahead July, the Committee agreed that these objectives toward ensuring that the growth of Ml, abstractwould be furthered by reaffirming the monetary growth ranges for the period from the fourth quarter of ing from temporary effects of the introduction of 1981 to the fourth quarter of 1982 that it had set at the new money market deposit accounts, would February meeting. These ranges were 2Vz to 5V2 per- moderate from the extremely rapid rate of recent cent for Ml, 6 to 9 percent for M2, and 6V2 to 9'/2 months. While recognizing the difficulties in inpercent for M3. The associated range for bank credit terpreting Ml currently, he was concerned that was 6 to 9 percent. The Committee agreed that growth in the monetary and credit aggregates around the top excessive underlying growth in that aggregate of the indicated ranges would be acceptable in the light might reverse the progress achieved in reducing of the relatively low base period for the M1 target and inflation and inflationary expectations and lead other factors, and that it would tolerate for some to substantially weaker markets for long-term period of time growth somewhat above the target securities. should unusual precautionary demands for money and liquidity be evident in the light of current economic Mr. Ford dissented from this action because uncertainties. The Committee had also earlier indicat- he continued to prefer a policy for the current ed that it was tentatively planning to continue the period that was more firmly directed toward current ranges for 1983, but it will review that decision restraining monetary growth, after allowance for carefully at its February 1983 meeting in light of the short-run impact of the introduction of the economic developments and institutional changes associated with the new deposit accounts authorized by new money market deposit accounts. He rethe Depository Institutions Deregulation Committee. mained concerned that rapid expansion in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

208 Federal Reserve Bulletin • March 1983 supply of money together with very large budget way. The situation will be reviewed at the FOMC deficits would produce an overly stimulative meeting on February 8-9. combination of policies that could rekindle inflation and inflationary expectations and lead to higher interest rates during 1983 and 1984. 2. Authorization for Domestic Open The Committee subsequently, on several occa- Market Operations sions, discussed the extraordinarily rapid growth in money market deposit accounts (MMDAs) At this meeting the Committee voted to increase that had taken place since they became available from $3 billion to $4 billion the limit on changes in mid-December and the implications of this between Committee meetings in System Account growth for behavior and interpretation of the holdings of U.S. government and federal agency monetary aggregates. At a telephone conference securities specified in paragraph 1(a) of the auon January 28, 1983, it was noted that these thorization for domestic open market operations, accounts had risen to a level of about $185 billion effective immediately, for the period ending with on average by the week ending January 19, the close of business on February 9, 1983. leading to a very sharp expansion in M2. Estimates of sources of MMDA inflows at this time Votes for this action: Messrs. Volcker, Solomon, were inevitably subject to considerable uncer- Balles, Black, Ford, Gramley, Mrs. Horn, Messrs. Martin, Partee, Rice, Mrs. Teeters, and Mr. Waltainty. Growth of M2 seemed clearly to be on a lich. Votes against this action: None. track well above the 9'/2 percent annual rate for the December to March period set at the December meeting, but staff analysis—based on assess- This action was taken on the recommendation ment of incoming data as well as various reports of the Manager for Domestic Operations. The on sources of MMDA inflows—suggested it was Manager had advised that substantial net sales of possible that virtually all of the greater M2 securities were likely to be required during Janugrowth might be attributed to unexpectedly large ary in order to absorb reserves that had been shifts into MMDAs out of instruments not in- provided over recent weeks to meet seasonal cluded in M2. Effects on M3 were more problem- needs for currency in circulation. atical, but actual growth of this aggregate in On January 25-26, 1983, the Committee voted December and January on average appeared to to approve an additional increase to $5.5 billion have been modest. Expansion of Ml had re- in the intermeeting limit on changes in holdings mained on the strong side; while there may have of U.S. government and federal agency securibeen some diversion from Ml to MMDAs, its ties, effective immediately, for the period ending growth very recently had been raised by the with the close of business on February 9, 1983. introduction of Super NOW accounts. It was the This action was taken after the Manager had Committee consensus for the time being to main- advised that the seasonal need to absorb reserves tain the existing degree of reserve restraint but in association with the return flow of currency not to increase this restraint further in response would be greater than anticipated earlier. to the recent reported over-target growth of the Votes for this action: Messrs. Volcker, Solomon, broader monetary aggregates because that Balles, Black, Ford, Gramley, Mrs. Horn, Messrs. growth appeared to be primarily related to the Martin, Partee, Rice, Mrs. Teeters, and Mr. Walmassive redistribution of funds currently under lich. Votes against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

209 Legal Developments AMENDMENT TO REGULATION L nity Affairs the authority to make determinations under § 226.28 of Regulation Z and § 213.7 of Regula- The Board of Governors of the Federal Reserve Sys- tion M regarding the effects of the Truth in Lending tem has amended its Regulation L—Management Offi- Act on analogous state laws. cial Interlocks, to permit a management official of a Effective February 1, 1983, section 265.2(f)(6) is depository organization who terminated a grandfather revised, and effective February 2, 1983, section interlock because of a change in circumstances, as 265.2(h)(2) is amended by revising it to read as follows: defined by the agencies, to resume the interlock for the duration of the grandfather period under the Act. Effective February 7, 1983, section 212.5 of Regula- Part 265—Rules Regarding Delegation of tion L is amended by revising it to read as set forth Authority below: Section 265.2—Specific Functions Delegated to Board Employees and to Federal Reserve Part 212—Management Official Interlocks Banks. Section 212.5—Grandfathered Interlocking Relationships ^ *** A person whose interlocking service in a position as a management official of two or more depository organi- (6) Under the provisions of the seventh paragraph zations began prior to November 10, 1978, and was not of section 13 of the Federal Reserve Act (12 U.S.C. immediately prior to that date in violation of Section 8 372), to permit a member bank or a Federal or State of the Clayton Act (15 U.S.C. 19) is not prohibited branch or agency of a foreign bank that is subject to from continuing to serve in such interlocking positions reserve requirements under section 7 of the Internauntil November 10, 1988. Any management official tional Banking Act of 1978 (12 U.S.C. 3105) to who has been required to terminate or who has termi- accept drafts or bills of exchange in an aggregate nated service in one or more such interlocking posi- amount at any one time up to 20 per cent of its paid tions as a result of a merger, acquisition, consolida- up and unimpaired capital stock and surplus, if the tion, or establishment of an office that formerly was Reserve Bank is satisfied that such permission is defined as a change in circumstances in 12 CFR warranted after giving consideration to the institu- 212.6(a) (1981) is not prohibited from continuing or tion's capitalization in relation to the character and resuming such service until November 10, 1988. condition of its assets and to its deposit liabilities and other corporate responsibilities, including the volume of its risk assets and of its marginal and inferior quality assets, all considered in relation to the strength of its management. AMENDMENTS TO RULES REGARDING DELEGATION OF AUTHORITY (h) *** The Board of Governors has amended its Rules Re- (2) Pursuant to Section 111, 171(a) and 186(a) of the garding Delegation of Authority (12 CFR Part 265) to Truth in Lending Act (15 U.S.C. 1610(a), 1666j(a) grant permission to member banks and certain United and 1667e(a)) and the Board's Regulation Z (12 CFR States branches and agencies of foreign banks to 226.28) and Regulation M (12 CFR 213.7), to make create bankers' acceptances of the type described in determinations regarding the effect of the Truth in 12 U.S.C. 372 up to 200 per cent of capital stock and Lending Act on state laws. surplus and has also amended Part 265 to delegate to the Director of the Division of Consumer and Commu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

210 Federal Reserve Bulletin • March 1983 BANK HOLDING COMPANY AND BANK MERGER Notice of the application, affording interested per- ORDERS ISSUED BY THE BOARD OF GOVERNORS sons an opportunity to submit comments and views, has been given in accordance with section 3(b) of the Orders Under Section 3 of Bank Holding BHC Act. The time for filing comments and views has Company Act expired and the Board has considered the comments received, including that of the Kansas Independent Fourth Financial Corporation, Bankers Association ("KIBA"), in light of the factors Wichita, Kansas set forth in section 3(c) of the BHC Act, (12 U.S.C. § 1842(c)). Order Approving Acquisition of Shares of a Bank Applicant, with assets of $952 million,3 is the largest Holding Company banking organization in Kansas. It controls, through the Fourth National Bank and Trust Company, Wichi- Fourth Financial Corporation, Wichita, Kansas, a ta, Kansas,4 $635 million in deposits, representing 5.9 registered bank holding company under the Bank percent of statewide deposits. Bank is the thirty-eighth Holding Company Act ("BHC Act"), as amended, largest bank in Kansas, and controls $66 million in 12 U.S.C. § 1841 et seq., has applied for the Board's deposits, representing 0.4 percent of commercial approval under section 3(a)(3) of the Act, (12 U.S.C. banking deposits statewide. Upon consummation of § 1842(a)(3)), to acquire 24.98 percent of the outstandthe proposed acquisition, Applicant will remain the ing voting shares1 and 100 percent of the outstanding largest commercial banking organization in Kansas nonvoting preferred stock of Pittsburg Bancshares, and will control 6.3 percent of total deposits in com- Inc., Pittsburg, Kansas ("Pittsburg"), and, thereby, mercial banking organizations in Kansas. The Board indirectly to acquire an interest in the National Bank concludes that the acquisition proposed by Applicant of Pittsburg, Pittsburg, Kansas ("Bank"). will not have any significant effect on the concentra- Applicant's investment in the voting and nonvoting tion of banking resources in Kansas. preferred stock of Pittsburg amounts to $8 million, and Bank is the largest commercial banking organization will represent approximately 89 percent of the total in the Crawford County banking market,5 and controls equity of Pittsburg. An officer and director of Appli- 27.4 percent of deposits in commercial banks in the cant will serve as one of the three directors of Pittsmarket. Applicant does not control a banking organiburg. Applicant will not have officers or directors in zation in the Crawford County banking market, and is common with Bank. In addition, Applicant has a 10prohibited by Kansas law from operating a branch in year option to purchase the remaining 74.94 percent of that market.6 Accordingly, consummation of the prothe outstanding voting shares of Pittsburg if Kansas posed transaction would not have any significant effect law is changed to permit such an acquisition, and a on existing or potential competition in any relevant right of first refusal and certain other rights with banking market. In view of the Board's finding, as respect to these shares, which are to be acquired by discussed below, that Applicant will, upon consumma- Mr. Fred B. Anschutz, a private investor who is not an tion of the proposal, control Pittsburg and Bank under officer or director of Applicant.2 Mr. Anschutz' investthe federal BHC Act, the Board has evaluated the ment will total $1 million and will not be financed in financial and managerial resources of Applicant, Pittsany manner by Applicant. Mr. Anschutz will act as a burg, and Bank within the context of the Board's director and president of Pittsburg and his financial multibank holding company standards. Under these advisor will also serve as a director of Pittsburg and standards, the financial and managerial resources of Bank. these organizations are regarded as generally satisfac- 1. Under section 3(a)(3) of the BHC Act, a bank holding company may not, without the prior approval of the Board, acquire directly or 3. All data with respect to Applicant are as of June 30, 1982, and indirectly more than 5 percent of the voting shares of a bank. The those of Bank are as of September 30, 1982. On January 18, 1983, the Board has held that this requirement applies to the acquisition of a Board approved Applicant's acquisition of 24.9 percent of the voting bank holding company of shares of another bank holding company. shares of Coffeyville Bancshares, Inc. In the Order the Board deter- State Street Boston Corporation, 67 FEDERAL RESERVE BULLETIN mined that Applicant would control Coffeyville and its subsidiary 862 (1981). bank for purposes of the federal BHC Act. Thus, upon consummation 2. At the expiration of this 10-year option, Mr. Anschutz has a one- of this acquisition, Applicant would have total assets of $1.12 billion year option to purchase all of the voting common and nonvoting and control aggregate deposits of $813 million, representing 6.4 preferred stock held by Applicant. In addition, the stockholders percent of statewide deposits. agreement between Mr. Anschutz and Applicant provides that neither 4. Applicant also owns as an investment 24.9 percent of the party may transfer any voting or preferred shares of Pittsburg without outstanding voting shares of M-L Bancshares, Inc., Wichita, Kansas, allowing the other party to sell the shares of Pittsburg to the proposed a registered one-bank holding company by virtue of its control of The third party purchaser. In the event the option is not exercised or the Kansas State Bank, Newton, Kansas. third party purchaser does not purchase all of the shares of Pittsburg, 5. The Crawford County banking market is approximated by Craweither Applicant or Mr. Anschutz may, under certain circumstances, ford County, Kansas. require the dissolution and liquidation of Pittsburg. 6. Kan. Stat. Ann. § 9-1111 (1975). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 211 tory, and their future prospects appear favorable. influence over another company. The Attorney Gener- Considerations relating to the convenience and needs al further stated that ownership by a company of 24.9 of the communities to be served are also consistent percent of the voting shares and 100 percent of the with approval. preferred stock of another company is insufficient to In acting on an application under the BHC Act, the give the company control over the other company, the Board is required to consider, in addition to the voting shares of the subsidiary bank held by the other competitive, financial, managerial and convenience company, or the election of a majority of the directors and needs factors set out in the BHC Act, whether the of the subsidiary bank. The opinion concludes that a proposal would comply with the provisions of relevant company's option to acquire the remainder of the state law, and the Board may not approve an applica- voting shares, or a company's right of first refusal with tion that would result in a violation of state law.7 respect to the remainder of the voting shares, does not KIBA has objected to approval of this application, give the company control of the other company, the contending that the proposed acquisition would violate voting shares of the subsidiary bank held by the other a provision of Kansas law that prohibits a company company, or the election of a majority of the directors from owning, controlling or holding with power to vote of the subsidiary bank. 25 percent or more of the voting shares of each of two In this case the Kansas Bank Commissioner took or more banks in Kansas, or controlling in any manner sworn statements of Mr. Anschutz and Applicant's the election of a majority of the directors of each of officers. These persons stated that the documents two or more banks in Kansas.8 KIBA contends that, submitted to the Board and to the Commissioner as a result of several factors, including the size of the represent all of the documents and agreements beinvestment proposed by Applicant, the existence of an tween the parties regarding control of Pittsburg. Based option in favor of Applicant to purchase the remaining on the Attorney General's opinion, and after review of outstanding voting shares of Pittsburg, and certain the underlying agreements and memoranda submitted provisions in the stockholders agreement restricting by Applicant and the sworn statements of Mr. Anthe transfer of Mr. Anschutz' shares, the proposed schutz and Applicant's officers, the Commissioner transaction will allow Applicant to acquire control of a concluded that "there is no apparent violation of the second bank in Kansas. KIBA has requested that the Kansas banking statutes" in Applicant's proposal. Board hold a formal hearing to explore whether under The record contains no evidence of explicit or tacit Kansas law a control relationship between Fourth agreements between Mr. Anschutz and Applicant, Financial and Pittsburg will result upon consummation other than the documents and agreements submitted of the proposal. with this application, relating to ownership or control By Order dated January 18, 1983, the Board ap- of Pittsburg or Bank or their management, policies or proved, over similar objections by KIBA, a nearly operations, or regarding the voting shares of Bank held identical section 3(a)(3) proposal involving Applicant.9 by Pittsburg. The record shows that Mr. Anschutz has In its Order, the Board examined KIBA's position made a personal investment in Pittsburg using his own regarding the applicability of Kansas law to the trans- resources; that he has not been indemnified by Appliaction and concluded that consummation of the trans- cant for his investment; and that he has no significant action would not violate Kansas law. In reaching this ownership or management affiliation with Applicant. conclusion, the Board relied on the opinion of the There is no evidence that he is acting as an agent of, Kansas Attorney General concerning the status of the for, or on behalf of Applicant or any person acting for transaction under Kansas law.10 In his opinion the Applicant, or that he is affiliated in any other way with Attorney General concluded that, under Kansas law, a Applicant. company indirectly controls voting shares of a bank or The record also shows that Mr. Anschutz proposes the election of a majority of the board of directors of a to act as a director and president of Pittsburg and to bank if a factual determination is made that a company appoint his personal financial advisor as a director of has the ability to exercise restraining or directing Pittsburg and Bank. Mr. Anschutz will thus control two of the three seats on Pittsburg's board of directors. Applicant will elect one representative to the 7. Whitney National Bank in Jefferson Parish v. Bank of New board of directors of Pittsburg and has committed not Orleans & Trust Company, 379 U.S. 411 (1965). to take any action that would represent or result in 8. Kan. Stat. Ann. §§ 9-504 and 9-505 (1975). 9. Fourth Financial Corporation/Coffeyville Bancshares, Inc., 69 control over Pittsburg or Bank for purposes of the FEDERAL RESERVE BULLETIN 95 (1983). KIBA acknowledges in its Kansas banking statute. comment that the pending application is "nearly identical" to Applicant's recently approved acquisition of Coffeyville Bancshares, Inc., In view of all of the facts of record in this case and and that its opposition to that application was filed "on the same for the reasons expressed herein and in its Order of grounds [as are] asserted herein." 10. 82 Op. Kan. Att'y Gen. 196 (September 8, 1982). January 18, 1983 regarding Applicant's acquisition of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

212 Federal Reserve Bulletin • March 1983 Coffeyville Bancshares, Inc., the Board concludes that be in dispute or that appear to warrant further investiconsummation of the proposal will not violate the gation. Nor has KIBA shown that the facts before the Kansas banking statute. Board are incomplete or insufficient to permit the Although consummation of the proposed transac- Board to carry out its responsibility under the BHC tion does not appear to allow Applicant to control Act or that further investigation would produce addi- Pittsburg or Bank for purposes of the Kansas banking tional relevant information. In essence, KIBA disstatute, the Board concludes, based upon the facts of putes the conclusion drawn by the state authorities record and established Board precendent, that Appli- regarding the question of control under state law. The cant will control Pittsburg and Bank for purposes of Board is not required to hold a formal hearing where a the federal BHC Act.11 In the Board's judgment, the party disputes the conclusion to be drawn from establong-term option in favor of Applicant to purchase the lished facts or where such proceeding would not serve voting shares of Pittsburg owned by Mr. Anschutz and to develop new or useful facts.16 Accordingly, the the other restrictions on the transferability of these Board concludes that a formal hearing is not warranted shares,12 Applicant's guarantee of the purchase agree- in this case, and hereby denies KIBA's request for a ment between Pittsburg and present shareholders of hearing. Bank,13 and the fact that Applicant will hold approxi- On the basis of the record, and for the reasons mately 89 percent of the total equity of Pittsburg and discussed above, the application is hereby approved. will bear substantially all of the risk of loss or receive The transaction shall not be made before the thirtieth substantially all of the gain on the proposal, demon- day following the effective date of this Order, or later strate that Applicant will control Pittsburg and Bank than three months after that date, unless such period is for purposes of section 2(a)(2) of the Act and the extended for good cause by the Board or by the Board's regulations thereunder.14 In this regard, Ap- Federal Reserve Bank of Kansas City, pursuant to plicant has agreed to register and report Pittsburg and delegated authority. Bank as subsidiaries for purposes of the BHC Act and By order of the Board of Governors, effective section 23A of the Federal Reserve Act, (12 U.S.C. February 14, 1983. § 371c). The Board has also considered KIBA's request for a Voting for this action: Governors Wallich, Partee, Teeters, formal hearing.15 KIBA contends that a formal hearing Rice, and Gramley. Absent and not voting: Chairman is required in this case in order to explore fully and Volcker and Governor Martin. develop information regarding whether Applicant will control Pittsburg for purposes of Kansas law. KIBA (Signed) JAMES MCAFEE, has not identified any relevant facts that it considers to [SEAL] Associate Secretary of the Board 11. Unlike the Kansas banking statute, which focuses only on Guaranty, Inc., ownership of voting shares or control of the election of a majority of Beloit, Kansas the board of directors of a bank, the federal BHC Act defines control to include any situation where the Board determines that a company exercises a controlling influence over the management or policies of a Order Approving Acquisition of Shares of a Bank bank, without regard to whether that company owns or controls Holding Company voting shares of the bank or has the ability to elect a majority of the bank's board of directors, (12 U.S.C. § 1841(a)(2)(C)). The federal BHC Act also defines control of a bank or company by a company Guaranty, Inc., Beloit, Kansas, a bank holding compa- "acting through one or more persons", (12 U.S.C. § 1841(a)(2)(A)). ny within the meaning of the Bank Holding Company The Kansas statute has no similar provision. 12. The Board has established a presumption in Regulation Y that Act of 1956, as amended, 12 U.S.C. § 1841 et seq. attributes control of voting shares to any company that enters into any ("BHC Act"), has applied for the Board's approval agreement placing long-term restrictions on the rights of a holder of the voting shares. 12 C.F.R. § 225.2(b)(4). under section 3(a)(3) of the BHC Act, (12 U.S.C. 13. See, e.g., The Jacobus Company and Inland Financial Corpor- § 1842(a)(3)), to acquire 24.8 percent of the voting ation, 60 FEDERAL RESERVE BULLETIN 130 (1974); Mid America Bancorporation, Inc., 60 FEDERAL RESERVE BULLETIN 131 (1974). 14. The Board reached the identical conclusion in its Fourth Financial/Coffeyville order when examining the similarly structured stockholders agreement in that proposal. 16. Northwest Bancorporation v. Board of Governors, 303 F.2d 15. The BHC Act requires the Board to hold a formal hearing on an 832, 843-844 (8th Cir. 1982). Moreover, as noted by the Kansas application submitted under section 3 of the Act only if the Office of Attorney General, the State Bank Commissioner has a continuing the Comptroller of the Currency, in the case of a national bank, or the obligation to monitor the future relationship between Applicant and state supervisory authority, in the case of a State bank, expresses Pittsburg to determine whether Applicant will in fact control Bank written disapproval of the proposed transaction. (12 U.S.C. through means other than those presented in the structure of the § 1842(b)). This hearing requirement is not triggered in this instance proposal itself. In the event such determination is made in the future, because the Comptroller of the Currency, the supervisor of Bank, the state has the authority to require termination of the control expressed no objection to the proposed transaction. relationship at that time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 213 shares and 100 percent of the nonvoting shares of managerial resources of Applicant, Delphos and Del- Delphos, Inc., and thereby indirectly to acquire an phos Bank within the context of the Board's multibank interest in State Bank of Delphos, Delphos, Kansas holding company standards. Under these standards, ("Delphos Bank").1 the financial and managerial resources of these organi- Applicant's investment in the voting and nonvoting zations are regarded as generally satisfactory, and shares of Delphos amounts to $562,000, and will their future prospects appear favorable. Considerrepresent about 94 percent of the total equity of ations relating to the convenience and needs of the Delphos. All officers and directors of Applicant will be communities involved are also consistent with officers and directors of Delphos and Delphos Bank. approval. In addition, the officers and directors of Applicant will In acting on an application under the BHC Act, the purchase the remaining 75.2 percent of the voting Board is required to consider, in addition to the shares of Delphos.2 competitive, financial, managerial and convenience Notice of the application, affording opportunity for and needs factors set out in the Act, whether the interested persons to submit comments and views, has proposal would comply with the provisions of the been given in accordance with section 3(b) of the BHC relevant state law, and the Board may not approve an Act. The time for filing comments and views has application that would result in a violation of state expired, and the Board has considered all comments law.5 received, including those of the Kansas State Bank KIBA has objected to approval of this application, Commissioner and the Kansas Independent Bankers contending that the proposed acquisition would violate Association ("KIBA"), in light of the factors set forth a provision of Kansas law that prohibits a company in section 3(c) of the BHC Act. from owning, controlling or holding with power to vote Applicant, a one-bank holding company, controls 25 percent or more of the voting shares of each of two The Guaranty State Bank & Trust Company, Beloit, or more banks in Kansas, or controlling in any manner Kansas, which holds deposits of $27.3 million and is the election of a majority of the directors of each of one of the smaller banking organizations in Kansas.3 two or more banks in Kansas.6 KIBA contends that, Delphos Bank, with deposits of $7.9 million, is also as a result of several factors, including the purchase of one of the smaller banking organizations in the state. 100 percent of Delphos' voting stock, either directly Accordingly, consummation of the proposed transac- by Applicant or indirectly by Applicant's principals, tion would not have a significant effect on the concen- and the relative size of Applicant's proposed investtration of banking resources in Kansas. ment, Applicant will control a second Kansas bank in Delphos Bank competes in the Ottawa County bank- violation of Kansas law. KIBA has requested that the ing market and is the fourth largest bank in the market Board order a formal hearing to explore whether under with 10.6 percent of the total deposits in commercial Kansas law a control relationship between Applicant banks in that market. Applicant's subsidiary bank is and Delphos will exist upon consummation of the located in a separate banking market and is prohibited proposal. from branching into the Ottawa County banking mar- In connection with the matter, the Kansas State ket by state law.4 Accordingly, consummation of the Bank Commissioner requested an opinion from the proposal would not have any significant effect on Kansas Attorney General regarding the legality of competition in the relevant banking markets. Applicant's proposal under the Kansas banking stat- In view of the Board's finding, as discussed below, ute. In response, the Attorney General referred the that Applicant will upon consummation of the propos- Bank Commissioner to two opinions issued by the al control Delphos and Delphos Bank under the federal Attorney General on unrelated, although similar, bank BHC Act, the Board has evaluated the financial and holding company applications, stating that these interpretations of Kansas law provided guidance on how the Kansas statute should be interpreted and applied.7 The Attorney General further stated that it is the 1. Under section 3(a)(3) of the BHC Act, a bank holding company responsibility of the Bank Commissioner to determine may not, without the prior approval of the Board, acquire directly or indirectly more than five percent of the voting shares of a bank. The whether there are facts or circumstances present in a Board has held that this requirement applies to the acquisition of a particular matter that would cause a company to bank holding company of shares of another bank holding company. State Street Boston Corporation, 67 FEDERAL RESERVE BULLETIN control two banks in violation of Kansas law. 862 (1981). 2. Each officer and director will purchase an identical percentage of Delphos' shares for approximately $3,300 each. Applicant will not extend funds or in any way guarantee these individuals' purchase of 5. Whitney National Bank in Jefferson Parish v. Bank of New Delphos' shares. Orleans & Trust Company, 379 U.S. 411 (1965). 3. All banking data are as of June 30, 1982. 6. Kan. Stat. Ann. §§ 9-504 and 9-505 (1975). 4. Kan. Stat. Ann. section 9-1111. 7. 82 Op. Kan. Att'y Gen. 195 and 196 (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

214 Federal Reserve Bulletin • March 1983 In the two opinions interpreting the Kansas banking ownership. Based upon the general legal guidance statute, the Attorney General concluded that, under provided in the opinions of the Attorney General and Kansas law, a company "indirectly controls" voting the evidence reflected in the record, the Commissioner shares of a bank or the election of a majority of the concluded that there was no apparent violation of the board of directors of a bank if a factual determination Kansas statute. is made that the company controls, within the ordinary In interpreting State law, the Board generally has dictionary meaning of the term "control," a second given great weight to opinions of the State Attorney company that owns voting shares of a bank or controls General or relevant state administrative agency where the election of a majority of the directors of a bank. the Board's review of the opinion reveals that it is well The Kansas Attorney General advised the Bank Com- reasoned, supported by the facts of record, consistent missioner that the definition of "control" that should with the statutory language being interpreted, and not be used in making this factual determination is wheth- inconsistent with either the apparent intent of the er the company has the ability "to exercise restraining statute or its legislative history.8 In this case, the or directing influence" over the second company. Board concludes that the opinion of the Kansas State As a matter of law, the Attorney General concluded Bank Commissioner, entered after a consideration of that a company could not be deemed to contol indi- the contentions of KIBA and all facts developed in the rectly the voting shares of a bank held by sharehold- proceeding, is consistent with past administration of ers, officers or directors of the company unless there the Kansas Banking statute by State authorities and are agreements or understandings between the compa- does not appear to contravene the intent of the statute ny and its shareholders, officers or directors that as interpreted by the Kansas Attorney General. would allow the company to control 25 percent or In reaching this conclusion, the Board notes that the more of the voting shares of the bank or the election of control provisions of the Kansas banking statute were a majority of its directors. Absent some agreement or modeled after those in the BHC Act as enacted in understanding, or evidence that the shareholders and 1956. The 1970 Amendments to the BHC Act broadmanagement officials of an applicant are acting on ened the control provisions of the federal BHC Act to behalf of the company with respect to their ownership include those situations where a company controlled of or positions with the bank to be acquired, the the voting shares of a bank "acting through one or Attorney General found that there is no legal basis to more other persons" (12 U.S.C. § 1841(a)(2)(A)), or impute to a corporation control over the voting stock where the Board determines "that the company directof a bank held by the corporation's stockholders. ly or indirectly exercises a controlling influence over Moreover, the Attorney General pointed out that the management or policies of the bank" (12 U.S.C. Kansas law does not prohibit individuals from owning § 1841(a)(2)(C)). The Kansas statute has never been or controlling more than one bank. amended to include these definitions of control. As the Acting on the basis of the Attorney General's opin- Board has previously stated, the Board may find that ion, the Bank Commissioner took sworn testimony control of a bank exists for purposes of the BHC Act from principals of Applicant concerning the proposed but not for purposes of the Kansas statute because of transaction. In the course of the State's evidentiary these significant differences between the control proviproceeding, the Commissioner established that there sions of the federal and state statutes.9 are no written or oral agreements or understandings The Board recognizes that the Kansas Attorney between Applicant and the 12 individuals who will General and the State Bank Commissioner have adoptown voting shares of Delphos by which Applicant ed a narrow interpretation of the term "control" in the could vote the shares of or control the election of a Kansas statute. However, the Board also recognizes majority of the directors of Delphos; that there are no that the primary responsibility for enforcing and ensurcommon family or other significant relationships ing the integrity of the state statute rests with the state, among the individuals; and that the nonvoting com- which has formally condoned the proposal. Since this mon shares to be held by Applicant carry no voting interpretation of the state statute does not impair the rights that could enable Applicant to control Delphos Board's ability to interpret or apply the federal BHC or Delphos Bank. The record of that proceeding also Act, the Board will not substitute its judgment for that reflects that there are no agreements among the 12 of the Kansas authority where, as here, there is a basis individuals concerning the ownership of shares of both Applicant and Delphos and that each individual is free 8. Credit and Commerce American Holdings, N.V., 65 FEDERAL to sell his or her shares in either company to any RESERVE BULLETIN 254, 255 (1979); Northwest Kansas Banc Shares, Inc., 69 FEDERAL RESERVE BULLETIN 98; Fourth Financial Corporaperson, without regard to the common interests of the tion, 69 FEDERAL RESERVE BULLETIN 95. 12 shareholders and Applicant. Applicant will have no 9. Fourth Financial Corporation, supra, note 8; Northwest Kansas option to purchase the shares of Delphos held by these Banc Shares, Inc., supra, note 8. Because of these differences, the Board concludes that KIBA's reliance on interpretations of control individuals if Kansas law changes to permit such under the federal BHC Act is misplaced. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 215 in the record for the finding of the state authority. The The Board's finding that Applicant will control Board does not believe that the Attorney General's or Delphos and Delphos Bank under the federal BHC Act the Commissioner's reliance on the record evidence does not bar approval of this application because the with respect to the absence of explicit or tacit agree- federal BHC Act specifically permits the formation ments or arrangements between Applicant and its and operation of multibank holding companies. The shareholders concerning the ownership or control of required application for the Board's approval under the voting shares of Delphos or Delphos Bank or the the BHC Act has been filed and, as noted, the competelection of a majority of the directors of Delphos Bank itive, financial, managerial, and convenience and is unreasonable. In light of all the facts and circum- needs standards in the BHC Act have been met. The stances of this proposal, including the opinions of the proposal also does not involve an interstate bank Kansas Attorney General and the factual findings acquisition that would violate section 3(d) of the BHC made by the Kansas State Bank Commissioner after Act, and Applicant is not engaged in impermissible the conduct of an evidentiary proceeding, the Board nonbanking activities. There is thus no basis for denial concludes that consummation of the proposal will not of this application under the federal BHC Act. result in a violation of Kansas law. The Board has also considered KIBA's request for a While consummation of the proposed transaction formal hearing. KIBA contends that a formal hearing does not appear to allow Applicant to control Delphos is required in this case in order to fully explore and or Delphos Bank for purposes of the Kansas banking develop information regarding whether Applicant will statute, the Board concludes, based upon the facts of control Delphos for purposes of Kansas law. record and established Board precedent, that Appli- The BHC Act requires the Board to hold a formal cant will control Delphos and Delphos Bank for pur- hearing regarding an application submitted under secposes of the federal BHC Act. In this case, Applicant tion 3 of the Act only in the event that the Office of the will hold 24.8 percent of the voting shares and 100 Comptroller of the Currency, in the case of a national percent of the nonvoting common shares of Delphos, bank, or the state supervisory authority, in the case of representing 94 percent of the equity of Delphos. The a state-chartered bank, expresses written disapproval twelve shareholders and management officials of Ap- of the proposed transaction.12 This hearing requireplicant who will be shareholders of Delphos will each ment is not triggered in this case because the Kansas hold a management position with Delphos and/or State Bank Commissioner, the appropriate banking Delphos Bank. Under the presumptions of control supervisor for Delphos Bank, has expressed his writestablished by the Board in Regulation Y, Applicant ten approval of the proposed transaction. would be presumed to control Delphos and Delphos Further, KIBA has been given the opportunity to Bank under the BHC Act.10 Moreover, the Board has submit facts and arguments to the Board regarding this also held that where a company will bear substantially application, and has not provided any basis to support all of the risk of economic gain or loss on an investthe belief that the facts already before the Board are ment in a bank, the voting shares of which are held by incomplete or insufficient to permit the Board to carry the company's officers and directors, the company out its responsibility under the BHC Act, or that may be deemed to control that bank for purposes of further investigation would produce additional relethe BHC Act.11 vant information. Nor has KIBA identified any relevant facts that are in dispute. Rather, KIBA disputes the conclusion drawn by the state authorities regarding the existence of control under state law. The Board is 10. 12 C.F.R. § 225.2(b)(2). See also "Policy Statement on Nonvot- not required to hold a formal hearing where a party ing Equity Investments by Bank Holding Companies", (12 C.F.R. disputes the conclusion to be drawn from established § 225.143), 68 FEDERAL RESERVE BULLETIN 413 (1982); Fourth Financial Corporation, supra, note 8. facts or where such proceedings would not serve to 11. In a case substantially similar to the instant proposal, the Board develop new or useful facts.13 Accordingly, based on determined that control by a one-bank holding company of nonvoting preferred stock representing 99.6 percent of another bank's total equity coupled with the purchase of 100 percent of the voting stock of 12. 12 U.S.C. § 1842(b); Northwest Bancorporation v. Board of the bank by the company's officers and directors represented control Governors, 303 F.2d 832, 843-44 (8th Cir. 1962); Grandview Bank & of the bank by the company under both the BHC Act and the Trust Co. v. Board of Governors, 550 F.2d 415 (8th Cir. 1977); and Oklahoma statute prohibiting the formation of multibank holding Farmers & Merchants Bank of Las Cruces v. Board of Governors, 567 companies, (Security Corporation, Duncan, Oklahoma, Board letter F.2d 1089 (D.C. Cir. 1977). to J. A. Maurer, June 23, 1982). Applicant's assumption of almost all 13. Northwest Bancorporation supra, note 12. Moreover, as noted of the risk of financial gain or loss from the operations of Delphos and by the Kansas Attorney General in other cases, the State Bank Delphos Bank raises the same concerns that underlie the Board's Commissioner would have a continuing obligation to monitor the decision in Security. The Oklahoma statute in question is identical to future relationship between Applicant and Delphos to determine the Kansas statute at issue here, except the relevant percentage of whether Applicant will in fact control Delphos Bank through means voting shares is 15 percent rather than 25 percent. However, in other than those presented in the structure of the proposal itself. In the Security, the Oklahoma Commissioner found that the transaction event such determination is made in the future, the state has the would violate state law and there were no applications for approval authority to require termination of the control relationship at that filed with either the Board or the State of Oklahoma. time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

216 Federal Reserve Bulletin • March 1983 these facts, the submissions by the parties, and the application and all comments received in light of the investigation by the Commissioner, including the de- public interest factors set forth in section 4(c)(8) of the positions of representatives of Applicant, the Board Act. concludes that a formal hearing is not warranted in this Applicant, with consolidated assets of $122.5 bilcase, and hereby denies KIBA's request for a hearing. lion, is a bank holding company by virtue of its control On the basis of the record, and for the reasons of Bank of America, N.T. & S.A. ("Bank").1 Bank, discussed above, the application is hereby approved. which holds total domestic deposits of $55.2 billion The transaction shall not be made before the thirtieth and combined domestic and international deposits of day following the effective date of this Order, or later $94 billion, is the largest commercial banking organizathan three months after the effective date of this tion in California. Applicant engages in various per- Order, unless such period is extended for good cause missible banking-related activities throughout the by the Board or by the Federal Reserve Bank of United States. The Board recently approved three Kansas City, pursuant to delegated authority. applications by bank holding companies to engage in By order of the Board of Governors, effective FCM activities.2 Applicants proposal generally paral- February 15, 1983. lels those proposals, and the Board considers it appropriate to examine Applicant's proposal within the Voting for this action: Governors Wallich, Partee, Teeters, same framework. Rice, and Gramley. Absent and not voting: Chairman Volcker and Governor Martin. Closely Related to Banking (Signed) JAMES MCAFEE, In order to approve an application submitted pursuant [SEAL] Associate Secretary of the Board to section 4(c)(8) of the Act, the Board is first required to determine that the proposed activity is closely Orders Under Section 4 of Bank Holding related to banking or managing or controlling banks. Company Act Upon consideration of all the facts of record, the Board has determined, for the reasons explained below, that BAFI's proposed activities as an FCM, with Bank America Corporation, respect to the contracts involved in this application, San Francisco, California would be closely related to banking. Order Approving Application to Engage in Certain Foreign Exchange. The Board has determined on Futures Commission Merchant Activities five prior occasions that FCM activities or their equivalent with respect to foreign exchange are BankAmerica Corporation, San Francisco, California, closely related to banking.3 Upon examination of a bank holding company within the meaning of the the record, Applicant's situation appears substan- Bank Holding Company Act of 1956, as amended tially similar to those presented previously. (12 U.S.C. § 1841 et seq.) (the "Act"), has applied for Applicant's lead bank, Bank of America, N.T. & the Board's approval, under section 4(c)(8) of the Act S.A., currently trades in the cash and forward (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the markets in foreign exchange for its corporate and Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to institutional customers. Because Bank already has engage through its subsidiary, BA Futures, Incorpo- extensive experience in these markets, acting as an rated, San Francisco, California ("BAFI"), in acting FCM in futures markets for this commodity would as a futures commission merchant (an "FCM") for be an integral adjunct to these present services. nonaffiliated persons, in the execution and clearance Further, it is reasonable to assume that market of certain futures contracts on major commodity ex- participants for whom Bank trades would regard changes. Such contracts would cover foreign ex- futures contracts in foreign exchange as the funcchange, government securities, and negotiable money market instruments. Notice of the application, affording interested per- 1. Banking data as of December 31, 1982. sons an opportunity to submit comments and views on 2. J.P. Morgan & Co. Incorporated, 68 FEDERAL RESERVE BULLEthe relation of the proposed activity to banking and on TIN 514 (1982); Bankers Trust New York Corporation, 68 FEDERAL RESERVE BULLETIN 651 (1982); Citicorp, 68 FEDERAL RESERVE the balance of the public interest factors regarding the BULLETIN 776 (1982). application, has been duly published (47 Federal Reg- 3. Citicorp, supra; Bankers Trust, supra; J.P. Morgan, supra; ister 55733 (1982)). The time for filing comments and Republic New York Corporation, 63 FEDERAL RESERVE BULLETIN 951 (1977); and Standard & Chartered Banking Group, Ltd., 38 views has expired, and the Board has considered the Federal Register 27552 (1973). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 217 tional equivalent of forward contracts for some ments involved in this application. The Board expects purposes. Accordingly, the proposed activity could that the de novo entry of BAFI into the market for be considered fundamentally a substitute for other FCM services would increase the level of competition services Applicant already provides. On this basis, among FCMs already in operation. Further, it appears the Board concludes that Applicant's proposal to act that BAFI is particularly well equipped to provide as an FCM for foreign exchange is closely related to FCM services to depository institutions in light of banking. Applicant's experience in the depository institution industry. Accordingly, the Board has concluded that Government Securities and Money Market Instru- the performance of the proposed activities by BAFI ments. Applicant's proposal also involves the exe- can reasonably be expected to produce benefits to the cution and clearance of futures contracts covering public. U.S. bonds, Treasury bills and notes; GNMA secur- The Board recognizes that the activity of trading ities; and negotiable money market instruments, futures contracts involves various types of financial that is, domestic and Eurodollar CDs, and Eurodol- risks and potential conflicts of interest, and is susceptilar and sterling deposit interest rate futures. The ble to anticompetitive and manipulative practices. Board has examined the portion of this proposal Congress has addressed those types of possible adwhich concerns FCM activities for government se- verse effects, however, through the passage of the curities and negotiable money market instruments in Commodity Exchange Act, as amended,5 and the light of Applicant's experience in related markets creation of the Commodity Futures Trading Commisfor these instruments. In 1978, Bank began to buy sion ("CFTC"). The CFTC also has promulgated and sell futures contracts covering various U.S. regulations to effectuate the provisions of the Com- Government and GNMA securities for its own ac- modity Exchange Act.6 Applicant has chosen to concount. More recently, Bank has expanded its activi- duct the proposed activities through a separately inties to include futures contracts covering money corporated subsidiary that would be subject to the market instruments. In addition, Bank is a primary Commodity Exchange Act and regulation by the dealer in U.S. government securities and it trades in CFTC and the various commodity exchanges. The the cash and forward markets for government secur- Board has considered the impact of the applicable ities and money market instruments for the account statutes and regulations in its evaluation of the likeliof its customers. Applicant's experience in these hood that significant adverse effects regarding conactivities has provided it with useful expertise in flicts of interest, unsound banking practices, deareas that are operationally or functionally similar to creased or unfair competition, or undue concentration FCM activities for nonaffiliated persons in govern- of resources would develop in this case. ment securities and money market instruments. Accordingly, the Board concludes, as it has in three Conflicts of Interests. Conflicts of interests that previous orders,4 that the proposed FCM activities could be associated with this proposal fall into two for these instruments would be closely related to broad categories: those arising out of the general banking. business of engaging in FCM activities, and those arising out of the particular circumstances of an Balance of Public Benefits and Adverse Effects FCM that is a subsidiary of a bank holding company. Rules and regulations promulgated and enforced In order to approve this application, the Board is also by the CFTC and the relevant futures exchanges required to determine that the performance of the substantially reduce the possibility for significant proposed activities by BAFI, "can reasonably be conflicts in the first category. In addition, BAFI has expected to produce benefits to the public, such as committed to time-stamp each order to the minute greater convenience, increased competition, or gains upon receipt, and to time-stamp the order again at in efficiency, that outweigh possible adverse effects, execution. Further, BAFI will execute orders in the such as undue concentration of resources, decreased sequence in which they are received to the extent or unfair competition, conflicts of interest, or unsound banking practices." (12 U.S.C. § 1843(c)(8)). Consummation of the proposal would provide added 5. 7 U.S.C. §§ 1-24. convenience to clients of Applicant trading in the cash, 6. For example, CFTC regulations require FCMs to keep detailed forward, and futures markets for the financial instru- records on many aspects of FCM activities, such as segregation of funds and investments made on behalf of customers, (17 C.F.R. §§ 1.20, .25); prescribe protective procedures for such activities as buying and selling contracts of two customers on opposite sides of the same transactions, (17 C.F.R. § 1.39); and impose minimum financial 4. Citicorp, supra; Bankers Trust, supra; and J.P. Morgan, supra. and related reporting requirements, (17 C.F.R. §§ 1.10—. 18). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

218 Federal Reserve Bulletin • March 1983 consistent with customer specifications. The Board cant and its subsidiaries appear well prepared to concludes that the risk of conflicts of interest arising deal with these potential obligations. The risk that a from the general business of an FCM that may result customer of BAFI would default on a contract or fail from consummation of the proposal as submitted is to meet a margin call are credit risks of a type Bank not inconsistent with approval. has significant expertise in evaluating. In addition, With respect to the second category of conflicts, the record indicates that BAFI would employ a high the Board believes that existing statutory and super- degree of credit selectivity in choosing its customvisory safeguards, together with Applicant's inter- ers, who will include institutional and commercial nal control procedures, will substantially reduce the clients of Bank. possibility of significant adverse effects. For exam- BAFI would face another type of risk because its ple, section 23 A of the Federal Reserve Act7 would membership in certain commodity exchange clearrequire any extension of credit by Bank to BAFI to ing associations could expose it to contingent liabilbe secured by collateral having a value equal to 100 ity for the contractual obligations due the associapercent or more of the extension of credit. In tion by all clearing members. This potential liability addition, any loan from Bank to BAFI's customers exists through the assessment provisions of certain would be subject to examination by the Comptroller clearing association guaranty funds into which all of the Currency. clearing members must contribute. In evaluating Furthermore, Applicant maintains internal proce- this element of risk to BAFI, the Board has considdures that generally prohibit disclosure among em- ered the effect of margin requirements and the level ployees of Applicant and its subsidiaries of confi- of supervision and regulation imposed on the futures dential information pertaining to customers, trading industry by the CFTC, the exchanges and whether received from customers or derived from their affiliated clearing associations. Clearing associinternal sources. Finally, as discussed below, the ations, in particular, have established various procecircumstances of this application alleviate any sub- dures that reduce the likelihood that this type of stantial concern regarding the possibility of volun- liability would arise. tary tying. Thus, there appears to be no significant The degree of risk associated with providing FCM danger that conflicts associated with the fact that services as a clearing member on a commodities BAF would be a bank holding company subsidiary exchange can be increased through the practice of will develop under this proposal. certain exchanges or clearing associations of requiring the parent corporation of a clearing member to Unsound Banking Practices. An FCM, clearing and also become a member of that exchange or clearing executing contracts for nonaffiliated persons, is gen- association. Applicant has committed that BAFI erally exposed to several types of financial risks. shall not, without the prior consent of the Board, However, the Board finds that Applicant's compe- become a clearing member of any exchange that tence, experience, and resources equip it to deal imposes such a requirement and has not waived that with these risks. Furthermore, the Board believes requirement for Applicant. that the Commodity Exchange Act and regulations On the basis of all the facts of record, the Board issued by the CFTC and the various commodity has concluded that the inherent risks of providing exchanges are significant factors in ameliorating the FCM services for nonaffiliated persons under the general hazards of the FCM activities proposed in circumstances of this proposal are manageable in the application.8 view of the expertise and resources of Applicant and As an FCM for nonaffiliated persons, BAFI would its subsidiaries, the commitments entered into by be contractually liable for nonperformance by a Applicant and BAFI, and the regulatory environcustomer of BAFI on each futures contract traded ment in which the FCM activities would be by BAFI for that customer. Similarly, in some conducted. circumstances, BAFI could be obligated to meet a margin call delivered to a customer of BAFI. Appli- Decreased or Unfair Competition. It is conceivable that a commercial bank in Bank of America's position could exert pressure on its customers to use the services of Bank of America's affiliated FCM, or 7. 12 U.S.C. § 371c. that a borrower could believe that its use of an 8. Among the provisions the Board has considered in this regard affiliated FCM could result in more favorable credit are the CFTC's net capital requirements, 17 C.F.R. §§ 1.17(a) and (c), 1.52(a), and the sections of the Commodity Exchange Act granting the terms for the borrower. Compulsory tying arrange- CFTC authority to establish position limits and to approve or disap- ments, however, are prohibited by the Act and by prove daily price movement limits established by domestic exchanges on futures contracts, (7 U.S.C. §§ 6a, 7a(12)). the Board's regulations; and voluntary tying can Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 219 take place only when a firm possesses significant 7. BAFI has committed that it will, in addition to market power.9 It appears that Applicant lacks the time-stamping orders of all customers to the nearest requisite market power for voluntary tying to occur, minute, execute all orders, to the extent consistent in view of the substantial competition in commercial with customers' specifications, in strictly chronolending and among FCMs. In addition, Applicant logical sequence, and that it will execute all orders has committed that BAFI will advise each customer with reasonable promptness with due regard to in writing that doing business with BAFI will not in market conditions. any way affect any provision of credit to that 8. Applicant and its subsidiaries have demonstrated customer from Bank or any other subsidiary of expertise and established capability in the cash, Applicant. forward, or futures markets for each of the contracts involved. On the basis of all the facts of record, the Board has 9. Applicant will require BAFI to advise each of its determined that in the circumstances of this case, the customers in writing that doing business with BAFI provision by BAFI of the proposed FCM services to will not in any way affect any provision of credit to nonaffiliated persons would not result in decreased or that customer by Bank or any other subsidiary of unfair competition, conflicts of interests, unsound Applicant. banking practices, or undue concentration of re- 10. Applicant is adequately capitalized to engage in sources in either commercial banking or the market for additional nonbanking activities. FCM services. In considering this application, the 11. BAFI will not extend credit to customers for the Board has placed particular reliance on the following purpose of meeting initial or maintenance margin 11 factors, to all of which this Applicant has commit- required of customers, subject to the limited excepted: tion of posting margin on behalf of customers in 1. BAFI shall not trade for its own account. advance of prompt reimbursement. 2. The instruments upon which the proposed futures contracts are based are essentially financial in Based upon the foregoing and other considerations character and the contracts are of a type that a bank reflected in the record, the Board has determined that may execute for its own account. the public benefits associated with consummation of 3. BAFI shall have an initial capitalization that is in this proposal can reasonably be expected to outweigh substantial excess of that required by CFTC regula- possible adverse effects, and that the balance of the tions, and will maintain fully adequate capitaliza- public interest factors, which the Board is required to tion. consider under section 4(c)(8) of the Act, is favorable. 4. BAFI and Bank have entered into a formal Accordingly, the application is hereby approved.10 service agreement that specifies the services that This determination is subject to the conditions set Bank will supply to BAFI. These services include forth in the Board's Order and section 225.4(c) of the assessment of customer credit risk and continu- Regulation Y and the Board's authority to require such ous monitoring of customer positions and the status modification or termination of the activities of a holdof customer margin accounts. ing company or any of its subsidiaries as the Board 5. Through its proposed service agreement with finds necessary to assure compliance with the provi- Bank, BAFI will be able to assess customer credit sions and purposes of the Act and the Board's regularisks, and will take such assessments into consider- tions and orders issued thereunder, or to prevent ation in establishing appropriate position limits for evasion thereof. each customer, both with respect to each type of The proposed activities shall not commence later contract and with respect to the customer's aggre- than three months after the effective date of this gate position for all contracts. Order, unless such period is extended for good cause 6. BAFI shall not, without the prior consent of the by the Board or by the Federal Reserve Bank of San Board, become a clearing member of any exchange Francisco. whose rules require the parent corporation of a clearing member to also become a clearing member, unless the requirement is waived with respect to Applicant. 10. In connection with this action, the Board hereby delegates authority to the Federal Reserve Bank of San Francisco to approve applications by BankAmerica to open additional offices of BAFI to engage in the same activities approved herein, as well as the authority to approve the provision of FCM services with regard to new financial 9. Citicorp (Citicorp Person-to-Person Financial Center of Con- instruments of the same type authorized herein, pursuant to section necticut, Inc.), 67 FEDERAL RESERVE BULLETIN 443, 446 (1981). 225.4(b)(1) of Regulation Y (12 C.F.R. § 225.4(b)(1)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

220 Federal Reserve Bulletin • March 1983 By order of the Board of Governors, effective In order to approve an application submitted pursu- February 17, 1983. ant to section 4(c)(8) of the Act, the Board must determine that the activity proposed is closely related Voting for this action: Governors Wallich, Partee, Teeters, to banking and that performance of the activity by the Rice, and Gramley. Absent and not voting: Chairman Applicant "can reasonably be expected to produce Volcker and Governor Martin. benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that (Signed) JAMES MCAFEE, outweigh possible adverse effects, such as undue [SEAL] Associate Secretary of the Board concentration of resources, decreased or unfair competition, conflicts of interests or unsound banking practices." (12 U.S.C. § 1843(c)(8)). By Order dated Bankers Trust New York Corporation, September 20, 1982, the Board approved Applicant's New York, New York initial application to engage in FCM activities.2 In that order, the Board determined that the proposed FCM Order Approving Application to Engage in Certain activities are closely related to banking. Because this Futures Commission Merchant Activities application is for the Board's approval of the same activity at additional branch offices, the Board has Bankers Trust New York Corporation, New York, determined that the same considerations upon which New York, a bank holding company within the mean- the Board based its finding that the activity is closely ing of the Bank Holding Company Act of 1956, as related to banking in the previous application are amended (12 U.S.C. §§ 1841 et seq.) (the "Act"), has applicable in this proposal. Accordingly, the Board applied for the Board's approval, under section 4(c)(8) has determined that the activity is closely related to of the Act (12 U.S.C. § 1843(c)(8)) and section banking. 225.4(b)(2) of the Board's Regulation Y (12 C.F.R. In approving Applicant's original application to en- § 225.4(b)(2)), to engage through de novo branches of gage in FCM activities, the Board determined that the its subsidiary, BT Capital Markets Corp., New York, proposal could reasonably be expected to produce New York ("BTCM"), in acting as a futures commis- benefits to the public in the form of added convenience sion merchant (an "FCM") for nonaffiliated persons, to customers of Applicant's subsidiary bank who trade in the execution and clearance of certain futures in the cash, forward, and futures markets for the contracts on major commodity exchanges. Such con- commodities involved in the application. The Board tracts would cover U.S. Government securities, nego- also determined that the de novo entry of BTCM into tiable money market instruments (including, in partic- the market for FCM services would increase the level ular, domestic and Eurodollar certificates of deposit), of competition among FCMs already in operation. foreign exchange, and bullion. The de novo branches Consummation of this proposal would provide added would be located in Atlanta, Georgia; Dallas, Texas; convenience to customers in the Atlanta, Dallas, and and Los Angeles, California. Los Angeles markets that BTCM had previously antic- Notice of the application, affording interested per- ipated serving through its existing offices in New York sons an opportunity to submit comments on the rela- and Chicago and would further enhance competition in tion of the proposed activity to banking and on the the provision of FCM services. Accordingly, the balance of public interest factors regarding the applica- Board has determined that approval of this proposal tion, has been duly published (47 Federal Register similarly can reasonably be expected to produce pub- 56,049 (1982)). The time for filing comments has lic benefits. expired, and the Board has considered the application In reviewing Applicant's original application to enand all comments received in light of the public gage in FCM activities through BTCM, the Board interest factors set forth in section 4(c)(8) of the Act. examined the potential adverse effects associated with Applicant is a bank holding company by virtue of its such activities. The Board determined that the public control of Bankers Trust Company, New York, New benefits associated with the performance of the activi- York ("Bank") and several other banks. Applicant ty by BTCM could reasonably be expected to outholds total consolidated deposits of $24.9 billion, and weigh possible adverse effects in view of certain is the sixth largest commercial banking organization in commitments made by Applicant and other facts of New York State.1 Applicant, through certain of its subsidiaries, engages in various permissible nonbanking activities. 2. Bankers Trust New York Corporation, 68 FEDERAL RESERVE BULLETIN 651 (1982). See also, /. P. Morgan & Co., Incorporated, 68 FEDERAL RESERVE BULLETIN 514 (1982); Citicorp, 68 FEDERAL RESERVE BULLETIN 776 (1982); BankAmerica Corporation, 69 FEDER- 1. Banking data are as of June 30, 1982. AL RESERVE BULLETIN 216. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 221 record. The Board has determined that the same Hongkong and Shanghai Banking Corporation, considerations that the Board relied on in approving Hong Kong, B.C.C. Applicant's original application are applicable in this case. Applicant has committed that each of the pro- Kellett, N.V., posed branch offices will engage in FCM activities Curacao, Netherlands Antilles only to the extent and in the manner authorized by the Board's Order of September 20, 1982. The Board has HSBC Holdings, B.V., carefully considered the potential for adverse effects Amsterdam, The Netherlands arising in connection with this application and, on the basis of all the facts of record in this case, including Marine Midland Banks, Inc., Applicant's statement that it will abide by its earlier Buffalo, New York commitments, the Board has determined that the public benefits associated with the proposal can rea- Order Approving Acquisition of International sonably be expected to outweigh possible adverse Treasury Management Ltd. and Commencement of effects. Accordingly, the Board has concluded that the Informational, Advisory, and Transactional Services balance of the public interest factors that the Board is Related to Foreign Exchange required to consider under section 4 is favorable, and the application is hereby approved. The Hongkong and Shanghai Banking Corporation, Having once reviewed Applicant's proposal and the Hong Kong, B.C.C. ("HSBC"); Kellett, N.V., Curaconditions under which it would be provided, and cao, Netherlands Antilles ("Kellett"); HSBC Holdhaving determined that the public interest consider- ings, B.V., Amsterdam, The Netherlands ("Holdations of section 4(c)(8) favor approval of the proposal, ings"); and Marine Midland Banks, Inc., Buffalo, New the Board has determined that further applications by York ("Marine") (collectively referred to as "Appli- Applicant either to engage in FCM activities at de cants"), each a bank holding company within the novo branch offices of BTCM, or to provide FCM meaning of the Bank Holding Company Act ("BHC services with regard to new financial instruments of Act"), have applied for the Board's approval under the same type previously approved, may be processed section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) in the same manner as other de novo applications and section 225.4(b)(2) of the Board's Regulation under the provisions of section 225.4(b)(1) of Regula- Y (12 C.F.R. § 225.4(b)(2)), to establish de novo an tion Y (12 C.F.R. § 225.4(b)(1)). Authority is hereby office in New York of International Treasury Managedelegated to the Federal Reserve Bank of New York to ment Limited, Hong Kong, B.C.C. ("ITM").1 ITM, a accept and take action on such notices properly filed newly formed company organized under the laws of as there prescribed. Hong Kong, will offer informational, advisory, and The Board's approval of this application is subject transactional services to customers throughout the to the conditions set forth in section 225.4(c) of United States from its New York office and worldwide Regulation Y and the Board's authority to require such from its foreign offices. Marine has also applied for the modification or termination of the activities of a hold- Board's approval under section 4(c)(13) of the BHC ing company or any of its subsidiaries as the Board Act (12 U.S.C. § 1843(c)(13)) and section 211.5(c)(2) of finds necessary to assure compliance with the provi- the Board's Regulation K (12 C.F.R. § 211.5(c)(2)) to sions and purposes of the Act and the Board's regula- acquire 50 percent of the voting shares of ITM and to tions and orders issued thereunder, or to prevent engage through ITM in the proposed activities evasion thereof. throughout the world. HSBC will indirectly acquire the remaining 50 percent of the shares of ITM through The proposed activities shall not commence later a de novo Bahamian shell corporation, Basingstoke than three months after the effective date of this Holdings Ltd.2 Order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of New York. 1. Kellett, a wholly-owned subsidiary of HSBC, owns 100 percent By order of the Board of Governors, effective of the voting shares of Holdings which, in turn, owns 51.05 percent of the voting shares of Marine. Thus, HSBC, Kellett and Holdings are all February 28, 1983. applicants under section 4(c)(8) because they are each a bank holding company with respect to Marine Midland Bank, N.A. ("Marine Bank"), the subsidiary bank of Marine. 2. The Applicants assert that Marine's investment in ITM should be Voting for this action: Chairman Volcker and Governors regarded as a joint venture and that ITM would not be a subsidiary of Martin, Wallich, and Partee. Absent and not voting: Gover- Marine for the purposes of Regulation K. Under section 211.2(p) of nors Teeters, Rice, and Gramley. Regulation K (12 C.F.R. § 211.2(p)), a subsidiary is defined as a company of which more than 50 percent of the stock is held by an (Signed) JAMES MCAFEE, investor and its affiliates. In this case Marine and Basingstoke are affiliates since they are both subsidiaries of HSBC, (12 U.S.C. [SEAL] Associate Secretary of the Board § 211.2(a)). Thus, ITM is regarded as a subsidiary of Marine. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

222 Federal Reserve Bulletin • March 1983 At its proposed New York office, ITM intends to or controlling banks as to be a proper incident thereto. offer certain informational, advisory and transactional Section 225.4(a) of the Board's Regulation Y lists services, including the following: (1) the provision of activities that have been determined by the Board to general economic information and statistical forecast- satisfy the standards of section 4(c)(8), and any bank ing with respect to foreign exchange and money mar- holding company may apply under certain simplified kets through timesharing networks. These services procedures to engage in the listed activities. In addiwould include the analysis of foreign exchange and tion, a bank holding company may apply to engage in a money market trends in the context of economic and nonbanking activity if the company is of the opinion political developments and the provision of informa- that the activity is closely related to banking. As tion with respect to forward foreign exchange con- discussed below, ITM's proposed activities include tracts; (2) the provision of advisory services designed several that the Board has found permissible for bank to assist customers in monitoring, evaluating, and holding companies, as well as several that the Board managing their foreign exchange exposure, including has not previously determined to be closely related to recommendations regarding policies and procedures to banking. enhance a customer's ability to identify, measure, and Applicants' proposed activity of providing general manage financial risks in a multi-currency environ- information and statistical forecasting with respect to ment. ITM would also provide advice on timing of foreign exchange and money markets is an activity purchases and sales of foreign exchange in both spot that is permissible under section 225.4(a)(5)(iv) of and forward markets; and (3) the provision of transac- Regulation Y, which authorizes "acting as . . . finantional services with respect to foreign exchange, with cial advisor to the extent of . . . furnishing general ITM arranging, for a fee, for currency "swaps" among economic information and advice, [and] general ecocustomers with complementary foreign exchange ex- nomic statistical forecasting services . . ." (12 C.F.R. posures. ITM will also arrange for the execution of § 225.4(a)(5)(iv)). Applicants propose to provide the foreign exchange transactions by HSBC, Marine subject informational services, in part, through time- Bank, and other commercial banks. sharing technology. The data processing activities Notice of the applications, affording opportunity for associated with providing the proposed general inforinterested persons to submit comments and views on mation and statistical forecasting with respect to forwhether the proposed activities are closely related to eign exchange and money markets have also been found by the Board to be closely related to banking banking and on the balance of public interest factors, (12 C.F.R. § 225.4(a)(8))4. has been duly published. The time for filing comments and views has expired and the Board has considered ITM's proposed activities of providing advice with the applications and all comments received in light of respect to foreign exchange operations, policies and the standards set forth in sections 4(c)(8) and (13) of procedures and arranging for the execution of foreign the BHC Act. exchange transactions have not been found to be HSBC, a bank organized under the laws of Hong closely related to banking.5 Accordingly, the Board Kong, is the 31st largest banking organization in the has reviewed the record to determine whether each world with total assets of approximately $52.3 billion.3 activity is closely related to banking or managing or HSBC, directly and indirectly, through over 900 of- controlling banks. In determining whether an activity fices worldwide, engages in a broad range of financial and commercial services. Through Kellett and Holdings, HSBC owns 51 percent of the shares of Marine, 4. The Board has determined that providing customers data procwhich is the 14th largest commercial banking organiza- essing services with respect to financial, banking, and economic data through timesharing, as well as timesharing itself, are activities that tion in the United States with total assets of $18.8 are permissible for bank holding companies. Citicorp, 68 FEDERAL billion. Marine, through its subsidiary, Marine Bank, RESERVE BULLETIN 505 (1982). Applicants have suggested that the proposed data processing services should be regarded as incidental to offers a full range of banking and trust services from providing general informational services. However, in view of the nearly 300 offices in the State of New York. Marine nature and extent of the data processing services proposed, the Board also engages through nonbanking subsidiaries in com- believes that they should be regarded as a separate activity. In this case it appears that the proposed data processing activities are of the mercial lending, leasing and credit-related insurance type permissible for bank holding companies under Regulation Y. underwriting activities. 5. Applicants' proposed activity of providing advice with respect to Section 4(c)(8) of the BHC Act authorizes a bank foreign exchange operations, policies and procedures appears to be similar to the activity of furnishing advice concerning foreign exholding company to engage in or acquire shares of a change transactions to depository institutions, an activity that is a company that engages in an activity determined by the permissible type of management consulting under Regulation Y, Board to be so closely related to banking or managing (12 C.F.R. § 225.131). However, a bank holding company may provide this service only to depository organizations, while Applicants propose to provide foreign exchange advice to all types of customers. The provision of foreign exchange advice is also similar to providing portfolio investment advice, which is also permisible under Regulation 3. Data are as of December 31, 1981. Y, (12 C.F.R. § 225.4(a)(5)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 223 is closely related to banking under section 4(c)(8) of effects on existing or potential competition or otherthe BHC Act, the Board has used the following wise decrease competition. While the comments on guidelines recognized by the courts: (1) whether banks the applications and proposed new activities were have generally provided the proposed service; (2) generally favorable, several comments suggested that whether banks generally provide services that are conflicts of interest could arise as a result of ITM operationally or functionally so similar to the proposed providing advisory services concerning foreign exservice as to equip them particularly well to provide change and arranging for a fee for the execution of the proposed service; or (3) whether banks generally foreign exchange transactions. Similarly, concern was provide services that are so integrally related to the expressed that conflicts would arise where ITM's proposed service as to require their provision is spe- affiliates take positions in foreign exchange. In this cialized form.6 In addition, the Board may consider regard, in conducting foreign exchange operations, other factors in deciding what activities are closely commercial banks do combine the functions of giving related to banking.7 advice, executing transactions and taking positions in Upon consideration of the entire record of this foreign exchange. Furthermore, ITM does not propose application, the Board has determined that ITM's to execute transactions, but rather proposes to arrange proposed activities of providing advice concerning for execution by HSBC, Marine Bank, and other foreign exchange operations, policies, and procedures commercial banks of transactions for ITM's customand arranging for the execution of foreign exchange ers. Thus, the potential for conflicts is reduced since transactions are both closely related to banking.8 The the entity actually executing the transaction will be a Applicants state that these applications represent a separate corporate entity from ITM. In addition, ITM reorganization whereby activities currently performed will not itself take positions in foreign exchange. The by Marine Bank will be performed by ITM. Moreover, Board notes that ITM will be dealing with sophisticatfrom the record, it appears that a number of commer- ed foreign-exchange market participants and that there cial banks, including Marine Bank, are currently en- are numerous other sources for quotations of foreign gaged in providing the proposed foreign exchange exchange rates. Moreover, in conducting its activities advice and transaction services to their customers. ITM will be required to observe the standards of care Furthermore, banks historically have been engaged in and conduct applicable to fiduciaries as a condition of the provision of advice and assistance with respect to approval of the application.9 Based on the foregoing, foreign exchange. the Board's judgment is that it is unlikely that the proposal would result in conflicts of interest. In addi- In order for the Board to approve the subject tion, there is no evidence in the record that approval of applications under section 4(c)(8) with respect to this proposal would result in any other adverse effects, ITM's New York activities, the Board must find that such as undue concentration of resources, unfair com- Applicants' performance of these activities through petition, or unsound banking practices. ITM can reasonably be expected to produce benefits to the public that outweigh possible adverse effects. As noted, Marine has applied for Board approval Under section 4(c)(13), the Board must find that under section 4(c)(13) of the BHC Act and section Marine's overseas activities through ITM are in the 211.5(c)(2) of Regulation K with respect to ITM's public interest and not at variance with the purposes of overseas activities.10 ITM's overseas activities are the BHC Act. permissible under section 4(c)(13) and Regulation K.11 Inasmuch as ITM will be established de novo to The Board has previously determined that, when no perform services currently performed by Marine Bank adverse effects are presented by the proposal, a bank and HSBC for an expanded customer base, approval holding company may, with the Board's prior approvof the applications would not result in any adverse al, engage in activities overseas that are permissible under Regulation K and in activities in the United States that are closely related to banking under Regu- 6. National Courier Association v. Board of Governors, 516 F.2d lation Y through the same foreign subsidiary.12 As 1229 (D.C. Cir. 1975). 7. Alabama Association of Insurance Agents v. Board of Governors, 553 F.2d 224, 241 (5th Cir. 1976), rehearing denied 558 F.2d 729 (1977), cert, denied. 435 U.S. 904 (1978). See Board of Governors v. 9. The Board has by regulation required that such standards be Investment Company Institute, 450 U.S. 46, 55 (1981). observed with respect to furnishing portfolio investment advice. 8. In 1977, the Board approved an application for the acquisition of 12 C.F.R. § 225.4(a)(5), n. 1. a New York investment company as an activity closely related to 10. HSBC, Kellett, and Holdings are qualifying foreign banking banking company. In its order the Board found that generally all organizations within the meaning of Regulation K and may therefore activities permissible to a New York investment company are closely engage in such overseas activities without receiving Board approval, related to banking. While the Order did not specifically discuss foreign (12 C.F.R. § 211.23(f)). exchange transaction services, such services were among those 11. 12 C.F.R. § 211.5(d)(8) and (14). identified by the Board as activities permissible for New York 12. See the Board's order approving a proposal by Applicants to investment companies. European American Bancorp, 63 FEDERAL acquire Wardley Marine International Investment Management Ltd. RESERVE BULLETIN 595 (1977). See also, Standard and Chartered and to commence investment advisory activities. 68 FEDERAL RE- Banking Group, 38 Federal Register 27552. SERVE BULLETIN 782 (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 Federal Reserve Bulletin • March 1983 discussed above, there is no evidence of adverse ration, Lumberton, North Carolina ("SNC"), both effects resulting from the proposal or the structure of bank holding companies within the meaning of the the transaction. Accordingly, the Board concludes Bank Holding Company Act (12 U.S.C. § 1841 et. that Applicants may engage, through ITM, in the seq.), have applied for the Board's approval under proposed activities overseas and in the United States section 4(c)(8) of the Act and section 225.4(b) of the pursuant to authority in sections 4(c)(13) and 4(c)(8) of Board's Regulation Y (12 C.F.R. § 225.4(b)), to jointly the BHC Act and the regulations thereunder. This establish Southern International Corporation, Chardetermination is subject to the condition that Appli- lotte, North Carolina ("Southern International"), a cants obtain the Board's prior approval before ITM de novo company. Southern International would offer engages in any additional activities in the United various financial services designed primarily to serve States. customers of Applicant's subsidiary banks in South Based upon the foregoing and other considerations Carolina and North Carolina.1 Specifically, Southern reflected in the record, the Board has determined that International would engage in the following activities: the balance of public interest factors that the Board is (1) soliciting loans and other extensions of credit, required to consider under section 4(c)(8) is favorable. issuing letters of credit and accepting or discounting In addition, the Board concludes that the acquisition drafts; (2) collecting and negotiating financial docuby Marine of ITM is in the public interest and not at ments, including bills of exchange, promissory notes, variance with the purposes of the BHC Act. Accord- checks, drafts, payment receipts, and all types of ingly, the applications are hereby approved. This commercial paper and negotiable instruments; collectdetermination is subject to the conditions set forth in ing and negotiating commercial documents, including section 225.4(c) of Regulation Y and section 211.5(b) invoices, shipping documents, documents of title, and of Regulation K, and the Board's authority to require other similar documents; (3) providing data and infortermination or such modification of the activities of a mation transmission services, facilities and data bases holding company or any of its subsidiaries as the in connection with its international financial activities, Board finds necessary to assure compliance with the where data and information to be transmitted, procprovisions of the BHC Act and the Board's regulations essed or furnished are financial, banking or economic; and orders issued thereunder or to prevent evasion (4) providing transfers of funds, whether by check, thereof. draft, or similar paper instrument, or by electronic The proposed activities shall commence not later system or any other technologically feasible means in than three months after the effective date of this connection with its international financial services; (5) Order, unless such period is extended for good cause buying and selling foreign currency for the account of by the Board or by the Federal Reserve Bank of New others, and; (6) furnishing management consulting York, pursuant to authority hereby delegated. advice to nonaffiliated banks concerning the provision By order of the Board of Governors, effective of international financial services to their customers. February 16, 1983. Except for buying and selling foreign currency for the account of others, all of the activities proposed by Voting for this action: Governors Wallich, Partee, Teeters, Applicants are included on the list of permissible Rice, and Gramley. Absent and not voting: Chairman nonbank activities for bank holding companies in Volcker and Governor Martin. Regulation Y. (12 C.F.R. §§ 225.4(a)(1), (8) and (12)). The activity of buying and selling foreign currency has (Signed) JAMES MCAFEE, not been included on the Board's list of permissible [SEAL] Associate Secretary of the Board activities. However, in connection with prior applications, the Board has determined by order that the activity of buying and selling foreign currency is Southern Bancorporation, Inc., closely related to banking and would be in the public Greenville, North Carolina interest.2 As noted in these earlier Board decisions, commercial banks historically have engaged in foreign exchange activities, including the buying and selling of Southern National Corporation, Lumberton, North Carolina Order Approving Acquisition of Southern 1. Southern Bank and Trust Company, Greenville, South Carolina, is Southern's subsidiary bank. SNC's subsidiary bank is Southern International Corporation National Bank of North Carolina, Lumberton, North Carolina. 2. Citicorp, 68 FEDERAL RESERVE BULLETIN 251 (1982); European Southern Bancorporation, Inc., Greenville, South American Bancorp, 65 FEDERAL RESERVE BULLETIN 667 (1979). European American Bancorp, 63 FEDERAL RESERVE BULLETIN 595 Carolina ("Southern"), and Southern National Corpo- (1977). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 225 foreign currency for their own account and for the Consummation of this proposal may be expected to account of others. In addition, national banks are result in public benefits inasmuch as a de novo corpoauthorized to buy and sell foreign exchange pursuant ration, Southern International would provide an addito 12 U.S.C. § 24 (Seventh). tional and convenient source of financial services. Notice of the applications, affording opportunity for Further, there is no evidence in the record to indicate interested persons to submit comments and views on that consummation of the proposal would result in the public interest factors, has been duly published (47 undue concentration of resources, unfair competition, Federal Register 55736, 58365). The time for filing conflicts of interests, unsound banking practices, or comments has expired, and the Board has considered other adverse effects on the public interest. the applications and all comments received in light of Based on the foregoing and other facts of record, the the public interest factors set forth in section 4(c)(8) of Board concludes that the balance of the public interest the Act. factors it must consider under section 4(c)(8) favors Southern controls one subsidiary bank with aggre- approval of the applications. In addition, the financial gate deposits of approximately $491 million and is the and managerial resources and future prospects of fifth largest banking organization in Southern Caroli- Southern, SNC, and Southern International are conna.3 Through its two nonbank subsidiaries, Southern sidered consistent with approval, and the Board has engages in consumer finance and credit-related insur- determined that the applications should be and hereby ance activities, and in the holding of bank premises. are approved. This determination is subject to the SNC also controls one subsidiary bank, with aggregate conditions set forth in section 225.4(c) of Regulation Y deposits of approximately $622 million, and is the and to the Board's authority to require such modificaeighth largest banking organization in North Carolina. tion or termination of the activities of a bank holding SNC's non-bank subsidiary engages in underwriting, company or its subsidiaries as the Board finds necesas a reinsurer, credit life, accident and health sary to assure compliance with the provisions and insurance. purposes of the Act and the Board's regulations and Neither Southern nor SNC currently engages direct- orders issued thereunder, or to prevent evasion therely or indirectly in the proposed financial services that of. Southern International would perform. Accordingly, it The transaction shall be made not later than three is the Board's judgment that consummation of the months after the effective date of this Order, unless proposal would not have any adverse effect on existing such period is extended for good cause by the Board or competition in any relevant market. by the Federal Reserve Bank of Richmond, acting The Board has also considered the effects of con- pursuant to delegated authority. summation of this proposal on probable future compe- By order of the Board of Governors, effective tition in the relevant line of commerce, particularly in February 16, 1983. light of the fact that these applications involve the use of a joint venture to establish Southern International. Voting for this action: Governors Wallich, Partee, Teeters, In this regard, although both Southern and SNC could Rice, and Gramley. Absent and not voting: Chairman Volcker and Governor Martin. presumably engage in the proposed financial services alone, the Board does not consider either of the joint (Signed) JAMES MCAFEE, venturers to be likely independent entrants into the [SEAL] Associate Secretary of the Board market given their relatively small size, and the fact that neither has a sufficient customer base to justify the cost of independent entry.4 In addition, because barriers to entry into the financial services industry are Trust Company of Georgia, low, there are numerous potential entrants into the Atlanta, Georgia market. The loss of either Southern or SNC as a potential entrant, therefore, would have little effect on Order Approving Application to Engage in Equity probable future competition in the market. According- Financing and Acting as an Investment or Financial ly, the Board concludes that consummation of the Adviser proposed joint venture would not significantly decrease competition in any market. Trust Company of Georgia, Atlanta, Georgia, a bank holding company within the meaning of the Bank Holding Company Act ("Act"), has applied for the 3. All banking data are as of June 30, 1982. Board's approval under section 4(c)(8) of the Act 4. See, Florida Coast Banks, Inc., 68 FEDERAL RESERVE BULLE- (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) of the TIN 781 (1982); Svenska Handelsbanken, 68 FEDERAL RESERVE BUL- LETIN 788 (1982). Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 Federal Reserve Bulletin • March 1983 engage de novo, through its wholly owned subsidiary, closely related to banking.3 Applicant has committed Trust Company Mortgage, Atlanta, Georgia ("Compa- to engage in the equity financing activity subject to the ny"), in the activity of arranging equity financing. same conditions as those relied on by the Board Although this activity has not been specified by the previously in finding that the activity is closely related Board in Regulation Y as permissible for bank holding to banking. companies, the Board has determined by order that Specifically, Applicant has committed that Compaarranging equity financing, subject to certain condi- ny's function will be limited to acting as an intermeditions, is closely related to banking.1 Applicant has also ary between developers and investors to arrange fiapplied to engage de novo through Company in the nancing. Neither Applicant nor any affiliate may activity of acting as an investment or financial adviser. acquire an interest in any real estate project for which The Board has determined this activity to be closely Company arranges equity financing nor have any role related to banking (12 C.F.R. § 225.4(a)(5)). in the development of the project. Neither Company Notice of the application, affording interested per- nor any affiliate shall participate in managing, developsons an opportunity to submit comments and views on ing or syndicating property for which Company arthe proposal has been duly published. The time for ranges equity financing, nor promote or sponsor the filing comments and views has expired and the Board syndication of such property. Neither Company nor has considered the application and all comments re- any affiliate will provide financing to the investors in ceived in light of the public interest factors set forth in connection with an equity financing arrangement. The section 4(c)(8) of the Act. fee Company receives for arranging equity financing Applicant is the second largest banking organization for a project shall not be based on profits derived, or to in Georgia and controls 17 banking subsidiaries with be derived, from the property and should not be larger aggregate deposits of $2.5 billion, representing 12.6 than the fee that would be charged by an unaffiliated percent of total commercial bank deposits in the intermediary. The Board finds that Applicant's prostate.2 Applicant engages through Company in mort- posed equity financing activity will not constitute real gage banking activities for which it has received Board estate brokerage, real estate development or real esapproval under section 4(c)(8) of the Act and sections tate syndication, provided the above-mentioned condi- 225.4(a)(1) and (3) of Regulation Y. tions and limitations are observed by Applicant and Applicant has applied to engage de novo through Company. Company in arranging equity financing on behalf of There is no evidence in the record to indicate that institutional investors for commercial and industrial Applicant's performance of equity financing or acting income-producing realty. Equity financing, as pro- as an investment or financial adviser would result in posed by Applicant, involves arranging for the financ- any undue concentration of resources, decreased or ing of commercial or industrial income-producing real unfair competition, unsound banking practices, or estate through the transfer of the title, control and risk other adverse effects. Based upon the foregoing and of the project from the owner/developer to one or other considerations reflected in the record, the Board more investors. Company would represent the owner/ has determined that the balance of public interest developer and would be paid a fee by the owner/ factors that the Board is required to consider under developer for this service. The service would be section 4(c)(8) of the Act is favorable. This determinaoffered only as an alternative to traditional financing tion is conditioned upon Applicant's strictly limiting arrangements and Company would not solicit for prop- its equity financing activities to those described in erties to be sold, list or advertise properties for sale, or information provided in connection with this applicahold itself out or advertise as a real estate broker or tion and as provided in this Order. syndicator. This activity would be provided only with Based on the foregoing, the Board has determined respect to commercial or industrial income-producing that the application should be approved, and the property and only when the financing arranged ex- application is hereby approved. This determination is ceeds $1 million. Only institutional or wealthy, profes- subject to the limitations set forth in this Order, the sional individual investors would be offered the conditions set forth in section 225.4(c) of Regulation service. Y, and the Board's authority to require such modifica- The Board has determined that, subject to certain tion or termination of the activities of a holding conditions to prevent a bank holding company or its company or any of its subsidiaries as the Board finds subsidiary from engaging in real estate brokerage, necessary to assure compliance with the provisions development and syndication, equity financing is and purposes of the Act, and the Board's regulations and orders issued thereunder, or to prevent evasion thereof. 1. BancOhio Corporation, 69 FEDERAL RESERVE BULLETIN 34 (1983); BankAmerica Corporation, 68 FEDERAL RESERVE BULLETIN 647 (1982). 2. All banking data are as of December 31, 1981. 3. BankAmerica Corporation, supra note 1, p. 649. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 227 The proposed activities shall be commenced not tion, Inc., Moline, Illinois, and thereby indirectly later than three months after the effective date of this Moline National Bank, Moline, Illinois; Danville Order, unless such period is extended for food cause Bancshares, Inc., Danville, Illinois, and thereby indiby the Board or by the Federal Reserve Bank of rectly The Second National Bank of Danville, Dan- Atlanta acting pursuant to delegated authority. ville, Illinois; Streator Bancorp, Inc., Streator, Illi- By order of the Board of Governors, effective nois, and thereby indirectly The Streator National February 16, 1983. Bank, Streator, Illinois; First Wyanet Investment Corporation, Galesburg, Illinois, and thereby indirectly Voting for this action: Governors Wallich, Partee, Teeters, The First National Bank of Wyanet, Wyanet, Illinois. Rice, and Gramley. Absent and not voting: Chairman Together the banks and bank holding companies to be Volcker and Governor Martin. acquired are referred to as "Banks." Applicant has also applied for the Board's approval (Signed) JAMES MCAFEE, under section 4(c)(8) of the Act (12 U.S.C. [SEAL] Associate Secretary of the Board § 1843(c)(8)) and section 225.4(b)(2) of the Board's Regulation Y (12 C.F.R. § 225.4(b)(2)), to acquire Midwest Insurance Company, Joliet, Illinois, which Orders Under Sections 3 and 4 of Bank will engage in the activity of reinsuring credit life and Holding Company Act credit accident and health policies directly related to extensions of credit by subsidiaries of the bank holding First Midwest Bancorp, Inc., company. These activities have been determined by Joliet, Illinois the Board to be closely related to banking and permissible for bank holding companies (12 C.F.R. Order Approving Formation of a Bank Holding § 225.4(a)(10)), and this determination is consistent Company and Acquisition of Company to Engage in with the recent amendments to section 4(c)(8) of the Reinsuring Credit Life and Credit Accident and Act limiting the permissible insurance activities of Health Insurance bank holding companies.1 Notice of the applications, affording opportunity for First Midwest Bancorp, Inc., Joliet, Illinois, has ap- interested persons to submit comments and views, has plied for the Board's approval under section 3(a)(1) of been given in accordance with sections 3 and 4 of the the Bank Holding Company Act ("Act") (12 U.S.C. Act (47 Federal Register 51000 (1982)). The time for § 1841 et seq.) to become a bank holding company filing comments and views has expired, and the Board through acquisition of at least 80 percent of the voting has considered the applications and all comments shares of each of 20 banks, five of which will be received in light of the factors set forth in section 3(c) acquired indirectly through the acquisition of the of the Act (12 U.S.C. § 1842(c)) and the considerations banks' parent bank holding companies and 15 of which specified in section 4(c)(8) of the Act. will be acquired directly. Applicant proposes to ac- Applicant, a nonoperating company organized unquire the following 15 banks directly: Union National der the laws of Delaware, was created for the purpose Bank and Trust Company of Joliet, Joliet, Illinois; of becoming a bank holding company by acquiring National Bank of Joliet, Joliet, Illinois; The First Banks. Upon consummation of the proposed transac- National Bank of Morris, Morris, Illinois; First Na- tion, Applicant would become the sixth largest banktional Bank and Trust Company of Quincy, Quincy, ing organization in Illinois, and control approximately Illinois; Bank of Galesburg, Galesburg, Illinois; Mid- $1 billion in total deposits, constituting 1.1 percent of West National Bank of Lake Forest, Lake Forest, total deposits in commercial banks in the state.2 Illinois; National Bank of North Chicago, North Chi- This proposal represents a restructuring of the existcago, Illinois; First Farmers National Bank of Knox- ing ownership of the Banks from individuals to a ville, Knoxville, Illinois; Bank of Danville, Danville, corporation owned by the same individuals. All of the Illinois; Community State Bank, Seneca, Illinois; banks to be acquired are under the ownership and Bank of Zion, Zion, Illinois; State Bank of Braidwood, control of a group of individuals ("the Oberwortmann Braidwood, Illinois; Community National Bank of Group"). These individuals will be principals of Appli- Quincy, Quincy, Illinois; Bradley Bank, Bradley, Illi- cant. The 20 banks to be acquired by Applicant nois; Bank of Lakehurst, Waukegan, Illinois. Appli- compete in 10 banking markets: Chicago, Joliet, Davcant also proposes to acquire the following five one- enport-Rock Island, LaSalle County, Danville, Grunbank holding companies and their subsidiary banks: Citizens Bancorp, Inc., Waukegan, Illinois, and there- 1. See the Garn-St Germain Depository Institutions Act of 1982, by indirectly The Citizens National Bank of Wauke- Pub. L. No. 97-320, § 601(A), 96 Stat. 1469 (1982). gan, Waukegan, Illinois; First Security Bancorpora- 2. All deposit data are as of December 31, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 Federal Reserve Bulletin • March 1983 dy County, Knox County, Kankakee, Kewanee, and tor within the market. In its denial order, the Board Quincy-Hannibal. In each of these markets, except found that the proposal contemplated use of the hold- Grundy County and Knox County, consummation of ing company form to further an anticompetitive arthe transaction would have no effect upon either rangement.7 Applicant's principals now propose to existing or potential competition. incorporate Morris and Braidwood into a multi-bank Where the principals of an Applicant control other holding company. Applicant would acquire no interest banking organizations in the same market as the bank in Gardner. or banks to be placed in a bank holding company, the In order to eliminate the anticompetitive effects Board, in addition to analyzing the competitive effects associated with their control of Gardner, Applicant's of the proposal before it, also analyzes the competitive principals have committed to transfer all of their effects of the transaction or series of transactions by interest in Gardner to an independent trustee on or means of which the banks involved came under com- before the date of consummation of the proposal8 and mon control.3 to divest Gardner completely on or before June 30, Applicant proposes to acquire two banks in the 1983. The Board views this disaffiliation as a positive Grundy County banking market, which are owned by factor in its analysis of the competitive considerations the Oberwortmann Group. The First National Bank of associated with this application because it will serve to Morris, Morris, Illinois ("Morris"), the largest bank in hasten the termination of a longstanding significantly the market, was acquired by the Oberwortmann group adverse competitive situation in the Grundy County in 1965. In 1966, the group acquired State Bank of market.9 Accordingly, based upon facts of record, the Braidwood, Braidwood, Illinois ("Braidwood"), Board considers the competitive effects of the transaction in the Grundy County market do not warrant which was the sixth largest bank in that market. In denial of the application. view of the fact that Morris and Braidwood controlled 19.2 percent and 5.3 percent, respectively, of the total The Oberwortmann group controls two banks in the deposits in commercial banks in the market,4 the Knox County banking market:10 Galesburg Bank acquisition of Braidwood by Applicant's principals ("Galesburg") and Knoxville Bank ("Knoxville"). appears to have eliminated a substantial amount of The group acquired Galesburg, the second largest existing competition in the Grundy County market. banking institution in the market, in 1965 and Knox- However, Braidwood was in poor financial condition ville, the fourth largest institution, in 1966. Combined, in 1966 and any adverse competitive effects of the Galesburg and Knoxville hold total deposits of $75.1 acquisition of Braidwood by Applicant's principals are million, or 27 percent of market deposits. mitigated by the fact that the acquisition was request- Some existing competition was eliminated in 1966 ed by that bank's regulatory authority.5 when the Oberwortmann group acquired Knoxville. Applicant's principals are also principals of Ex- However, the anticompetitive effects of the transacchange Bank of Gardner, Gardner, Illinois ("Gard- tion that brought these banks under common control ner"), which is the seventh largest bank in the Grundy are mitigated by several factors. First, although the County market. Gardner, which has total deposits of two banks in question controlled 18.9 percent of the $12.3 million or 5 percent of the total deposits in total deposits in commercial banks in the market in commercial banks in the market, was acquired by the 1966, the absolute deposit size of each bank was small Oberwortmann group in 1976. In 1978, the Board considered an application by principals of the Applicant to form a one-bank holding company to control 7. Id. at 318. Gardner.6 The Board denied that application, finding 8. The trust is for a period beginning no later than the date of the consummation of the acquisition and ending no later than June 30, that acquisition of Gardner in 1976 by the owners of 1983. If Applicant fails to negotiate a transfer of Gardner on or before Morris and Braidwood eliminated significant competi- that date, the trustee is directed to sell the shares of Gardner. 9. The Board's policy with regard to competitive divestitures, as tion that existed at that time between Gardner and the stated in its Order approving the acquisition by Barnett Banks of other two banks, increased the concentration of bank- Florida, Inc., Jacksonville, Florida, of First Marine Banks, Inc., ing resources within the Grundy County banking mar- Riviera Beach, Florida, 68 FEDERAL RESERVE BULLETIN 190 (1982), requires that divestitures intended to cure the anticompetitive effects ket, and eliminated an independent banking competiresulting from a merger or acquisition occur on or before the date of consummation of the merger to avoid the existence of anticompetitive effect for even a short period of time, see also InterFirst Corporation, 3. See Mid-Nebraska Bancshares, Inc., 64 FEDERAL RESERVE 68 FEDERAL RESERVE BULLETIN 243 (1982). Because Applicant does BULLETIN 589 (1978), afFd ium nom, Mid-Nebraska Bancshares, Inc. not propose to acquire Gardner and because Applicant's proposal v. Board of Governors, 627 F.2d 266 (D.C. Cir. 1980). does not serve to cause or maintain an anticompetitive situation, the 4. As of December 31, 1966. board does not believe that the divestiture of Gardner must be effected 5. See First Bank Holding Company of Batesville, 67 FEDERAL prior to or contemporaneous with consummation of Applicant's RESERVE BULLETIN 347 (1981). proposal. 6. Midwest Bancorp, Inc., 64 FEDERAL RESERVE BULLETIN 317 10. The Knox County banking market is defined as Knox County, (1978). Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 229 and there were six other banks in the market. In 1966, Applicant proposes that, upon consummation of this Galesburg had total deposits of $9.2 million and Knox- proposal, it would charge rates that are 4.6 to 5.5 ville had deposits of $5.1 million. Second, although in percent below the Illinois maximum rates that are 1966 the Knox County market had a four-firm concen- currently being charged by Midwest Insurance Comtration of 83.4 percent, this level of concentration in pany and has committed to maintain reduced rates the market was attributable largely to the fact that the following approval of the application, a result the largest bank in the market held 45 percent of the total Board regards as being in the public interest. It does deposits in commercial banks in the market. Since not appear that Applicant's acquisition of Midwest 1965, however, the market share of this bank has Insurance would have any significant adverse effects eroded steadily and now amounts to 38.3 percent of upon existing or potential competition. Furthermore, the total deposits in commercial banks in the market. there is no evidence in the record to indicate that Further, a de novo bank was established in the market approval of this proposal would result in undue conin 1967 and now holds a 3.7 percent share of the total centration of resources, decreased or unfair competicommercial banks in the market, demonstrating that tion, conflicts of interests, unsound banking practices successful, procompetitive de novo entry into the or other adverse effects on the public interest. Accordmarket is possible. Thus, the Board concludes that the ingly, the Board has determined that the balance of the competitive effects of this transaction in the Knox public interest factors it must consider under section County market are not so serious as to warrant denial 4(c)(8) of the Act is favorable and consistent with of the proposal. approval of the application. Accordingly, based on the record as a whole, and in Based on the foregoing and all facts of record, the view of Applicant's commitment that Gardner will be Board has determined that the applications under transferred to a trustee on or before the date of sections 3(a)(1) and 4(c)(8) of the Act should be and consummation and divested completely on or before hereby are approved subject to the condition that June 30, 1983, the Board concludes that the proposed complete divestiture of Gardner take place as soon as acquisition would not have any significantly adverse possible but in no event later than June 30, 1983. effects on existing or potential competition, or on the The acquisition of Banks shall not be made before concentration of banking resources in any relevant the thirtieth calendar day following the effective date market. of this Order, and neither the acquisition of Banks nor The financial and managerial resources of Applicant the acquisition of the nonbanking subsidiary shall and the proposed subsidiary banks and bank holding occur later than three months after the effective date of companies are generally satisfactory and consistent this Order, unless such period is extended for good with approval. Moreover, considerations relating to cause by the Board or by the Federal Reserve Bank of the convenience and needs of the community to be Chicago, pursuant to delegated authority. The deterserved are consistent with approval. mination as to Applicant's nonbanking activities are Applicant has also applied, pursuant to section subject to the conditions set forth in section 225.4(c) of 4(c)(8) of the Act, to engage in reinsuring credit life Regulation Y (12 C.F.R. § 225.4(c)) and to the Board's and credit accident and health insurance directly relat- authority to require such modification or termination ed to extensions of credit by the banking subsidiaries of the activities of a holding company or any of its of the bank holding company. Credit life insurance and subsidiaries as the Board finds necessary to assure credit accident and health insurance are generally compliance with the provisions and purposes of the made available by banks and other lenders and are Act and the Board's regulations and Orders issued designed to assure repayment of a loan in the event of thereunder, or to prevent evasion thereof. death or disability of the borrower. In connection with By order of the Board of Governors, effective its addition of the underwriting of such insurance to February 28, 1983. the list of permissible activities for bank holding companies, the Board stated: Voting for this action: Chairman Volcker and Governors Martin, Wallich, and Partee. Absent and not voting: Gover- To assure that engaging in the underwriting of credit life and nors Teeters, Rice, and Gramley. Governor Wallich abcredit accident and health insurance can reasonably be ex- stained from voting on those portions of the proposal that pected to be in the public interest, the Board will only relate to insurance. approve applications in which an applicant demonstrates that approval will benefit the consumer or result in other public benefits. Normally such a showing would be made by a projected reduction in rates or increase in policy benefits due to bank holding company performance of this service. (Signed) JAMES MCAFEE, (12 C.F.R. § 225.4(a)(10), n. 7). [SEAL] Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 Federal Reserve Bulletin • March 1983 ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During February 1983, the Board of Governors approved the applications listed below. Copies are available upon request to Publications Services, MS-138, Division of Support Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Board action Applicant Bank(s) (effective date) Barnett Banks of Florida, Inc. The State Exchange Bank, February 8, 1983 Jacksonville, Florida Lake City, Florida Treasure Coast Bankcorp, Port St. Lucie, Florida Suncoast Bancorp, Inc., Vero Beach, Florida Broadway Bancshares, Inc., Broadway Air Force National Bank, February 3, 1983 San Antonio, Texas Randolph Air Force Base, Bexar County, Texas Commerce Bancorp, Inc., Bank of Commerce, February 10, 1983 Hamtramck, Michigan Hamtramck, Michigan The State Bank of Fraser, Fraser, Michigan First Mechants Financial Corporation, The Merchants National Bank of Fort February 16, 1983 Fort Smith, Arkansas Smith, Fort Smith, Arkansas First State Bancorp of Princeton, First State Bank of Princeton, February 22, 1983 Illinois, Inc., Princeton, Illinois Princeton, Illinois Farmers' State Bank of Sheffield, Sheffield, Illinois High Point Financial Corporation, The National Bank of Sussex County, February 10, 1983 Branchville, New Jersey Branchville, New Jersey InterFirst Corporation, InterFirst Bank D/FW Freeport, N.A., February 9, 1983 Dallas, Texas Irving, Texas Key Banks Inc., Bankers Trust Company of Western New February 9, 1983 Albany, New York York, Jamestown, New York Norstar Bancorp, Inc., Bank of Commerce, February 25, 1983 Albany, New York New York, New York Puget Sound Bancorp, San Juan County Bank, February 24, 1983 Tacoma, Washington Friday Harbor, Washington Sun Banks of Florida, Inc., The First National Bank of DeFuniak February 18, 1983 Orlando, Florida Springs, DeFuniak Springs, Florida Texas American Bancshares, Inc., Heritage Bank, February 10, 1983 Fort Worth, Texas Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 231 By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies of the orders are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Alpine Bancorporation Inc., The Bank of Cherry Valley, Chicago February 4, 1983 Belvidere, Illinois Cherry Valley, Illinois Amarillo Western Bancshares, Inc., Western National Bank, Dallas February 17, 1983 Amarillo, Texas Amarillo, Texas American Bank Corporation, American National Bank of Rock Kansas City January 18, 1983 Denver, Colorado Springs, Rock Springs, Wyoming BancTexas Group, Inc., East Texas Bancshares, Inc., Dallas February 3, 1983 Dallas, Texas Tyler, Texas CNB of Lebanon Bancorp, Inc., Citizens National Bank, St. Louis February 9, 1983 Lebanon, Kentucky Lebanon, Kentucky Central Banc System, Inc., Granite City Trust and Savings St. Louis February 8, 1983 Granite City, Illinois Bank, Granite City, Illinois Colonial Bancorporation, Inc., The First National Bank of Port Chicago January 27, 1983 Thiensville, Wisconsin Washington, Port Washington, Wisconsin Continental Bancorp, Inc., York Bancorp, Philadelphia January 27, 1983 Philadelphia, Pennsylvania York, Pennsylvania Cullen/Frost Bankers, Inc., Northfield National Bank, Dallas February 11, 1983 San Antonio, Texas Houston, Texas Downing Investment Co., Inc., Americus State Bank, Kansas City February 2, 1983 Ellis, Kansas Americus, Kansas Ellis State Bank, Ellis, Kansas Eagle Bancorporation, Inc., Time Associates, Inc., St. Louis January 28, 1983 Highland, Illinois Nashville, Illinois F.A.B. Bancorp, Inc., First American Bank of Aurora, Chicago February 4, 1983 Aurora, Illinois Aurora, Illinois F & M Bancorporation, Inc., Forest Junction State Bank, Chicago January 28, 1983 Kaukauna, Wisconsin Forest Junction, Wisconsin FNB Holding Co., First National Bank of West Des Chicago February 7, 1983 West Des Moines, Iowa Moines, West Des Moines, Iowa FTS Financial Inc., Farmers Trust and Savings Bank, Williamsburg, Iowa Williamsburg, Iowa First Bancorp of War, Inc., Ameribank, Welch, Richmond February 14, 1983 Welch, West Virginia Welch, West Virginia First Commonwealth Bancshares, The Commonwealth Bank, Dallas February 18, 1983 Inc., Bellaire, Texas Bellaire, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

232 Federal Reserve Bulletin • March 1983 Section 3—Continued Reserve Effective AApppplliiccaanntt BBaannkk((ss)) Bank date First Financial Bancorp, First National Bank of Southwest- Cleveland February 18, 1983 Monroe, Ohio ern Ohio, Monroe, Ohio The Citizens Commercial Bank & Trust Company, Celina, Ohio First Illinois Corporation, Northwest Trust & Savings Bank, Chicago February 17, 1983 Evanston, Illinois Arlington Heights, Illinois First North Port Bancorp, North Port Bank, Atlanta February 23, 1983 North Port, Florida North Port, Florida First Sterling Bancorp., Inc., First National Bank of Sterling, Chicago February 23, 1983 Sterling, Illinois Sterling, Illinois H & L Investments, Inc., First Manhattan Bankshares, Inc., Kansas City February 2, 1983 Manhattan, Kansas Manhattan, Kansas Hopkins Financial Corporation, Leola State Bank, Minneapolis February 4, 1983 Mitchell, South Dakota Leola, South Dakota Illinois Valley Bancorp, Inc., The Grundy County National Bank, Chicago February 10, 1983 Morris, Illinois Morris, Illinois Intercity Bancorporation, Inc., Intercity State Bank, Chicago February 18, 1983 Schofield, Wisconsin Schofield, Wisconsin Interstate Financial Corporation, The Waynesville National Cleveland February 16, 1983 Dayton, Ohio Waynes ville, Ohio Key Banks Inc., Bankers Trust Company of Western New York February 2, 1983 Albany, New York New York, Jamestown, New York Mahnomen Bancshares, Inc., First National Bank in Mahnomen, Minneapolis February 3, 1983 Mahnomen, Minnesota Mahnomen, Minnesota Naperville Financial Corporation The Naperville National Bank and Chicago February 15, 1983 Naperville, Illinois Trust Company, Naperville, Illinois Norstar Bancorp, Inc., Bank of Commerce, New York February 2, 1983 Albany, New York New York, New York Northwest Pennsylvania Corp., Union Bank & Trust Co., Cleveland February 18, 1983 Oil City, Pennsylvania Erie, Pennsylvania Old Second Bancorp, Inc., Bank of North Aurora, Chicago January 28, 1983 Aurora, Illinois North Aurora, Illinois Prairieland Bancorp, Inc. Roseville State Bank, Chicago February 4, 1983 Bushnell, Illinois Rose ville, Illinois Security Bancorp, Inc., The First National Bank of Monroe, Chicago February 7, 1983 Southgate, Michigan Monroe, Michigan Security Shares, Inc., Security State Bank, Dallas February 2, 1983 Abilene, Texas Abilene, Texas Smithville Bankshares, Inc., First State Bank of Smithville, Dallas February 10, 1983 Smithville, Texas Smithville, Texas Starr Ban Company, State Bank of Lamoni, Chicago January 31, 1983 Lamoni, Iowa Lamoni, Iowa Town & Country Bancorp, Inc., Town & Country Bank, Chicago February 9, 1983 Springfield, Illinois Springfield, Illinois Utah Bancorporation, Intermountain Thrift and Loan, San Francisco February 23, 1983 Salt Lake City, Utah Salt Lake City, Utah Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 233 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Victoria Bankshares, Inc., First National Bank of Ingleside, Dallas February 7, 1983 Victoria, Texas Ingleside, Texas Wayne County Bancshares, Inc. Wayne County Bank, Atlanta February 23, 1983 Waynesboro, Tennessee Waynesboro, Tennessee Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant company or activity Bank date Dewco Agency, Inc., Dewey County Bank, Minneapolis February 16, 1983 Timber Lake, South Dakota Timber Lake, South Dakota Le Center Financial Services, Inc. First State Bank of Le Center, Minneapolis January 28, 1983 Le Center, Minnesota Le Center, Minnesota To continue to engage in operating a general insurance agency McKinstry Inc., The First National Bank of Jules- Kansas City February 4, 1983 Julesburg, Colorado burg, Julesburg, Colorado McKinstry-Campbell Insurance Agency, Julesburg, Colorado Metter Financial Services, Inc., Metter Banking Company, Atlanta February 11, 1983 Metter, Georgia Metter, Georgia Metter Systems, Inc., Metter, Georgia Ranchers Investment Corporation, Ranchers National Bank of Minneapolis February 4, 1983 Winner, South Dakota Winner, Winner, South Dakota To engage in general insurance activities Starbuck Bancshares, Inc., The First National Bank of Star- Minneapolis January 31, 1983 Starbuck, Minnesota buck, Starbuck, Minnesota Olson Insurance Agency of Starbuck, Starbuck, Minnesota ORDER APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Reserve Effective Applicant Bank(s) Bank date Lookingglass Banc Corp. Peoples Bank of Albers, St. Louis February 3, 1983 Albers, Illinois Albers, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 Federal Reserve Bulletin • March 1983 PENDING CASES INVOLVING THE BOARD OF GOVERNORS* *This list of pending cases does not include suits Bank Stationers Association, Inc., et al. v. Board of against the Federal Reserve Banks in which the Board Governors, filed July 1981, U.S.D.C. for the Northof Governors is not named a party. ern District of Georgia. Public Interest Bounty Hunters v. Board of Gover- Flagship Banks, Inc. v. Board of Governors, filed nors, et al, filed June 1981, U.S.D.C. for the January 1983, U.S.D.C. for the District of Colum- Northern District of Georgia. bia. Edwin F. Gordon v. John Heimann, et al., filed May Flagship Banks, Inc. v. Board of Governors, filed 1981, U.S.C.A. for the Fifth Circuit. October 1982, U.S.D.C. for the District of Colum- First Bank & Trust Company v. Board of Governors, bia. filed February 1981, U.S.D.C. for the Eastern Dis- Association of Data Processing Service Organiza- trict of Kentucky. tions, Inc., et al. v. Board of Governors, filed 9 to 5 Organization for Women Office Workers v. August 1982, U.S.C. A. for the District of Columbia. Board of Governors, filed December 1980, The Philadelphia Clearing House Association, et al. v. U.S.D.C. for the District of Massachusetts. Board of Governors, filed July 1982, U.S.D.C. for Securities Industry Association v. Board of Goverthe Eastern District of Pennsylvania. nors, et al., filed October 1980, U.S.D.C. for the Richter v. Board of Governors, et al., filed May 1982, District of Columbia. U.S.D.C. for the Northern District of Illinois. Securities Industry Association v. Board of Gover- Wyoming Bancorporation v. Board of Governors, filed nors, et al., filed October 1980, U.S.C.A. for the May 1982, U.S.C.A. for the Tenth Circuit. District of Columbia. First Bancorporation v. Board of Governors, filed A. G. Becker, Inc. v. Board of Governors, et al., filed April 1982, U.S.C.A. for the Tenth Circuit. October 1980, U.S.D.C. for the District of Colum- Charles G. Vick v. Paul A. Volcker, et al., filed March bia. 1982, U.S.D.C. for the District of Columbia. A. G. Becker, Inc. v. Board of Governors, et al., filed Jolene Gustafson v. Board of Governors, filed March October 1980, U.S.C.A. for the District of Colum- 1982, U.S.C.A. for the Fifth Circuit. bia. Edwin F. Gordon v. Board of Governors, et al., filed A. G. Becker, Inc. v. Board of Governors, et al., filed October 1981, U.S.C.A. for the Eleventh Circuit August 1980, U.S.D.C. for the District of Columbia. (two consolidated cases). Berkovitz, et al. v. Government of Iran, et al., filed Allen Wolfson v. Board of Governors, filed September June 1980, U.S.D.C. for the Northern District of 1981, U.S.D.C. for the Middle District of Florida. California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

235 Directors of Federal Reserve Banks and Branches Following is a list of the directorates of the Federal each group elects one Class A and one Class B Reserve Banks and Branches as presently constituted. director. Class C directors are selected to represent The list shows, in addition to the name of each the public with due but not exclusive consideration to director, the principal business affiliation, the class of the interests of agriculture, commerce, industry, servdirectorship, and the date when the term expires. Each ices, labor, and consumers, and may not be officers, Federal Reserve Bank has nine directors: three Class directors, employees, or stockholders of any bank. A and three Class B directors, who are elected by the One Class C director is designated by the Board of stockholding member banks, and three Class C direc- Governors as Chairman of the board of directors and tors, who are appointed by the Board of Governors of Federal Reserve Agent and another is appointed Depthe Federal Reserve System. All Federal Reserve uty Chairman. Bank directors are chosen without discrimination on Federal Reserve Branches have either five or seven the basis of race, creed, color, sex, or national origin. directors, of whom a majority are appointed by the Class A directors are representative of the stockhold- board of directors of the parent Federal Reserve Bank; ing member banks. Class B directors represent the the others are appointed by the Board of Governors of public and are elected with due but not exclusive the Federal Reserve System. One of the directors consideration to the interests of agriculture, com- appointed by the Board of Governors at each Branch merce, industry, services, labor, and consumers, and is designated annually as Chairman of the board of that may not be officers, directors, or employees of any Branch in such a manner as the Federal Reserve Bank bank. may prescribe. For the purpose of electing Class A and Class B In this list of the directorates, a name followed by directors, the member banks of each Federal Reserve footnote reference 1 is a chairman of the Bank's board, District are classified by the Board of Governors of the that by footnote reference 2 is a deputy chairman, and Federal Reserve System into three groups, each of that by footnote reference 3 indicates a new appointwhich consists of banks of similar capitalization, and ment. DISTRICT 1—BOSTON Class A Henry S. Woodbridge, Jr. Chairman of the Board and Chief Executive Officer, Rhode Island 1983 Hospital Trust National Bank, Providence, R.I. James Stokes Hatch President and Chief Executive Officer, The Canaan National Bank, 1984 Canaan, Conn. William W. Treat3 President, Bank Meridian, N.A., Hampton, N.H. 1985 Class B Joseph A. Baute Chairman and Chief Executive Officer, Markem Corporation, 1983 Keene, N.H. George N. Hatsopoulos Chairman of the Board and President, Thermo Electron Company, 1984 Waltham, Mass. Matina S. Horner3 President, Radcliffe College, Cambridge, Mass. 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

236 Federal Reserve Bulletin • March 1983 Class C Term expires Dec. 31 Michael J. Harrington Harrington Company, Peabody, Mass. 1983 Robert P. Henderson1 Chairman and Chief Executive Officer, Itek Corporation, 1984 Lexington, Mass. Thomas I. Atkins2 General Counsel, National Association for the Advancement of 1985 Colored People, New York, N.Y. DISTRICT 2—NEW YORK Class A Peter D. Kiernan Chairman and President, Norstar Bancorp Inc., Albany, N.Y. 1983 Robert A. Rough President, The National Bank of Sussex County, Branchville, N.J. 1984 Alfred Brittain3 Chairman of the Board, Bankers Trust Company, New York, N.Y. 1985 Class B John R. Opel President and Chief Executive Officer, International Business 1983 Machines Corporation, Armonk, N.Y. Edward L. Hennessy, Jr. Chairman of the Board, Allied Chemical Corporation, Morristown, 1984 N.J. William S. Cook President, Union Pacific Corporation, New York, N.Y. 1985 Class C Clifton R. Wharton, Jr.3 Chancellor, State University of New York System, New York, 1983 N.Y. Gertrude G. Michelson2 Senior Vice President, R. H. Macy & Company, Inc., New York, 1984 N.Y. John Brademas1- 3 President, New York University, New York, N.Y. 1985 —BUFFALO BRANCH Appointed by Federal Reserve Bank Carl F. Ulmer President, The Evans National Bank of Angola, Angola, N.Y. 1983 Edward W. Duffy Chairman of the Board, Marine Midland Bank, N.A., Buffalo, N.Y. 1984 Frederick G. Ray3 Chairman, President, and Chief Executive Officer, Rochester 1985 Savings Bank, Rochester, N.Y. Donald I. Wickham3 President, Tri-Way Farms, Inc., Stanley, N.Y. 1985 Appointed by Board of Governors John R. Burwell President, Rollins Container Corporation, Rochester, N.Y. 1983 George L. Wessel President, Buffalo AFL/CIO Council, Buffalo, N.Y. 1984 M. Jane Dickman1 Partner, c/o Touche Ross & Co., Buffalo, N.Y. 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 237 DISTRICT 3—PHILADELPHIA Term expires Class A Dec. 31 Roger S. Hillas Chairman and President, Provident National Bank, Philadelphia, 1983 Pa. Douglas Eugene Johnson Chairman and President, Ocean County National Bank, Point 1984 Pleasant Beach, N.J. JoAnne Brinzey3 Cashier and Chief Executive Officer, The First National Bank at 1985 Gallitzin, Gallitzin, Pa. Class B Harry A. Jensen President and Chief Executive Officer, Armstrong World Industries, 1983 Inc., Lancaster, Pa. Richard P. Hauser Chairman and Chief Executive Officer, John Wanamaker, 1984 Philadelphia, Pa. Eberhard Faber, IV Chairman of the Board and Chief Executive Officer, Eberhard 1985 Faber, Inc., Wilkes-Barre, Pa. Class C Robert M. Landis1 Partner, Dechert Price & Rhoads, Philadelphia, Pa. 1983 George E. Bartol, III Chairman of the Board, Hunt Manufacturing Company, 1984 Philadelphia, Pa. Nevius M. Curtis2-3 President and Chief Executive Officer, Delmarva Power & Light 1985 Company, Wilmington, Del. DISTRICT 4—CLEVELAND Class A J. David Barnes Chairman of the Board, Mellon Bank, N.A., Pittsburgh, Pa. 1983 Raymond D. Campbell Director, The Oberlin Savings Bank Co., Oberlin, Ohio 1984 William W. Stroud3 President, First-Knox National Bank, Mount Vernon, Ohio 1985 Class B E. Mandell de Windt Chairman of the Board, Eaton Corporation, Cleveland, Ohio 1983 Richard D. Hannan Chairman of the Board and President, Mercury Instruments, Inc., 1984 Cincinnati, Ohio John W. Kessler President, John W. Kessler Company, Columbus, Ohio 1985 Class C William H. Knoell2 President and Chief Executive Officer, Cyclops Corporation, 1983 Pittsburgh, Pa. J. L. Jackson1 Executive Vice President and President, Coal Unit, Diamond 1984 Shamrock Corporation, Lexington, Ky. John D. Anderson Senior Partner, The Andersons, Maumee, Ohio 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238 Federal Reserve Bulletin • March 1983 —CINCINNATI BRANCH Term expires Appointed by Federal Reserve Bank Dec. 31 O. T. Dorton President, Citizens National Bank, Paintsville, Ky. 1983 Richard J. Fitton President and Chief Executive Officer, First National Bank of 1984 Southwestern Ohio, Hamilton, Ohio Sherrill Cleland President, Marietta College, Marietta, Ohio 1984 Clement L. Buenger3 President, The Fifth Third Bank, Cincinnati, Ohio 1985 Appointed by Board of Governors Clifford R. Meyer1 President and Chief Operating Officer, Cincinnati Milacron Inc., 1983 Cincinnati, Ohio Don Ross Owner, Dunreath Farm, Lexington, Ky. 1984 Sister Grace Marie Hiltz President, Sisters of Charity Health Care Systems, Inc., Cincinnati, 1985 Ohio —PITTSBURGH BRANCH Appointed by Federal Reserve Bank Ernest L. Lake President, The National Bank of North East, North East, Pa. 1983 Robert C. Milsom President, Pittsburgh National Bank, Pittsburgh, Pa. 1984 James S. Pasman, Jr. Chairman, Aluminum Company of America, Pittsburgh, Pa. 1984 A. Dean Heasley3 President and Chief Executive Officer, Century National Bank & 1985 Trust Co., Rochester, Pa. Appointed by Board of Governors Milton G. Hulme, Jr.1 President and Chief Executive Officer, Mine Safety Appliances 1983 Company, Pittsburgh, Pa. Quentin C. McKenna President and Chief Executive Officer, Kennametal Inc., Latrobe, 1984 Pa. Robert S. Kaplan Dean, Graduate School of Industrial Administration, Carnegie- 1985 Mellon University, Pittsburgh, Pa. DISTRICT 5—RICHMOND Class A J. Banks Scarborough Chairman and President, Pee Dee State Bank, Timmonsville, S.C. 1983 Joseph A. Jennings Chairman and Chief Executive Officer, United Virginia Bankshares 1984 Inc. and United Virginia Bank, Richmond, Va. Willard H. Derrick3 President and Chief Executive Officer, Sandy Springs National 1985 Bank and Savings Institution, Sandy Springs, Md. Class B Leon A. Dunn, Jr. Chairman, President, and Chief Executive Officer, Guardian 1983 Corporation and Subsidiaries, Rocky Mount, N.C. Paul G. Miller Chairman of the Board and Chief Executive Officer, Commercial 1984 Credit Company, Baltimore, Md. James A. Chapman, Jr. Chairman of the Board and Chief Executive Officer, Inman Mills, 1985 Inman, S.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 239 Class C Term expires Dec. 31 Steven Muller1 President, The Johns Hopkins University, Baltimore, Md. 1983 William S. Lee, IIP Chairman of the Board and Chief Executive Officer, Duke Power 1984 Company, Charlotte, N.C. Robert A. Georgine3 President, The Johns Hopkins University, Baltimore, Md. 1985 —BALTIMORE BRANCH Appointed by Federal Reserve Bank Joseph M. Gough, Jr. President, The First National Bank of St. Mary's, Leonardtown, 1983 Md. Pearl C. Brackett Deputy Manager, Baltimore Regional Chapter of the American Red 1984 Cross, Baltimore, Md. Hugh D. Shires Senior Vice President, First National Bank of Maryland, 1985 Cumberland, Md. Howard I. Scraggs3 Chairman of the Board, American National Building and Loan 1985 Association, Baltimore, Md. Appointed by Board of Governors Robert L. Tate Chairman, Tate Industries, Baltimore, Md. 1983 Thomas H. Maddux Executive Vice President and Chief Operating Officer, Easco 1984 Corporation, Baltimore, Md. Edward H. Covell1 President, The Covell Company, Easton, Md. 1985 —CHARLOTTE BRANCH Appointed by Federal Reserve Bank Nicholas W. Mitchell Chairman of the Board, Piedmont Federal Savings and Loan 1983 Association, Winston-Salem, N.C. Hugh M. Chapman Chairman of the Board, The Citizens & Southern National Bank of 1984 South Carolina, Columbia, S.C. John G. Medlin3 President and Chief Executive Officer, Wachovia Bank and Trust 1985 Company and Wachovia Company, N.A., Winston-Salem, N.C. Marvin D. Trapp President and Chief Executive Officer, The National Bank of South 1985 Carolina, Sumter, S.C. Appointed by Board of Governors Wallace J. Jorgenson President, Jefferson-Pilot Broadcasting Co., Charlotte, N.C. 1983 Henry Ponder1 President, Benedict College, Columbia, S.C. 1984 George A. Bernhardt3 President and Director, Bernhardt Industries, Lenoir, N.C. 1985 DISTRICT 6—ATLANTA Class A Hugh M. Willson President, Citizens National Bank, Athens, Tenn. 1983 Guy W. Botts Chairman of the Board, Barnett Banks of Florida, Inc. 1984 Jacksonville, Fla. Dan B. Andrews President, First National Bank, Dickson, Tenn. 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

240 Federal Reserve Bulletin • March 1983 Class B Term expires Dec. 31 Harold B. Blach, Jr. President, Blach's Inc., Birmingham, Ala. 1983 Horatio C. Thompson President, Horatio Thompson Investment, Inc., Baton Rouge, La. 1984 Bernard F. Sliger3 President, Florida State University, Tallahassee, Fla. 1985 Class C William A. Fickling, Jr.1 Chairman and Chief Executive, Charter Medical Corporation, 1983 Macon, Ga. Jane C. Cousins President and Chief Executive Officer, Merrill Lynch 1984 Realty/Cousins, Miami, Fla. John H. Weitnauer, Jr.2 Chairman and Chief Executive Officer, Richway, Atlanta, Ga. 1985 —BIRMINGHAM BRANCH Appointed by Federal Reserve Bank Henry A. Leslie President and Chief Executive Officer, Union Bank and Trust 1983 Company, Montgomery, Ala. William M. Schroeder Chairman and President, Central State Bank, Calera, Ala. 1984 Grady Gillam3 President and Chief Executive Officer, The American National 1985 Bank, Gadsden, Ala. G. Mack Dove3 President, AAA Cooper Transportation Co., Dothan, Ala. 1985 Appointed by Board of Governors Samuel R. Hill, Jr.1 President, University of Alabama in Birmingham, Birmingham, Ala. 1983 Louis J. Willie Executive Vice President, Booker T. Washington Insurance Co., 1984 Birmingham, Ala. Martha A. Mclnnis Executive Vice President, Alabama Environmental Quality 1985 Association, Montgomery, Ala. —JACKSONVILLE BRANCH Appointed by Federal Reserve Bank Gordon W. Campbell President and Chief Executive Officer, Exchange Bancorporation, 1983 Inc., Tampa, Fla. Lewis A. Doman President, The Citizens and Peoples National Bank, Pensacola, Fla. 1984 E. F. Keen, Jr.3 Vice Chairman and President, Ellis Banking Corporation, 1985 Bradenton, Fla. Roy G. Green3 President, First Federal Savings and Loan Association of 1985 Jacksonville, Jacksonville, Fla. Appointed by Board of Governors Joan W. Stein1 Chairman, Regency Square Properties, Inc., Jacksonville, Fla. 1983 Jerome P. Keuper President, Florida Institute of Technology, Melbourne, Fla. 1984 E. William Nash, Jr.3 President, South Central Operations, The Prudential Insurance 1985 Company, Jacksonville, Fla. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 241 —MIAMI BRANCH Term expires Appointed by Federal Reserve Bank Dec. 31 Daniel S. Goodrum Senior Executive Vice President, Sun Banks of Florida, 1983 Ft. Lauderdale, Fla. E. Llwyd Ecclestone, Jr. President and Chief Executive Officer, National Investment Co., 1984 West Palm Beach, Fla. Stephen G. Zahorian President, Barnett Bank of Fort Myers, N.A., Fort Myers, Fla. 1984 D. S. Hudson, Jr.3 Chairman, First National Bank and Trust Company of Stuart, 1985 Stuart, Fla. Appointed by Board of Governors Eugene E. Cohen1 Chief Financial Officer and Treasurer, Howard Hughes Medical 1983 Institute, Coconut Grove, Fla. Roy Vandegrift, Jr. President, Vandegrift-Williams Farms, Inc., Pahokee, Fla. 1984 Sue McCourt Cobb3 Attorney, Greenberg, Traurig, Askew, Hoffman, Lipoff, Quentel, 1985 and Wolff, P.A., Miami, Fla. —NASHVILLE BRANCH Appointed by Federal Reserve Bank James F. Smith, Jr. Chairman and Chief Executive Officer, Park National Bank, 1983 Knoxville, Tenn. Michael T. Christian President and Chief Executive Officer, First National Bank of 1984 Greeneville, Greeneville, Tenn. Owen G. Shell, Jr.3 President and Chief Operating Officer, First American Bank of 1985 Nashville, N.A., Nashville, Tenn. Samuel H. Howard3 Vice President and Treasurer, Hospital Corporation of America, 1985 Nashville, Tenn. Appointed by Board of Governors Robert C. H. Mathews, Jr.' Managing General Partner, R. C. Mathews, Contractor, Nashville, 1983 Tenn. C. Warren Neel Dean, College of Business Administration, The University of 1984 Tennessee, Knoxville, Tenn. Condon S. Bush3 President, Bush Brothers & Company, Dandridge, Tenn. 1985 —NEW ORLEANS BRANCH Appointed by Federal Reserve Bank Paul W. McMullan Chairman and Chief Executive Officer, First Mississippi National 1983 Bank, Hattiesburg, Miss. Jerry W. Brents President and Chief Executive Officer, First National Bank, 1984 Lafayette, La. Thomas G. Rapier3 President and Chief Executive Officer, First National Bank, 1985 New Orleans, La. Tom Burkett Scott, Jr.3 President and Chief Executive Officer, Unifirst Federal Savings and 1985 Loan Association, Jackson, Miss. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin • March 1983 Appointed by Board of Governors Term expires Dec. 31 Leslie B. Lampton President, Ergon, Inc., Jackson, Miss. 1983 Roosevelt Steptoe1 Professor, Southern University, Baton Rouge Campus, 1984 Baton Rouge, La. Sharon A. Perlis Attorney, Metairie, La. 1985 DISTRICT 7—CHICAGO Class A Ollie Jay Tomson President, The Citizens National Bank of Charles City, Charles 1983 City, Iowa Charles M. Bliss3 Chairman of the Board and Chief Executive Officer, Harris Trust 1984 and Savings Bank, Chicago, 111. Patrick E. McNarny President, First National Bank of Logansport, Logansport, Ind. 1985 Class B Leon T. Kendall Chairman of the Board and Chief Executive Officer, Mortgage 1983 Guaranty Insurance Corp., Milwaukee, Wis. Dennis W. Hunt President, Hunt Truck Lines, Inc., Rockwell City, Iowa 1984 Mary Garst Manager of Cattle Division, Garst Company, Coon Rapids, Iowa 1985 Class C John Sagan1 Vice President-Treasurer, Ford Motor Company, Dearborn, Mich. 1983 Edward F. Brabec Business Manager, Chicago Journeymen Plumbers, Local Union 1984 130, U.A., Chicago, 111. Stanton R. Cook2 President, Tribune Company, Chicago, 111. 1985 —DETROIT BRANCH Appointed by Federal Reserve Bank Lawrence A. Johns President, Isabella Bank and Trust, Mount Pleasant, Mich. 1983 James H. Duncan Chairman and Chief Executive Officer, First American Bank 1984 Corporation, Kalamazoo, Mich. Thomas R. Ricketts Chairman and President, Standard Federal Savings and Loan 1984 Association, Troy, Mich. Charles T. Fisher, IIP Chairman and President, National Bank of Detroit, Detroit, Mich. 1985 Appointed by Board of Governors Karl D. Gregory Professor; Management and Economic Consultant, Oakland 1983 University, Rochester, Mich. Robert E. Brewer Executive Vice President Finance, K Mart Corporation, Troy, 1984 Mich. Russell G. Mawby1 President and Trustee, W. K. Kellogg Foundation, Battle Creek, 1985 Mich. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 243 DISTRICT 8—ST. LOUIS TERM expires Class A Dec. 31 Clarence C. Barksdale Chairman and Chief Executive Officer, Centerre Bank National 1983 Association, St. Louis, Mo. George M. Ryrie President, First National Bank & Trust Co., Alton, 111. 1984 Donald L. Hunt President, First National Bank of Marissa, Marissa, 111. 1985 Class B Frank A. Jones, Jr. President, Dietz Forge Company, Memphis, Tenn. 1983 Jesse M. Shaver Consultant, Allis-Chalmers Corporation, Louisville, Ky. 1984 Vacancy 1985 Class C W. L. Hadley Griffin1 Chairman of the Board, Brown Group, Inc., St. Louis, Mo. 1984 Mary P. Holt2 President, Clothes Horse, Little Rock, Mo. 1985 Robert L. Virgil3 Dean, School of Business, Washington University, St. Louis, Mo. 1985 —LITTLE ROCK BRANCH Appointed by Federal Reserve Bank William H. Kennedy, Jr. Chairman of the Board, National Bank of Commerce of Pine Bluff, 1983 Pine Bluff, Ark. Gordon E. Parker Chairman of the Board and President, The First National Bank of 1984 El Dorado, El Dorado, Ark. D. Eugene Fortson3 President and Chief Executive Officer, Worthen Bank and Trust 1985 Company, N.A., Little Rock, Ark. Wilbur P. Gulley, Jr.3 President and Chief Executive Officer, Savers Federal Savings and 1985 Loan Association, Little Rock, Ark. Appointed by Board of Governors Richard V. Warner1 Group Vice President, Wood Products Group, Potlatch 1983 Corporation, Warren, Ark. Sheffield Nelson Chairman of the Board, President, and Chief Executive Officer, 1984 Arkla, Inc., Little Rock, Ark. Shirley J. Pine Department of Communicative Disorders, University of Arkansas at 1985 Little Rock, Little Rock, Ark. —LOUISVILLE BRANCH Appointed by Federal Reserve Bank Frank B. Hower, Jr. Chairman and Chief Executive Officer, Liberty National Bank and 1983 Trust Company, Louisville, Ky. R. I. Kerr, Jr. President and Managing Officer, Greater Louisville First Federal 1984 Savings and Loan Association, Louisville, Ky. John E. Darnell, Jr. Chairman of the Board, President, and Chief Executive, The 1984 Owensboro National Bank, Owensboro, Ky. Allan S. Hanks3 President, The Anderson National Bank of Lawrenceburg, 1985 Lawrenceburg, Ky. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin • March 1983 Appointed by Board of Governors Term expires Dec. 31 William C. Ballard, Jr.1 Executive Vice President—Finance and Administration, Humana, 1983 Inc., Louisville, Ky. Sister Eileen M. Egan President, Spalding College, Louisville, Ky. 1984 Henry F. Frigon3 Executive Vice President and Chief Financial and Administrative 1985 Officer, BATUS, INC., Louisville, Ky. —MEMPHIS BRANCH Appointed by Federal Reserve Bank Wayne W. Pyeatt President, Memphis Fire Insurance Company, Memphis, Tenn. 1983 Edgar H. Bailey Chairman and President, Leader Federal Savings and Loan 1984 Association, Memphis, Tenn. William M. Matthews, Jr. Chairman of the Board and Chief Executive Officer, Union Planters 1984 National Bank of Memphis, Memphis, Tenn. William H. Brandon, Jr.3 President, First National Bank of Phillips County, Helena, Ark. 1985 Appointed by Board of Governors Donald B. Weis President, Tamak Transportation Corp., West Memphis, Ark. 1983 G. Rives Neblett1 Attorney, Neblett, Bobo & Chapman, Shelby, Miss. 1984 Patricia W. Shaw Executive Vice President, Universal Life Insurance Company, 1985 Memphis, Tenn. DISTRICT 9—MINNEAPOLIS Class A Vern A. Marquardt President, Commercial National Bank of L'Anse, L'Anse, Mich. 1983 Dale W. Fern President and Chairman of the Board, The First National Bank of 1984 Baldwin, Wisconsin, Baldwin, Wis. Curtis W. Kuehn3 Senior Vice President, The First National Bank in Sioux Falls, 1985 Sioux Falls, S.D. Class B Harold F. Zigmund President and Chief Executive Officer, Blandin Paper Company, 1983 Grand Rapids, Minn. William L. Mathers President, Mathers Land Co., Inc., Miles City, Mont. 1984 Richard L. Falconer3 District Manager, Northwestern Bell, Bismarck, N.D. 1985 Class C William G. Phillips1 Chairman and Chief Executive Officer, International Multifoods, 1984 Minneapolis, Minn. John B. Davis, Jr.2 President, Macalester College, St. Paul, Minn. 1984 Sister Generose Gervais Administrator, St. Mary's Hospital, Rochester, Minn. 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 245 —HELENA BRANCH Term expires Appointed by Federal Reserve Bank Dec. 31 Roger H. Ulrich President, The First State Bank of Malta, Malta, Mont. 1983 Harry W. Newlon President, First National Bank, Bozeman, Mont. 1984 Seabrook Pates3 President and Chief Executive Officer, Midland Implement Co., 1985 Inc., Billings, Mont. Appointed by Board of Governors Gene J. Etchart1 Past President, Hinsdale Livestock Company, Glasgow, Mont. 1983 Ernest B. Corrick Vice President and General Manager, Champion International 1984 Corporation, Timberlands-Rocky Mountain Operation, Missoula, Mont. DISTRICT 10—KANSAS CITY Class A Wayne D. Angell President, Council Grove National Bank, Ottawa, Kans. 1983 John D. Woods Chairman and Chief Executive Officer, The Omaha National Bank, 1984 Omaha, Nebr. Howard K. Loomis President, The Peoples Bank, Pratt, Kans. 1985 Class B James G. Harlow, Jr. Chairman of the Board and President, Oklahoma Gas and Electric 1983 Co., Oklahoma City, Okla. Duane Acker President, Kansas State University, Manhattan, Kans. 1984 Charles C. Gates President and Chairman of the Board, Gates Rubber Company, 1985 Denver, Colo. Class C John F. Anderson President and Chief Executive Officer, Farmland Industries, Inc., 1983 Kansas City, Mo. Doris M. Drury2 Professor of Economics; Director of Public Affairs Program, 1984 University of Denver, Englewood, Colo. Paul H. Henson1 Chairman, United Telecommunications, Inc., Kansas City, Mo. 1985 —DENVER BRANCH Appointed by Federal Reserve Bank Delano E. Scott Chairman, Intra West Bank of Steamboat Springs, Steamboat 1983 Springs, Colo. Kenneth C. Naramore President, Stockmen's Bank & Trust Company, Gillette, Wyo. 1983 Donald D. Hoffman Chairman, Central Bank of Denver, Denver, Colo. 1984 George S. Jenks Chairman and Chief Executive Officer, Albuquerque National 1985 Bank, Albuquerque, N.M. Appointed by Board of Governors James E. Nielson1 President and Chief Executive Officer, J.N., Inc., Cody, Wyo. 1984 Alvin F. Grospiron Denver, Colo. 1985 Ralph F. Cox3 Executive Vice President and Director, Atlantic Richfield 1985 Company, Denver, Colo. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • March 1983 —OKLAHOMA CITY BRANCH Term expires Appointed by Federal Reserve Bank Dec. 31 William H. Crawford President and Chief Executive Officer, First National Bank and 1983 Trust Company, Frederick, Okla. Marcus R. Tower Vice Chairman of the Board; Chairman of the Credit Policy 1984 Committee, Bank of Oklahoma, Tulsa, Okla. William O. Alexander3 President and Chief Executive Officer, Continental Federal Savings 1984 & Loan Association, Oklahoma City, Okla. Appointed by Board of Governors Christine H. Anthony1 Oklahoma City, Okla. 1983 Samuel R. Noble Chairman of the Board, Noble Affiliates, Inc., Ardmore, Okla. 1984 —OMAHA BRANCH Appointed by Federal Reserve Bank Joseph J. Huckfeldt President, Gering National Bank and Trust Company, Gering, 1983 Nebr. William W. Cook, Jr. President, Beatrice National Bank and Trust Company, Beatrice, 1983 Nebr. Donald J. Murphy Chairman and Chief Executive Officer, United States National 1984 Bank of Omaha, Omaha, Nebr. Appointed by Board of Governors Robert G. Lueder1 President, Lueder Construction Company, Omaha, Nebr. 1984 Vacancy 1985 DISTRICT 11—DALLAS Class A Miles D. Wilson Chairman of the Board and President, The First National Bank of 1983 Bellville, Bellville, Tex. Lewis H. Bond Chairman of the Board and Chief Executive Officer, Texas 1984 American Bancshares Inc., Ft. Worth, Tex. John P. Gilliam President and Chief Executive Officer, First National Bank in 1985 Valley Mills, Valley Mills, Tex. Class B Kent Gilbreath Associate Dean, Hankamer School of Business, Baylor University, 1983 Waco, Tex. J. Wayland Bennett Professor of Agricultural Finance and Associate Dean, College of 1984 Agricultural Sciences, Texas Tech University Robert Ted Enloe, IIP President and Director, Lomas & Nettleton Financial Corporation, 1985 Dallas, Tex. Class C John V. James2 Chairman of the Board, Dresser Industries, Inc., Dallas, Tex. 1983 Gerald D. Hines1 Owner, Gerald D. Hines Interests, Houston, Tex. 1984 Robert D. Rogers President, Texas Industries, Inc., Dallas, Tex. 1985 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 247 —EL PASO BRANCH Term expires Appointed by Federal Reserve Bank Dec. 31 David L. Stone3 President, The Portales National Bank, Portales, N.M. 1983 Ernest M. Schur Chairman of the Executive Committee, The First National Bank of 1984 Odessa, Odessa, Tex. Gerald W. Thomas President, New Mexico State University, Las Cruces, N.M. 1984 Stanley J. Jarmiolowski Chairman of the Board and President, First International Bank in El 1985 Paso, N.A., El Paso, Tex. Appointed by Board of Governors Chester J. Kesey1 C. J. Kesey Enterprises, Pecos, Tex. 1983 Mary Carmen Saucedo Associate Superintendent, Central Area, El Paso Independent 1984 School District, El Paso, Tex. S. Lee Ware, Jr.3 Investor, Oil and Real Estate, Ruidoso, N.M. 1985 —HOUSTON BRANCH Appointed by Federal Reserve Bank Raymond L. Britton Labor Arbitrator, and Professor of Law, University of Houston, 1983 Houston, Tex. Ralph E. David Chairman of the Board and Chief Executive Officer, Freeport, Tex. 1984 Thomas B. McDade Vice Chairman, Texas Commerce Bancshares, Inc., Houston, Tex. 1984 Will E. Wilson Chairman of the Board and Chief Executive Officer, First Security 1985 Bank of Beaumont, N.A., Beaumont, Tex. Appointed by Board of Governors Paul N. Howell1 Chairman of the Board, Howell Corporation, Houston, Tex. 1983 George V. Smith, Sr. President, Smith Pipe & Supply, Inc., Houston, Tex. 1984 Robert T. Sakowitz3 Chairman of the Board and President, Sakowitz Inc., Houston, 1985 Tex. —SAN ANTONIO BRANCH Appointed by Federal Reserve Bank John H. Garner President and Chief Executive Officer, Corpus Christi National 1983 Bank, Corpus Christi, Tex. Charles E. Cheever, Jr. Chairman of the Board, Broadway National Bank, San Antonio, 1984 Tex. Joe D. Barbee President and Chief Executive Officer, Barbee-Neuhaus Implement 1984 Company, Weslaco, Tex. George Brannies Chairman of the Board and President, The Mason National Bank, 1985 Mason, Tex. Appointed by Board of Governors Lawrence L. Crum Professor of Banking and Finance, The University of Texas at 1983 Austin, Austin, Tex. Carlos A. Zuniga1 Zuniga Freight Services, Inc., Laredo, Tex. 1984 Robert F. McDermott3 Chairman of the Board and President, United Services Automobile 1985 Association, San Antonio, Tex. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Federal Reserve Bulletin • March 1983 DISTRICT 12—SAN FRANCISCO Term expires Class A Dec. 31 Ole R. Mettler Chairman of the Board and President, Farmers & Merchants Bank 1983 of Central California, Lodi, Calif. Robert A. Young Chairman of the Board and President, Northwest National Bank, 1984 Vancouver, Wash. Spencer F. Eccles Chairman, President and Chief Executive Officer, First Security 1985 Corporation, Salt Lake City, Utah. Class B J. R. Vaughan Senior Member, Richards, Watson, Dreyfuss & Gershon, 1983 Los Angeles, Calif. George H. Weyerhauser President and Chief Executive Officer, Weyerhauser Company, 1984 Tacoma, Wash. Togo W. Tanaka Chairman, Gramercy Enterprises, Inc., Los Angeles, Calif. 1985 Class C Fred W. Andrew Chairman of the Board, President and Chief Executive Officer, 1983 Superior Farming Company, Bakersfield. Calif. Alan C. Furth2 President, Southern Pacific Company, San Francisco, Calif. 1984 Caroline L. Ahmanson1 Chairman of the Board, Caroline Leonetti, Ltd., Beverly Hills, 1985 Calif. —Los ANGELES BRANCH Appointed by Federal Reserve Bank James D. McMahon President and Chief Executive Officer, Western United National 1983 Bank (in organization), Valencia, Calif. Robert R. Dockson Chairman and Chief Executive Officer, California Federal Savings, 1984 Los Angeles, Calif. Bram Goldsmith Chairman of the Board, City National Bank, Beverly Hills, Calif. 1985 William L. Tooley Managing Partner, Tooley and Company, Investment Builders, 1985 Los Angeles, Calif. Appointed by Board of Governors Lola M. McAlpin-Grant Assistant Dean for Special Projects, Loyola Law School, Los 1983 Angeles, Calif. Bruce M. Schwaegler1 President, Bullock's-Bullocks Wilshire, Los Angeles, Calif. 1984 Thomas R. Brown, Jr.3 Chairman and Chief Executive Officer, Burr-Brown Research 1985 Corporation, Tucson, Ariz. —PORTLAND BRANCH Appointed by Federal Reserve Bank William S. Naito Vice President, Norcrest China Company, Portland, Oreg. 1983 Jack W. Gustavel President and Chief Executive Officer, The First National Bank of 1984 North Idaho, Coeur d'Alene, Idaho John A. Elorriaga Chairman and Chief Executive Officer, United States National 1984 Bank of Oregon, Portland, Oreg. Herman C. Bradley, Jr. President and Chief Executive Officer, Tri-County Banking 1985 Company, Junction City, Oreg. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 249 Appointed by Board of Governors Term expires Dec. 31 John C. Hampton1 President, Willamina Lumber Company, Portland, Oreg. 1983 Carolyn S. Chambers Executive Vice President and Treasurer, Liberty Communications, 1984 Inc., Eugene, Oreg. G. Johnny Parks3 Northwest Regional Director, International Longshoremen's & 1985 Warehousemen's Union, Portland, Oreg. —SALT LAKE CITY BRANCH Appointed by Federal Reserve Bank Albert C. Gianoli President and Chairman of the Board, First National Bank of Ely, 1983 Ely, Nev. Lela M. Ence Executive Director, University of Utah Alumni Association, 1984 Salt Lake City, Utah Fred C. Humphreys3 President and Chief Executive Officer, The Idaho First National 1985 Bank, Boise, Idaho John A. Dahlstrom3 Chairman of the Board, Tracy-Collins Bank and Trust Company, 1985 Salt Lake City, Utah Appointed by Board of Governors J. L. Terteling President, The Terteling Company, Inc., Boise, Idaho 1983 Wendell J. Ashton' Publisher, Deseret News, Salt Lake City, Utah 1984 David A. Nimkin3 Executive Director, Salt Lake Neighborhood Housing Services, 1985 Inc., Salt Lake City, Utah —SEATTLE BRANCH Appointed by Federal Reserve Bank Lonnie G. Bailey Executive Vice President and Chief Operating Officer, Farmers & 1983 Merchants Bank of Rockford, Spokane, Wash. John N. Nordstrom Co-Chairman of the Board, Nordstrom, Inc., Seattle, Wash. 1984 G. Robert Truex, Jr. Chairman, Rainier Bancorporation and Rainier National Bank, 1984 Seattle, Wash. William W. Philip3 Chairman, President, and Chief Executive Officer, Puget Sound 1985 Bancorp, Tacoma, Wash. Appointed by Board of Governors Virginia L. Parks Vice President for Finance and Treasurer, Seattle University, 1983 Seattle, Wash. John W. Ellis1 President and Chief Executive Officer, Puget Sound Power & Light 1984 Company, Bellevue, Wash. Byron I. Mallot3 Chairman and Chief Executive Officer, Sealaksa Corporation, 1985 Juneau, Alaska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A19 All reporting banks A20 Banks with assets of $1 billion or more A3 Monetary aggregates and interest rates A21 Banks in New York City A4 Reserves of depository institutions, Reserve A22 Balance sheet memoranda Bank credit A23 Branches and agencies of foreign banks A5 Reserves and borrowings of depository A24 Commercial and industrial loans institutions A25 Gross demand deposits of individuals, A6 Federal funds and repurchase agreements of partnerships, and corporations large member banks FINANCIAL MARKETS POLICY INSTRUMENTS A26 Commercial paper and bankers dollar A7 Federal Reserve Bank interest rates acceptances outstanding A8 Reserve requirements of depository institutions A27 Prime rate charged by banks on short-term A9 Maximum interest rates payable on time and business loans savings deposits at federally insured institutions A27 Terms of lending at commercial banks All Federal Reserve open market transactions A28 Interest rates in money and capital markets A29 Stock market—Selected statistics A30 Selected financial institutions—Selected assets FEDERAL RESERVE BANKS and liabilities A12 Condition and Federal Reserve note statements A13 Maturity distribution of loan and security FEDERAL FINANCE holdings A31 Federal fiscal and financing operations A32 U.S. budget receipts and outlays MONETAR Y AND CREDIT AGGREGATES A33 Federal debt subject to statutory limitation A33 Gross public debt of U.S. Treasury—Types and A13 Aggregate reserves of depository institutions ownership and monetary base A33 U.S. government marketable securities— A14 Money stock measures and components Ownership, by maturity A15 Bank debits and deposit turnover A34 U.S. government securities dealers— A16 Loans and securities of all commercial banks Transactions, positions, and financing A35 Federal and federally sponsored credit agencies—Debt outstanding COMMERCIAL BANKS All Major nondeposit funds A18 Assets and liabilities, last Wednesday-of-month series Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin • March 1983 SECURITIES MARKETS AND International Statistics CORPORATE FINANCE A54 U.S. international transactions—Summary A36 New security issues—State and local A55 U.S. foreign trade governments and corporations A55 U.S. reserve assets A37 Open-end investment companies—Net sales and A55 Foreign official assets held at Federal Reserve asset position Banks A37 Corporate profits and their distribution A56 Foreign branches of U.S. banks—Balance sheet A38 Nonfinancial corporations—Assets and data liabilities A58 Selected U.S. liabilities to foreign official A38 Total nonfarm business expenditures on new institutions plant and equipment A39 Domestic finance companies—Assets and liabilities; business credit REPORTED BY BANKS IN THE UNITED STATES A58 Liabilities to and claims on foreigners REAL ESTATE A59 Liabilities to foreigners A61 Banks' own claims on foreigners A40 Mortgage markets A62 Banks' own and domestic customers' claims on A41 Mortgage debt outstanding foreigners A62 Banks' own claims on unaffiliated foreigners A63 Claims on foreign countries—Combined CONSUMER INSTALLMENT CREDIT domestic offices and foreign branches A42 Total outstanding and net change A43 Extensions and liquidations REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES FLOW OF FUNDS A64 Liabilities to unaffiliated foreigners A65 Claims on unaffiliated foreigners A44 Funds raised in U.S. credit markets A45 Direct and indirect sources of funds to credit markets SECURITIES HOLDINGS AND TRANSACTIONS A66 Foreign transactions in securities Domestic Nonfinancial Statistics A67 Marketable U.S. Treasury bonds and notes— Foreign holdings and transactions A46 Nonfinancial business activity—Selected measures A46 Output, capacity, and capacity utilization INTEREST AND EXCHANGE RATES A47 Labor force, employment, and unemployment A48 Industrial production—Indexes and gross value A67 Discount rates of foreign central banks A50 Housing and construction A68 Foreign short-term interest rates A51 Consumer and producer prices A68 Foreign exchange rates A52 Gross national product and income A53 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)1 IItteemm 1982 1982 1983 Qlr Q2' Qy Q4' Sept/ Oct/ Nov/ Dec/ Jan. Reserves of depository institutions 1 Total 7.5 6 4.8 14.8 23.6 9.4 17.5 12.8 1.9 2 Required 7.1 1.1 4.6 13.9 21.5 8.9 17.8 10.0 .5 3 Nonborrowed -.9 4.2 11.2 16.5 10.7 23.8 13.4 12.7 5.0 4 Monetary base2 7.9 6.6 6.7 8.5 11.3 7.2 7.9 8.4 12.7 Concepts of money and liquid assets3 5 Ml 10.5 3.2 6.1 13.5 12.8 14.5 13.3 10.6 9.5 6 M2 8.7 7.0 10.9 9.2 8.4 7.8 9.5 8.6 29.8 7 M3 8.6 8.5 12.5 9.4 8.3 9.2 9.2 3.5 11.9 8 L 10.2 10.5 11.4 n.a. 7.2 n.a. n.a. n.a. n.a. Time and savings deposits Commercial banks 9 Total 6.5 13.4 18.2 3.2 4.7 2.7 -5.0 5.4 27.3 10 Savings4 4.5 1.7 -1.8 13.4 9.1 20.3 28.8 -19.5 -77.8 11 Small-denomination time5 9.1 17.0 18.7 -.4 8.6 -4.6 -2.2 -18.2 -83.6 12 Large-denomination time6 4.6 17.0 26.8 -6.8 -1.3 2.9 -22.9 -44.3 -97.4 13 Thrift institutions7 1.3 4.1 6.5 6.0 6.3 5.2 7.1 4.0 8.3 14 Total loans and securities at commercial banks8 2.6 -6.7 6.0 5.5 4.4 6.8 1.5 10.5 12.8 Interest rates (levels, percent per annum) 1982 1982 1983 Ql Q2 Q3 Q4 Oct. Nov. Dec. Jan. Feb. 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Unless otherwise noted, rates of change are calculated from average 5. Small-denomination time deposits—including retail RPs—are those issued amounts outstanding in preceding month or quarter. in amounts of less than $100,000. 2. Includes reserve balances at Federal Reserve Banks in the current week 6. Large-denomination time deposits are those issued in amounts of $100,000 plus vault cash held two weeks earlier used to satisfy reserve requirements at all or more. depository institutions plus currency outside the U.S. Treasury, Federal Reserve 7. Savings and loan associations, mutual savings banks, and credit unions. Banks, the vaults of depository institutions, and surplus vault cash at depository 8. Changes calculated from figures shown in table 1.23. Beginning December institutions. 1981, growth rates reflect shifts of foreign loans and securities from U.S. banking 3. Ml: Averages of daily figures for (1) currency outside the Treasury, Federal offices to international banking facilities. Reserve Banks, and the vaults of commercial banks; (2) traveler's checks of 9. Averages of daily effective rates (average of the rates on a given date nonbank issuers; (3) demand deposits at all commercial banks other than those weighted by the volume of transactions at thos erates). due to domestic banks, the U.S. government, and foreign banks and official 10. Rate for the Federal Reserve Bank of New York. institutions less cash items in the process of collection and Federal Reserve float; 11. Quoted on a bank-discount basis. and (4) negotiable order of withdrawal (NOW) and automatic transfer service 12. Unweighted average of offering rates quoted by at least five dealers. (ATS) accounts at banks and thrift institutions, credit union share draft (CUSD) 13. Market yields adjusted to a 20-year maturity by the U.S. Treasury. accounts, and demand deposits at mutual savings banks. 14. Bond Buyer series for 20 issues of mixed quality. M2: Ml plus savings and small-denomination time deposits at all depository 15. Weighted averages of new publicly offered bonds rated Aaa, Aa, and A by institutions, overnight repurchase agreements at commercial banks, overnight Moody's Investors Service and adjusted to an Aaa basis. Federal Reserve Eurodollars held by U.S. residents other than banks at Caribbean branches of compilations. member banks, and balances of money market mutual funds (general purpose and 16. Average rates on new commitments for conventional first mortgages on broker/dealer). new homes in primary markets, unweighted and rounded to nearest 5 basis points, M3: M2 plus large-denomination time deposits at all depository institutions from Dept. of Housing and Urban Development. and term RPs at commercial banks and savings and loan associations and balances of institution-only money market mutual funds. NOTE. Revisions in reserves of depository institutions reflect the transitional L: M3 plus other liquid assets such as term Eurodollars held by U.S. residents phase-in of reserve requirements as specified in the Monetary Control Act of other than banks, bankers acceptances, commercial paper, Treasury bills and 1980. other liquid Treasury securities, and U.S. savings bonds. 4. Savings deposits exclude NOW and ATS accounts at commercial banks and thrifts and CUSD accounts at credit unions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • March 1983 1.11 RESERVES OF DEPOSITORY INSTITUTIONS, RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending Factors 1982 1983 1983 Dec. Jan. Feb. Jan. 12 Jan. 19 Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 159,659 157,519 155,275 157,958 158,163 155,985 153,780 154,097 155,956 156,420 2 U.S. government securities' 137,248 135,318 134,379 135,843 136,497 134,037 132,579 133,081 133,833 136,442 3 Bought outright 136,139 134,862 133,961 135,464 136,210 133,739 132,579 133,081 133,833 134,771 4 Held under repurchase agreements 1.109 456 418 379 287 298 0 0 0 1,671 5 Federal agency securities 9.110 8,987 8,945 8,976 8,944 8,946 8,927 8,924 8,924 9,009 6 Bought outright 8,939 8,934 8,924 8,937 8,937 8,928 8,927 8.924 8,924 8,924 7 Held under repurchase agreements 171 53 21 39 7 18 0 0 0 85 8 Acceptances 281 126 17 58 55 21 0 0 0 68 9 Loans 699 500 561 425 465 325 383 370 869 476 10 Float 2,827 2,652 1,989 2,918 1,943 2,594 2,144 1.925 2,666 1,567 11 Other Federal Reserve assets 9,494 9,936 9,384 9,738 10,259 10,061 9,747 9,797 9,665 8,858 12 Gold stock 11,148 11,146 11,142 11,148 11,146 11,144 11,144 11,144 11,143 11,139 13 Special drawing rights certificate account . 4,431 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 14 Treasury currency outstanding 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 ABSORBING RESERVE FUNDS 15 Currency in circulation 154,269 152,672 151,650 154,167 152,614 151,188 150,581 151,321 151,846 151,881 16 Treasury cash holdings 436 438 457 433 437 443 446 449 456 462 Deposits, other than reserves, with Federal Reserve Banks 17 Treasury 3,227 3,250 3,200 2,915 3,115 3,909 2,431 3,456 3,271 3,221 18 Foreign 277 259 236 257 273 221 267 231 246 210 19 Other 571 691 551 657 589 602 596 585 545 506 20 Required clearing balances 423 460 511 451 459 474 479 500 504 522 21 Other Federal Reserve liabilities and capital 5,017 4,868 4,776 4,881 4,927 4,865 4,818 4,701 4,792 4,770 22 Reserve accounts2 24,804 24,431 23,440 23,748 25,298 23,830 23,710 22,400 23,843 24,389 End-of-month figures Wednesday figures 1982 1983 1983 Dec. Jan. Feb. Jan. 12 Jan. 19 Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit outstanding 163,659 152,537 153,936 162,160 161,260 157,105 156,459 155,366 158,051 159,752 24 U.S. government securities' 139,312 132,368 135,561 138,227 137,519 135,206 134,529 133,976 134,138 138,130 25 Bought outright 135,607 132,368 135,561 135,574 135,510 133,121 134,529 133,976 134,138 133,965 26 Held under repurchase agreements 3,705 0 0 2,653 2,009 2,085 0 0 0 4,165 27 Federal agency securities 9,525 8,928 8,923 9,212 8,985 9,057 8,924 8,924 8,924 9,063 28 Bought outright 8,937 8,928 8,923 8,937 8,937 8,928 8,924 8,924 8,924 8,924 29 Held under repurchase agreements 588 0 0 275 48 129 0 0 0 139 30 Acceptances 1,480 0 0 406 385 148 0 0 0 245 31 Loans 717 354 1,155 1,823 2,186 489 533 541 3,518 467 32 Float 2,735 1,006 -2,664 2,459 1,956 2,216 2,639 1,896 2,690 2,658 33 Other Federal Reserve assets 9,890 9,881 10,961 10,033 10,229 9,989 9,834 10,029 8,781 9,189 34 Gold stock 11,148 11,144 11,139 11,146 11,146 11,144 11,144 11,144 11,142 11,139 35 Special drawing rightsc ertificate account . 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 36 Treasury currency outstanding 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 13,786 ABSORBING RESERVE FUNDS 37 Currency in circulation 154,908 150,511 151,872 153,924 152,188 151,092 151,131 152,027 152,210 152,513 38 Treasury cash holdings 429 448 465 435 437 444 446 450 458 463 Deposits, other than reserves, with Federal Reserve Banks 39 Treasury 5,033 2,627 2,856 2,753 3,468 2,140 3,322 2,699 4,057 2,643 40 Foreign 328 366 352 271 270 217 226 201 197 210 41 Other 1,033 603 486 581 545 609 635 580 524 504 42 Required clearing balances 436 478 535 449 460 477 478 500 504 522 43 Other Federal Reserve liabilities and capital 4,990 4,850 4,988 4,858 4,857 4,728 4,601 4,649 4,652 4,706 44 Reserve accounts2 26,053 22,201 21,924 28,438 28,584 26,944 25,168 23,807 24,994 27,733 1. Includes securities loaned—fully guaranteed by U.S government securities 2. Excludes required clearing balances, pledged with Federal Reserve Banks—and excludes (if any) securities sold and scheduled to be bought back under matched sale-purchase transactions. NOTE. For amounts of currency and coin held as reserves, see table 1.12. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Depository Institutions A5 1.12 RESERVES AND BORROWINGS Depository Institutions Millions of dollars Monthly averages of daily figures RReesseerrvvee ccllaassssiiffiiccaattiioonn 1981 1982 1983 Dec. June July Aug. Sept. Oct. Nov. Dec. Jan. Feb .P 1 Reserve balances with Reserve Banks' 26,163 24,031 24,273 24,471 23,385 24,252 24,604 24,804 24,431 23,440 2 Total vault cash (estimated) 19,538 19,318 19,448 19,500 19,921 19,578 19,807 20,392 21,454 20,042 Vault cash at institutions with required reserve balances2 13,577 13,048 13,105 13,188 13,651 13,658 13,836 14,292 14,602 13,782 4 Vault cash equal to required reserves at other institutions 2,178 2,488 2,486 2,518 2,927 2,677 2,759 2,757 2,829 2,484 5 Surplus vault cash at other institutions3 3,783 3,782 3,857 3,794 3,343 3,243 3,212 3,343 4,023 3,776 6 Reserve balances + total vault cash4 45,701 43,349 43,721 43,971 43,306 43,830 44,411 45,196 45,885 43,482 7 Reserve balances + total vault cash used to satisfy reserve requirements4 5 41,918 39,567 39,864 40,177 39,963 40,587 41,199 41,853 41,862 39,706 8 Required reserves (estimated) 41,606 39,257 39,573 39,866 39,579 40,183 40,797 41,353 41,316 39,377 9 Excess reserve balances at Reserve Banks4 6 312 310 291 311 384 404 402 500 546 329 10 Total borrowings at Reserve Banks 642 1,205 669 510 976 455 579 697 500 561 11 Seasonal borrowings at Reserve Banks 53 239 225 119 102 86 47 33 33 39 12 Extended credit at Reserve Banks 149 103 46 94 118 141 188 187 156 277 Weekly averages of daily figures for week ending 1982 1983 Dec. 22 Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26 Feb. 2 Feb. 9 Feb. 16" Feb. 23p 13 Reserve balances with Reserve Banks' 25,671 25,136 25,737 23,748 25,298 23,830 23,710 22,400 23,843 24,389 14 Total vault cash (estimated) 19,506 20,496 20,105 21,463 22,187 21,836 21,228 20,952 20,386 18,680 15 Vault cash at institutions with required reserve balances2 14,112 14,406 14,126 14,516 14,801 14,892 14,513 14,074 13,772 13,217 16 Vault cash equal to required reserves at other institutions 2,494 2,464 2,490 3,017 3,019 2,801 2,677 2,853 2,659 2,086 17 Surplus vault cash at other institutions3 2,900 3,626 3,489 3,930 4,367 4,143 4,038 4,025 3,955 3,377 18 Reserve balances + total vault cash4 45,177 45,632 45,842 45,211 47,485 45,666 44,938 43,352 44,229 43,069 19 Reserve balances + total vault cash used to satisfy reserve requirements4'5 42,277 42,006 42,353 41,281 43,118 41,523 40,900 39,327 40,274 39,692 20 Required reserves (estimated) 42,047 41,243 41,360 40,990 42,497 41,022 40,484 39,018 39,416 39,390 21 Excess reserve balances at Reserve Banks4-6 230 763 993 291 621 501 416 309 858 302 22 Total borrowings at Reserve Banks 546 690 1,198 425 465 325 383 370 869 476 23 Seasonal borrowings at Reserve Banks 38 44 37 31 30 34 37 35 39 45 24 Extended credit at Reserve Banks 189 191 143 133 113 197 211 234 274 335 1. As of Aug. 13, 1981, excludes required clearing balances of all depository existing member bank, or when a nonmember bank joins the Federal Reserve institutions. System. For weeks for which figures are preliminary, figures by class of bank do 2. Before Nov. 13, 1980, the figures shown reflect only the vault cash held by not add to total because adjusted data by class are not available. member banks. 5. Reserve balances with Federal Reserve Banks, which exclude required 3. Total vault cash at institutions without required reserve balances less vault clearing balances plus vault cash at institutions with required reserve balances cash equal to their required reserves. plus vault cash equal to required reserves at other institutions. 4. Adjusted to include waivers of penalties for reserve deficiencies in accord- 6. Reserve balances with Federal Reserve Banks, which exclude required ance with Board policy, effective Nov. 19,1975, of permitting transitional relief on clearing balances plus vault cash used to satisfy reserve requirements less a graduated basis over a 24-month period when a nonmember bank merged into an required reserves. (This measure of excess reserves is comparable to the old excess reserve concept published historically.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • March 1983 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks' Averages of daily figures, in millions of dollars 1982 and 1983, week ending Wednesday BByy mmaattuurriittyy aanndd ssoouurrccee Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 One day and continuing contract 1 Commercial banks in United States 57,614 63,310 69,120 66,138 60,143' 59,405 63,549 60,970 61,055 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 22,007 21,949' 25,588 28,792 29,051 26,980 27,928 29,014 30,612 3 Nonbank securities dealers 4,494 4,056 4,515 4,437 4,342 5,022 4,273 5,110 4,654 4 All other 20,707' 22,302' 25,995' 25,279 25,232 26,054 24,697 24,468 24,727 All other maturities 5 Commercial banks in United States 6,127 5,768 4,352 4,229 4,299 4,337 4,608 4,765 4,435 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 11,065 10,352 8,801 8,652 8,580 8,802 9,299 9,534 9,487 7 Nonbank securities dealers 3,866 4,072 3,439 4,270 4,809 4,914 4,986 4,898 5,010 8 All other 13,566r 13,132' 8,769' 9,187 8,938 8,808 8,544 9,441 9,581 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 21,544 23,750 27,326 27,936 24,771 23,575 23,574 24,176 25,220 10 Nonbank securities dealers 5,115 4,848 5,328 4,641 3,968 4,749 4,638 4,137 3,897 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments All 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit1 SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt FFFeeedddeeerrraaalll RRReeessseeerrrvvveee aanndd sseeaassoonnaall ccrreeddiitt First 60 days Next 90 days BBBaaannnkkk of borrowing !*of borrowing After 150 days EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 2/28/83 date rate 2/28/83 rate 2/28/83 rate 2/28/83 rate Boston 8W 12/14/82 9 sw 9 9W 10 10^ 11 12/14/82 New York 12/15/82 12/15/82 Philadelphia 12/17/82 12/17/82 Cleveland 12/15/82 12/15/82 Richmond 12/15/82 12/15/82 Atlanta 12/14/82 12/14/82 Chicago 12/14/82 12/14/82 St. Louis 12/14/82 12/14/82 Minneapolis 12/14/82 12/14/82 Kansas City 12/15/82 12/15/82 Dallas 12/14/82 12/14/82 San Francisco... sw 12/14/82 9 8W 9 9W 10 I0W 11 12/14/82 Range of rates in recent years2 Range (or F.R. Range(or F.R. Range (or F.R. Effective date A le l v l e l F )— .R. Ba o n f k Effective date A le l v l e l F )— .R. B o an f k Effective date A le l v l e l F )— .R . Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1973 7W M July 3 7-7 Kt m 11998811—— MMaayy 55 13-14 14 1974— Apr. 25 7W-8 8 10 7'/4 7'/4 88 14 14 3 0 Aug. 21 73/4 73/4 Nov. 2 13-14 13 Dec. 9 73/t-8 73/4 Sept. 22 8 8 6 13 13 16 7% 73/4 Oct. 16 8-8 W m Dec. 4 12 12 20 8W 81/2 1975— Jan. 6 7'/4-7'/4 73/4 Nov. 1 8W-9W 9 W 1982— July 20 11W-12 11 Vi. 2140 7'A 71 - / 7 4 3 /4 M M 3 91/2 9W Aug. 23 2 11 1 - 1 1 W 1' /! 1 1 1 1 W Feb. 5 6V4-7'/4 63/4 Julv 20 10 10 3 11 11 7 63/t 6V4 Aug. 17 10-10W 10W 16 10W 10W Mar. 10 6'/4-63/4 6V4 20 10>/2 I0W 27 10-10W 10 14 6'/4 6V* Sept. 19 I0W-1 1 11 30 10 10 May 16 6-6'/4 6 21 11 11 Oct. 12 9W-10 9W 23 6 6 Oct. 8 11-12 12 13 91/2 9W 10 12 12 Nov. 22 .. 9-9 W 9 1976— Jan. 19 5W-6 5 W 26 9 9 23 5W 5W Feb. 15 12-13 13 Dec. 14 8W-9 9 Nov. 22 5'A-5W 5 V* 19 13 13 15 8W-9 8W 26 51/4 5'/4 May 29 12-13 13 17 81/2 8W 30 12 12 1977— Aug. 30 5V4-53/4 51/4 June 13 11-12 11 3 1 51/4-5V4 53/4 16 11 11 Sept. 2 5V4 53/4 July 28 10-11 10 Oct. 26 6 6 29 10 10 Sept. 26 11 11 1978— Jan. 9 6-6I/2 6 W Nov. 17 12 12 May 2101 6 6 W '/2 - 7 6 7 V 2 Dec. 5 12 1 - 3 1 3 1 1 3 3 12 7 7 In effect Feb. 28, 1983 S'/2 8W 1. Applicable to advances when exceptional circumstances or practices involve In 1980 and 1981, the Federal Reserve applied a surcharge to short-term only a particular depository institution and to advances when an institution is adjustment credit borrowings by institutions with deposits of $500 million or more under sustained liquidity pressures. See section 201.3(b)(2) of Regulation A. that had borrowed in successive weeks or in more than 4 weeks in a calendar 2. Rates for short-term adjustment credit. For description and earlier data see quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, the following publications of the Board of Governors: Banking and Monetary 1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was Statistics, 1914-1941 and 1941-1970; Annual Statistical Digest, 1970-1979, and adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and 1980. to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. I, the formula for applying the surcharge was changed from a calendar quarter to a moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • March 1983 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Percent of deposits Member bank requirements Depository institution requirements Type of deposit, and deposit interval before implementation of the Type of deposit, and after implementation of the in millions of dollars Monetary Control Act deposit interval5 Monetary Control Act6 Effective date Percent Net demand2 Net transaction accounts1 7 12/30/76 $0-$26.3 million 0 21 - -0 2 1- 01 00 1 9 1 ' 3 /2 /4 1 12 2 / / 3 3 0 0 / / 7 7 6 6 Over $26.3 million 100-400 123/4 12/30/76 Nonpersonal time deposits9 Over 400 16!/4 12/30/76 By original maturity Less than 3'/2 years Time and savings1-3 3'/: years or more Savings Eurocurrency liabilities Time4 All types 0-5, by maturity 30-179 days 3 3/16/67 4 18 y 0 e a d r a s y o s r t o m 4 or y e e a . r .. s 21l/2 10/ 1 3 / 0 8 / / 7 7 5 6 Over 5, by maturity 30-179 days 6 12/12/74 180 days to 4 years 2Vi 1/8/76 4 years or more ... 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board 'sAnnual 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97- Statistical Digest, 1971-1975 and for prior changes, see Board's Annual Report 320) provides that $2 million of reservable liabilitie s(transaction accounts, for 1976, table 13. Under provisions of the Monetary Control Act, depository nonpersonal time deposits, and Eurocurrency liabilities) of each depository institutions include commercial banks, mutual savings banks, savings and loan institution be subject to a zero percent reserve requirement. The Board is to adjust associations, credit unions, agencies and branches of foreign banks, and Edge Act the amount of reservable liabilities subject to this zero percent reserve requirecorporations. ment each year for the next succeeding calendar year by 80 percent of the 2. Requirement schedules are graduated, and each deposit interval applies to percentage increase in the total reservable liabilities of all depository institutions, that part of the deposits of each bank. Demand deposits subject to reserve measured on an annual basis as of June 30. No corresponding adjustment is to be requirements were gross demand deposits minus cash items in process of made in the event of a decrease. Effective Dec. 9, 1982, the amount of the collection and demand balances due from domestic banks. exemption was established at $2.1 million. In determining the reserve require- The Federal Reserve Act as amended through 1978 specified different ranges of ments of a depository institution, the exemption shall apply in the following order: requirements for reserve city banks and for other banks. Reserve cities were (1) nonpersonal money market deposit accounts (MMDAs) authorized under 12 designated under a criterion adopted effective Nov. 9, 1972, by which a bank CFR section 1204.122; (2) net NOW accounts (NOW accounts less allowable having net demand deposits of more than $400 million was considered to have the deductions); (3) net other transaction accounts; and (4) nonpersonal time deposits character of business of a reserve city bank. The presence of the head office of or Eurocurrency liabilities starting with those with the highest reserve ratio. With such a bank constituted designation of that place as a reserve city. Cities in which respect to NOW accounts and other transaction accounts, the exemption applies there were Federal Reserve Banks or branches were also reserve cities. Any only to such accounts that would be subject to a 3 percent reserve requirement. banks having net demand deposits of $400 million or less were considered to have 6. For nonmember banks and thrift institutions that were not members of the the character of business of banks outside of reserve cities and were permitted to Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, maintain reserves at ratios set for banks not in reserve cities. 1987. For banks that were members on or after July 1, 1979, but withdrew on or Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends due from domestic banks to their foreign branches and on deposits that foreign on Oct. 24, 1985. For existing member banks the phase-in period is about three branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent years, depending on whether their new reserve requirements are greater or less respectively. The Regulation D reserve requirement of borrowings from unrelated than the old requirements. All new institutions will have a two-year phase-in banks abroad was also reduced to zero from 4 percent. beginning with the date that they open for business, except for those institutions Effective with the reserve computation period beginning Nov. 16, 1978, that have total reservable liabilities of $50 million or more. domestic deposits of Edge corporations were subject to the same reserve 7. Transaction accounts include all deposits on which the account holder is requirements as deposits of member banks. permitted to make withdrawals by negotiable or transferable instruments, pay- 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as ment orders of withdrawal, and telephone and preauthorized transfers (in excess Christmas and vacation club accounts were subject to the same requirements as of three per month) for the purpose of making payments to third persons or others. savings deposits. However, MMDAs and similar accounts offered by institutions not subject to the The average reserve requirement on savings and other time deposits before rules of the Depository Institutions Deregulation Committee (DIDC) that permit implementation of the Monetary Control Act had to be at least 3 percent, the no more than six preauthorized, automatic, or other transfers per month of which minimum specified by law. no more than three can be checks—are not transaction accounts (such accounts 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent are savings deposits subject to time deposit reserve requirements.) was imposed on large time deposits of $100,000 or more, obligations of affiliates, 8. The Monetary Control Act of 1980 requires that the amount of transaction and ineligible acceptances. This supplementary requirement was eliminated with accounts against which the 3 percent reserve requirement applies be modified the maintenance period beginning July 24, 1980. annually by 80 percent of the percentage increase in transaction accounts held by Effective with the reserve maintenance period beginning Oct. 25, 1979, a all depository institutions determined as of June 30 each year. Effective Dec. 31, marginal reserve requirement of 8 percent was added to managed liabilities in 1981, the amount was increased accordingly from $25 million to $26 million; and excess of a base amount. This marginal requirement was increased to 10 percent effective Dec. 30, 1982, to $26.3 million. beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and 9. In general, nonpersonal time deposits are time deposits, including savings was eliminated beginning July 24, 1980. Managed liabilities are defined as large deposits, that are not transaction accounts and in which the beneficial interest is time deposits, Eurodollar borrowings, repurchase agreements against U.S. held by a depositor that is not a natural person. Also included are certain government and federal agency securities, federal funds borrowings from non- transferable time deposits held by natural persons, and certain obligations issued member institutions, and certain other obligations. In general, the base for the to depository institution offices located outside the United States. For details, see marginal reserve requirement was originally the greater of (a) $100 million or (b) section 204.2 of Regulation D. the average amount of the managed liabilities held by a member bank, Edge corporation, or family of U.S. branches and agencies of a foreign bank for the two NOTE. Required reserves must be held in the form of deposits with Federal reserve computation periods ending Sept. 26, 1979. For the computation period Reserve Banks or vault cash. After implementation of the Monetary Control Act, beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease nonmembers may maintain reserves on a pass-through basis with certain apin an institution's U.S. office gross loans to foreigners and gross balances due proved institutions. from foreign offices of other institutions between the base period (Sept. 13-26, 1979) and the week ending Mar. 12, 1980, whichever was greater. For the computation period beginning May 29, 1980, the base was increased by 7'/2 percent above the base used to calculate the marginal reserve in the statement week of May 14—21, 1980. In addition, beginning Mar. 19, 1980, the base was reduced to the extent that foreign loans and balances declined. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments All 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions Percent per annum Commercial banks Savings and loan associations and mutual savings banks (thrift institutions) Type and maturity of deposit In effect February 28, 1983 Previous maximum In effect February 28, 1983 Previous maximum Percent Ef d fe a c t t e iv e Ef d fe a c t t e iv e Ef d fe a c t t e iv e 2 1 N Sa e v g i o n t g ia s b le order of withdrawal accounts2.. 5 5 ' 1 /4 /4 12 7 /3 /1 1 / / 7 8 9 0 7 1 / / 1 1 / / 7 7 3 4 5 S '/4 V i 12 7 /3 /1 1 / / 7 8 9 0 5 5 ' /4 Time accounts3 Fixed ceiling rates by maturity4 4 5 6 3 9 2 1 1 0 4 t - t o d 8 o a 9 2 2 V y d s y 2 a e t y o a y s r e ' 1 s a 7 r y s7 e ar 5 5 1 % /4 8 7 1 / / / 1 1 1 / / / 7 7 8 9 0 3 5 5 5 53 / V V 4 2 i 1 1 7 7 / / 2 2 / / 1 1 1 1 / / / / 7 7 7 7 3 3 0 0 (6) 6 6l /2 1 ( / ' 1 ) / 80 C 6 5 5 ) 3 3 / / 4 4 7 2l/i to 4 years7 6V1 7/1/73 53/4 1/21/70 63/4 (') 6 1 8 9 0 6 4 8 t t y o o e a 8 6 r y y s e e o a a r r r s s m 8 8 ore8 7 I 73 V / 1 4 / l 4 12 1 6 / 1 2 / / 1 3 1 / / / 7 7 7 8 4 3 7'/4 11/1/73 I 7 V 3/ l 4 12 1 6 / 1 2 / / 1 3 1 / / / 7 7 7 8 4 3 IV2 11 Issued to governmental units (all maturities)10 6/1/78 73/4 12/23/74 6/1/78 73/4 12 IRAs and Keogh (H.R. 10) plans (3 years or more)10'11 6/1/78 73/4 7/6/77 6/1/78 73/4 1. July 1, 1973, for mutual savings banks; July 6, 1973, for savings and loans. 9. Between July 1, 1973, and Oct. 31, 1973, certificates maturing in 4 years or 2. Federally insured commercial banks, savings and loan associations, cooper- more with minimum denominations of $ 1,000 had no ceiling; however, the amount ative banks, and mutual savings banks in Massachusetts and New Hampshire of such certificates that an institution could issue was limited to 5 percent of its were first permitted to offer negotiable order of withdrawal (NOW) accounts on total time and savings deposits. Sales in excess of that amount, as well as Jan. 1, 1974. Authorization to issue NOW accounts was extended to similar certificates of less than $1,000, were limited to the 6V2 percent ceiling on time institutions throughout New England on Feb. 27, 1976, in New York State on deposits maturing in 2Vi years or more. Effective Nov. 1, 1973, ceilings were Nov. 10, 1978, New Jersey on Dec. 28, 1979, and to similar institutions nationwide reimposed on certificates maturing in 4 years or more with minimum denominaeffective Dec. 31, 1980. Effective January 5, 1983 the interest rate ceiling is tion of $1,000. There is no limitation on the amount of these certificates that banks removed for NOW accounts with an initial balance and average maintenance can issue. balance of $2,500. 10. Accounts subject to fixed-rate ceilings. See footnote 8 for minimum 3. For exceptions with respect to certain foreign time deposits see the denomination requirements. BULLETIN for October 1962 (p. 1279), August 1965 (p. 1084), and February 1968 11. Effective Jan. 1, 1980, commercial banks are permitted to pay the same rate (p. 167). as thrifts on IRA and Keogh accounts and accounts of governmental units when 4. Effective Nov. 10, 1980, the minimum notice period for public unit accounts such deposits are placed in 2'/2-year-or-mor evariable-ceiling certificates or in 26at savings and loan associations was decreased to 14 days and the minimum week money market certificates regardless of the level of the Treasury bill rate. maturity period for time deposits at savings and loan associations in excess of $100,000 was decreased to 14 days. Effective Oct. 30, 1980, the minimum maturity NOTE. Before Mar. 31, 1980, the maximum rates that could be paid by federally or notice period for time deposits was decreased from 30 to 1 d4ays at mutual insured commercial banks, mutual savings banks, and savings and loan associasavings banks. tions were established by the Board of Governors of the Federal Reserve System, 5. Effective Oct. 30, 1980, the minimum maturity or notice period for time the Board of Directors of the Federal Deposit Insurance Corporation, and the deposits was decreased from 30 to 14 days at commercial banks. Federal Home Loan Bank Board under the provisions of 12 CFR 217, 329, and 526 6. No separate account category. respectively. Title II of the Depository Institutions Deregulation and Monetary 7. No minimum denomination. Until July 1, 1979, a minimum of $1,000 was Control Act of 1980 (P.L. 96-221) transferred the authority of the agencies to required for savings and loan associations, except in areas where mutual savings establish maximum rates of interest payable on deposits to the Depository banks permitted lower minimum denominations. This restriction was removed for Institutions Deregulation Committee. The maximum rates on time deposits in deposits maturing in less than 1 year, effective Nov. 1, 1973. denominations of $100,000 or more with maturities of 30-89 days were suspended 8. No minimum denomination. Until July 1, 1979, the minimum denomination in June 1970; the maximum rates for such deposits maturing in 90 days or more was $1,000 except for deposits representing funds contributed to an individual were suspended in May 1973. For information regarding previous interest rate retirement account (IRA) or a Keogh (H.R. 10) plan established pursuant to the ceilings on all types of accounts, see earlier issues of the FEDERAL RESERVE Internal Revenue Code. The $1,000 minimum requirement was removed for such BULLETIN, the Federal Home Loan Bank Board Journal, and the Annual Report accounts in December 1975 and November 1976 respectively. of the Federal Deposit Insurance Corporation. For deposits subject to variable ceiling rates and deposits not subject to interest rate ceilings see page A10. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic NonfinancialS tatistics • March 1983 1.16 Continued TIME DEPOSITS SUBJECT TO VARIABLE CEILING RATES 7- to 31-day time deposits. Effective Sept. 1, 1982, depository institutions are The maximum rates in February 1983 for commercial banks based on the bill rate authorized to issue nonnegotiable time deposits of $20,000 or more with a maturity were as follows: Feb. 1, 8.475; Feb. 8, 8.595; Feb. 15, 8.639; Feb. 23, 8.223; and or required notice period of 7 to 31 days. The maximum rate of interest payable by based on the 4-week average bill rate were as follows: Feb. 1,8.217; Feb. 8, 8.360; thrift institutions is the rate established and announced (auction average on a Feb. 15, 8.525; Feb. 23, 8.483. The maximum allowable rates in February 1983 for discount basis) for U.S. Treasury bills with maturities of 91 days at the auction thrifts based on the bill rate were as follows: Feb 1, 8.725; Feb. 8, 8.845; Feb. 15, held immediately before the date of deposit or renewal ("bill rate"). Commercial 8.889; Feb. 23, 8.473; and based on the 4-week average bill rate were as follows: banks may pay the bill rate minus 25 basis points. The interest rate ceiling is Feb. 1, 8.467; Feb. 8, 8.610; Feb. 15, 8.775; Feb. 23, 8.733. suspended when the bill rate is 9 percent or below for the four most recent auctions held before the date of deposit or renewal. Effective January 5, 1983, the 12-month all savers certificates. Effective Oct. 1, 1981, depository institutions minimum denomination required for this deposit is reduced to $2,500 and the are authorized to issue all savers certificates (ASCs) with a 1-year maturity and an interest rate ceiling is removed. annual investment yield equal to 70 percent of the average investment yield for 52week U.S. Treasury bills as determined by the auction of 52-week Treasury bills 91-day time deposits. Effective May 1, 1982, depository institutions were held immediately before the calendar week in which the certificate is issued. A authorized to offer time deposits that have a minimum denomination of $7,500 and maximum lifetime exclusion of $1,000 ($2,000 on a joint return) from gross income a maturity of 91 days. Effective January 5, 1983, the minimum denomination is generally authorized for interest income from ASCs. The annual investment required for this deposit is reduced to $2,500. The ceiling rate of interest on these yield for ASCs issued in December 1982 (in percent) was as follows: Dec. 26,6.26. deposits is indexed to the discount rate (auction average) on most recently issued 91-day Treasury bills for thrift institutions and the discount rate minimum 25 basis 2'/2-yearto less than 3'/2-year time deposits. Effective Aug. 1,1981, commercial points for commercial banks. The rate differential ends 1 year from the effective banks are authorized to pay interest on any variable ceiling nonnegotiable time date of these instruments and is suspended at any time the Treasury bill discount deposit with an original maturity of 2'/> years to less than 4 years at a rate not to rate is 9 percent or below for four consecutive auctions. The maximum allowable exceed 'A of 1 percent below the average 2'/2-year yield for U.S. Treasury rates in February 1983 (in percent) for commercial banks and thrifts were as securities as determined and announced by the Treasury Department immediately follows: Feb. 1, 8.122; Feb. 8, 8.252; Feb. 15, 8.256; Feb. 23, 7.888. before the date of deposit. Effective May 1, 1982, the maximum maturity for this category of deposits was reduced to less than 3'A years. Thrift institutions may Six-month money market time deposits. Effective June 1, 1978, commercial pay interest on these certificates at a rate not to exceed the average 2'/i-year yield banks and thrift institutions were authorized to offer time deposits with a maturity for Treasury securities as determined and announced by the Treasury Department of exactly 26 weeks and a minimum denomination requirement of $10,000. immediately before the date of deposit. If the announced average 21^-year yield Effective January 5, 1983, the minimum denomination required for this deposit is for Treasury securities is less than 9.50 percent, commercial banks may pay 9.25 reduced to $2,500. The ceiling rate of interest on these deposits is indexed to the percent and thrift institutions 9.50 percent for these deposits. These deposits have discount rate (auction average) on most recently issued 26-week U.S. Treasury no required minimum denomination, and interest may be compounded on them. bills. Interest on these certificates may not be compounded. Effective for all 6- The ceiling rates of interest at which they may be offered vary biweekly. The month money market certificates issued beginning Nov. 1, 1981, depository maximum allowable rates in February 1983 (in percent) for commercial banks institutions may pay rates of interest on these deposits indexed to the higher of (1) were as follows: Feb. 1, 9.45; Feb. 15, 9.65; and for thrift institutions: Feb. 1, the rate for 26-week Treasury bills established immediately before the date of 9.70; Feb. 15, 9.90. deposit (bill rate) or (2) the average of the four rates for 26-week Treasury bills Between Jan. 1, 1980, and Aug. 1, 1981, commercial banks and thrift instituestablished for the 4 weeks immediately before the date of deposit (4-week tions were authorized to offer variable ceiling nonnegotiable time deposits with no average bill rate). Ceilings are determined as follows: required minimum denomination and with maturities of 2Vz years or more. Effective Jan. 1, 1980, the maximum rate for commercial banks was 3A percentage Bill rate or 4-week Commercial bank ceiling point below the average yield on 2'/i-year U.S. Treasury securities; the ceiling rate average bill rate for thrift institutions was '/4 percentage point higher than that for commercial 7.50 percent or below 7.75 percent banks. Effective Mar. 1, 1980, a temporary ceiling of 11% percent was placed on Above 7.50 percent 'A of 1 percentage point plus the higher of these accounts at commercial banks and 12 percent on these accounts at savings the bill rate or 4-week average bill rate a co n m d m lo er a c n ia s. l b E a f n f k ec s t a iv n e d J sa u v n i e n g 2 s , a n 1 d 9 8 lo 0 a , n t s h w e er c e ei l i i n n c g r ea r s a e t d es ] /2 fo p r e r t c h e e n s t e a g d e e p p o o i s n i t t . s T a h t e Thrift ceiling temporary ceiling was retained, and a minimum ceiling of 9.25 percent for 7.25 percent or below 7.75 percent commercial banks and 9.50 percent for thrift institutions was established. Above 7.25 percent, but below '/2 of 1 percentage point plus the higher of 8.50 percent the bill rate or 4-week average bill rate 8.50 percent or above, but below 9 percent 8.75 percent 8.75 percent or above 'A of 1 percentage point plus the higher of the bill rate or 4-week average bill rate TIME DEPOSITS NOT SUBJECT TO INTEREST RATE CEILINGS Money market deposit account. Effective Dec. 14,1982, depository institutions IRAs and Keogh (H.R. 10) plans <18 months or more). Effective Dec. 1, 1981, are authorized to offer a new account with a required initial balance of $2,500 and depository institutions are authorized to offer time deposits not subject to interest an average maintenance balance of $2,500 not subject to interest rate restrictions. rate ceilings when the funds are deposited to the credit of, or in which the entire No minimum maturity period is required for this account, but depository beneficial interest is held by, an individual pursuant to an IRA agreement or institutions must reserve the right to require seven days' notice before withdraw- Keogh (H.R. 10) plan. Such time deposits must have a minimum maturity of 18 als. When the average balance is less than $2,500, the account is subject to the months, and additions may be made to the time deposit at any time before its maximum ceiling rate of interest for NOW accounts; compliance with the average maturity without extending the maturity of all or a portion of the balance of the balance requirement may be determined over a period of one month. Depository account. institutions may not guarantee a rate of interest for this account for a period longer Time deposits of J'/2 years or more. Effective May 1, 1982, depository than one month or condition the payment of a rate on a requirement that the funds institutions are authorized to offer negotiable or nonnegotiable time deposits with remain on deposit for longer than one month. No more than six preauthorized, a minimum original maturity of 3'/2 years or more that are not subject to interest automatic, or other third-party transfers are permitted per month, of which no rate ceilings. Such time deposits have no minimum denomination, but must be more than three can be checks. Telephone transfers to third parties or to another made available in a $500 denomination. Additional deposits may be made to the account of the same depositor are regarded as preauthorized transfers. account during the first year without extending its maturity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments All 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1982 1983 TTyyppee ooff ttrraannssaaccttiioonn 11998800 11998811 11998822 July Aug. Sept. Oct. Nov. Dec. Jan. U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 7,668 13,899 17,067 1,905 1,721 425 774 2,552 1,897 0 2 Gross sales 7,331 6,746 8,369 1,175 651 674 0 0 731 1,983 3 Exchange 0 0 0 -200 0 0 0 0 0 0 4 Redemptions 3,389 1,816 3,000 200 600 400 0 0 200 900 Others within 1 year 5 Gross purchases 912 317 312 71 0 0 0 88 0 0 6 Gross sales 0 23 0 0 0 0 0 0 0 0 7 Maturity shift 12,427 13,794 17,295 382 4,938 733 623 2,819 906 558 8 Exchange -18,251 -12,869 -14,164 0 -3,914 -650 0 -1,924 -943 -544 9 Redemptions 0 0 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 2,138 1,702 1,797 691 0 0 0 485 0 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -8,909 -10,299 -14,524 -382 -4,938 -733 -623 -2,204 -906 -553 13 Exchange 13,412 10,117 11,804 200 3,078 650 0 1,515 943 544 5 to 10 years 14 Gross purchases 703 393 388 113 0 0 0 194 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shift -3,092 -3,495 -2,172 0 601 0 0 -616 0 -5 17 Exchange 2,970 1,500 2,128 0 837 0 0 250 0 0 Over 10 years 18 Gross purchases 811 379 307 123 0 0 0 132 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -426 0 -601 0 -601 0 0 0 0 0 21 Exchange 1,869 1,253 234 0 0 0 0 159 0 0 All maturities 22 Gross purchases 12,232 16,690 19,870 2,903 1,721 425 774 3,452 1,897 0 23 Gross sales 7,331 6,769 8,369 1,175 651 674 0 0 731 1,983 24 Redemptions 3,389 1,816 3,000 200 600 400 0 0 200 900 Matched transactions 25 Gross sales 674,000 589,312 543,804 54,646 39,403 51,983 45,655 39,579 72,123 59,398 26 Gross purchases 675,496 589,647 543,173 58,753 37,962 51,554 46,370 41,724 69,088 59,043 Repurchase agreements 27 Gross purchases 113,902 79,920 130,774 18,267 3,755 9,649 5,618 4,161 15,229 6,747 28 Gross sales 113,040 78,733 130,286 18,267 2,567 7,035 9,420 4,161 11,525 10,451 29 Net change in U.S. government securities 3,869 9,626 8,358 5,636 217 1,535 -2,313 5,596 1,636 -6,943 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 668 494 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 145 108 189 1 46 5 6 * 6 9 Repurchase agreements 33 Gross purchases 28,895 13,320 18,957 4,389 1,095 1,997 1,776 739 2,566 452 34 Gross sales 28,863 13,576 18,638 4,389 866 1,225 2,778 739 1,978 1,040 35 Net change in federal agency obligations 555 130 130 -1 183 767 -1,008 * 582 -596 BANKERS ACCEPTANCES 36 Repurchase agreements, net 73 -582 1,285 0 565 248 -813 0 1,480 -1,480 37 Total net change in System Open Market Account 4,497 9,175 9,773 5,634 966 2,550 -4,134 5,5% 3,697 -9,019 NOTE: Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic NonfinancialS tatistics • March 1983 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1983 1982 1983 Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 Dec. Jan. Feb. Consolidated condition statement ASSETS 1 Gold certificate account 11,144 11,144 11,144 11,142 11,139 11,148 11,144 11,139 2 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3 Coin 490 508 517 510 505 438 506 508 Loans 4 To depository institutions 489 533 541 3,518 467 717 354 1,155 5 Other 0 0 0 0 0 0 0 0 Acceptances 6 Held under repurchase agreements 148 0 0 0 245 1,480 0 0 Federal agency obligations 7 Bought outright 8,928 8,924 8,924 8,924 8,924 8,937 8,928 8,923 8 Held under repurchase agreements 129 0 0 0 139 588 0 0 U.S. government securities Bought outright 9 Bills 51,939 53,347 52,794 52,956 52,783 54,425 51,186 54,379 10 Notes 62,626 62,626 62,626 62,187 62,187 62,626 62,626 62,187 11 Bonds 18,556 18,556 18,556 18,995 18,995 18,556 18,556 18,995 12 Total1 133,121 134,529 133,976 134,138 133,965 135,607 132,368 135,561 13 Held under repurchase agreements 2,085 0 0 0 4,165 3,705 0 0 14 Total U.S. government securities 135,206 134,529 133,976 134,138 138,130 139,312 132,368 135,561 15 Total loans and securities 144,900 143,986 143,441 146,580 147,905 151,034 141,650 145,639 16 Cash items in process of collection 8,832 9,989 8,125 9,921 12,413 9,807 6,620 4,207 17 Bank premises 552 551 552 553 552 549 550 552 Other assets 18 Denominated in foreign currencies2 5,359 5,263 5,277 5,292 5,308 5,764 5,263 4,988 19 All other3 4,078 4,020 4,200 2,936 3,329 3,577 4,068 5,421 20 Total assets 179,973 180,079 177,874 181,552 185,769 186,935 174,419 177,072 LIABILITIES 21 Federal Reserve notes 138,242 138,299 139,209 139,393 139,696 141,990 137,680 139,060 Deposits 22 Depository institutions 27,431 25,647 24,308 25,499 28,256 26,489 22,683 22,468 23 U.S. Treasury—General account 2,140 3,322 2,699 4,057 2,643 5,033 2,627 2,856 24 Foreign—Official accounts 217 226 201 197 210 328 366 352 25 Other 599 634 579 523 503 1,033 599 477 26 Total deposits 30,387 29,829 27,787 30,276 31,612 32,883 26,275 26,153 27 Deferred availability cash items 6,616 7,350 6,229 7,231 9,755 7,072 5,614 6,871 28 Other liabilities and accrued dividends4 1,705 1,669 1,612 1,603 1,639 2,272 1,708 1,709 29 Total liabilities 176,950 177,147 174,837 178,503 182,702 184,217 171,277 173,793 CAPITAL ACCOUNTS 30 Capital paid in 1,376 1,382 1,382 1,385 1,387 1,359 1,381 1,388 31 Surplus 1,359 1,359 1,359 1,359 1,359 1,359 1,359 1,359 32 Other capital accounts 288 191 296 305 321 0 402 532 33 Total liabilities and capital accounts 179,973 180,079 177,874 181,552 185,769 186,935 174,419 177,072 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 111,362 112,188 112,043 113,251 112,441 106,762 112,040 112,208 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to bank) 159,988 159,621 159,480 159,731 159,821 159,979 159,546 159,741 36 LESS: Held by bank5 21,746 21,322 20,271 20,338 20,125 17,989 21,866 20,681 37 Federal Reserve notes, net 138,242 138,299 139,209 139,393 139,696 141,990 137,680 139,060 Collateral for Federal Reserve notes 38 Gold certificate account 11,144 11,144 11,144 11,142 11,139 11,148 11,144 11,139 39 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 40 Other eligible assets 0 0 0 0 0 107 0 0 41 U.S. government and agency securities 122,480 122,537 123,447 123,633 123,939 126,117 121,918 123,303 42 Total collateral 138,242 138,299 139,209 139,393 139,696 141,990 137,680 139,060 1. Includes securities loaned—fully guaranteed by U.S. government securities 3. Includes special investment account at Chicago of Treasury bills maturing pledged with Federal Reserve Banks—and excludes (if any) securities sold and within 90 days. scheduled to be bought back under matched sale-purchase transactions. 4. Includes exchange-translation account reflecting the monthly revaluation at 2. Includes U.S. government securities held under repurchase agreement market exchange rates of foreign-exchange commitments. against receipt of foreign currencies and foreign currencies warehoused for the 5. Beginning September 1980, Federal Reserve notes held by the Reserve Bank U.S. Treasury. Assets shown in this line are revalued monthly at market exchange are exempt from the collateral requirement. rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Reserve Banks; Banking Aggregates A13 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1983 1982 1983 Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 Dec. 31 Jan. 31 Feb. 28 1 Loans—Total 489 533 541 3,518 467 717 354 1,155 2 Within 15 days 470 517 524 3,511 458 697 338 1,141 3 16 days to 90 days 19 16 17 7 9 20 16 14 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 148 0 0 0 245 1,480 0 0 6 Within 15 days 148 0 0 0 245 1,480 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities—Total 135,206 134,529 133,976 134,138 138,130 139,312 132,368 135,561 10 Within 15 days' 5,204 6,145 8,046 6,298 10,288 4,396 3,755 3,916 11 16 days to 90 days 27,945 25,567 23,800 24,703 25,992 31,088 25,7% 28,249 12 91 days to 1 year 38,286 39,060 38,373 41,105 39,818 40,057 39,060 40,865 13 Over 1 year to 5 years 35,106 35,092 35,092 32,279 32,279 35,102 35,092 32,778 14 Over 5 years to 10 years 12,091 12,091 12,091 12,970 12,970 12,095 12,091 12,970 15 Over 10 years 16,574 16,574 16,574 16,783 16,783 16,574 16,574 16,783 16 Federal agency obligations—Total 9,057 8,924 8,924 8,924 9,063 9,525 8,928 8,923 17 Within 15 days' 228 0 0 198 495 730 99 225 18 16 days to 90 days 690 800 925 728 570 564 690 602 19 91 days to 1 year 1,957 1,928 1,803 1,920 1,920 1,954 1,957 1,963 20 Over 1 year to 5 years 4,715 4,736 4,736 4,618 4,618 4,780 4,715 4,543 21 Over 5 years to 10 years 949 942 942 942 942 979 949 1,072 22 Over 10 years 518 518 518 518 518 518 518 518 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1982 1983 IItteemm D 19 e 7 c 8 . D 19 e 7 c 9 . D 19 e 8 c 0 . D 19 e 8 c 1 . July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS' 1 Total reserves2 32.82 34.26 36.46 37.99 38.52 38.80 39.57 39.88 40.46 40.89 40.96 40.50 2 Nonborrowed reserves 31.95 32.79 34.77 37.35 37.83 38.29 38.63 39.40 39.84 40.26 40.43 39.91 3 Required reserves 32.59 33.93 35.95 37.67 38.21 38.49 39.18 39.47 40.06 40.39 40.41 40.05 4 Monetary base3 132.2 142.5 155.0 162.7 169.1 170.2 171.8 172.9 174.0 175.2 177.1 177.7 Not seasonally adjusted 5 Total reserves2 33.37 34.83 37.11 38.66 38.43 38.51 39.35 40.00 40.68 41.57 42.25 40.26 6 Nonborrowed reserves 32.50 33.35 35.42 38.03 37.74 38.00 38.42 39.52 40.06 40.94 41.72 39.68 7 Required reserves 33.13 34.50 36.59 38.34 38.12 38.20 38.97 39.59 40.28 41.07 41.71 39.82 8 Monetary base3 134.8 145.4 158.0 165.8 170.0 170.4 171.4 172.9 175.1 178.4 177.3 175.5 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS4 9 Total reserves2 41.68 43.91 40.66 41.92 39.97 40.18 39.96 40.59 41.20 41.85 41.86 39.82 10 Nonborrowed reserves 40.81 42.43 38.97 41.29 39.28 39.66 39.03 40.11 40.58 41.22 41.33 39.24 11 Required reserves 41.45 43.58 40.15 41.60 39.65 39.87 39.58 40.18 40.80 41.35 41.32 39.37 12 Monetary base3 144.6 156.2 162.4 169.7 172.3 172.8 172.3 173.8 176.0 179.3 177.9 176.0 For notes see bottom of next page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic NonfinancialS tatistics • March 1983 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1982 1983 1979 1980 1981 1982 IItteemm Dec/ Dec/ Dec/ Dec/ Sept/ Oct/ Nov/ Dec/ Jan. Seasonally adjusted MEASURES' 1 Ml 389.0 414.1 440.6 478.4 463.2 468.8 474.1 478.4 482.0 2 M2 1,497.5 1,630.3 1,794.9 1,958.8 1,917.0 1,929.5 1,944.7 1,958.8 2,007.3 3 M3 1,758.4 1,936.7 2,167.9 2,376.9 2,333.9 2,351.8 2,369.9 2,376.9 2,400.3 4 L2 2,131.8 2,343.6 2,622.0 n.a. 2,837.7 n.a. n.a. n.a. n.a. SELECTED COMPONENTS 5 Currency 106.5 116.2 123.2 132.8 130.5 131.3 131.9 132.8 134.2 6 Traveler's checks3 3.7 4.1 4.5 4.4 4.4 4.4 4.4 4.4 4.1 7 Demand deposits 262.0 266.8 236.4 239.8 234.0 236.1 237.6 239.8 239.4 8 Other checkable deposits4 17.0 26.9 76.6 101.3 94.3 97.0 100.1 100.7 104.4 9 Savings deposits5 423.1 400.7 344.4 359.0 350.0 358.0 366.4 359.0 334.5 10 Small-denomination time deposits6 635.9 731.7 828.6 859.1 883.2 877.8 874.6 859.1 797.3 11 Large-denomination time deposits7 222.2 258.9 302.6 333.9 336.1 339.6 340.4 333.9 310.9 Not seasonally adjusted MEASURES' 12 Ml 398.8 424.7 452.1 491.2 461.0 470.6 479.1 491.2 498.6 13 M2 1,502.1 1,635.0 1,799.6 1,963.8 1,908.7 1,928.4 1,943.3 1,963.8 2,015.7 14 M3 1,766.1 1,944.9 2,175.9 2,384.6 2,324.4 2,350.2 2,368.9 2,384.6 2,412.1 15 L2 2,138.9 2,350.8 2,629.7 n.a. 2,822.7 n.a. n.a. n.a. n.a. SELECTED COMPONENTS 16 Currency 108.2 118.3 125.4 135.2 130.2 131.3 132.7 135.2 133.2 17 Traveler's checks3 3.5 3.9 4.3 4.2 4.7 4.4 4.3 4.2 3.9 18 Demand deposits 270.1 275.2 244.0 247.7 232.9 237.6 240.6 247.7 245.1 19 Other checkable deposits4 17.0 27.2 78.4 104.0 93.3 97.3 97.3 104.0 82.3 20 Overnight RPs and Eurodollars8 21.2 28.4 36.1 44.2 41.5 43.9 45.1 44.2 47.5 21 Savings deposits5 420.7 398.3 342.1 356.5 348.2 357.8 363.3 356.5 334.1 22 Small-denomination time deposits6 633.1 728.3 824.1 853.8 879.0 875.1 871.2 853.8 798.5 Money market mutual funds 23 General purpose and broker/dealer 33.4 61.4 150.9 182.1 185.1 187.6 191.1 182.1 166.6 24 Institution only 9.5 14.9 36.0 47.6 48.2 49.3 49.9 47.6 46.1 25 Large-denomination time deposits7 226.0 262.4 305.9 336.6 334.9 339.1 340.8 336.6 314.4 1. Composition of the money stock measures is as follows: 3. Outstanding amount of U.S. dollar-denominated traveler's checks of non- Ml: Averages of daily figures for (1) currency outside the Treasury, Federal bank issuers. Reserve Banks, and the vaults of commercial banks; (2) traveler's checks of 4. Includes ATS and NOW balances at all institutions, credit union share draft nonbank issuers; (3) demand deposits at all commercial banks other than those balances, and demand deposits at mutual savings banks. due to domestic banks, the U.S. government, and foreign banks and official 5. Excludes NOW and ATS accounts at commercial banks and thrift instituinstitutions less cash items in the process of collection and Federal Reserve float: tions and CUSDs at credit unions. and (4) negotiable order of withdrawal (NOW) and automatic transfer service 6. Issued in amounts of less than $100,000 and includes retail RPs. (ATS) accounts at banks and thrift institutions, credit union share draft (CUSD) 7. Issued in amounts of $100,000 or more and are net of the holdings of accounts, and demand deposits at mutual savings banks. domestic banks, thrift institutions, the U.S. government, money market mutual M2: Ml plus savings and small-denomination time deposits at all depository funds, and foreign banks and official institutions. institutions, overnight repurchase agreements at commercial banks, overnight 8. Overnight (and continuing contract) RPs are those issued by commercial Eurodollars held by U.S. residents other than banks at Caribbean branches of banks to other than depository institutions and money market mutual funds member banks and balances of money market mutual funds (general purpose and (general purpose and broker/dealer), and overnight Eurodollars are those issued broker/dealer). by Caribbean branches of member banks to U.S. residents other than depository M3: M2 plus large-denomination time deposits at all depository institutions, institutions and money market mutual funds (general purpose and broker/dealer). term RPs at commercial banks and savings and loan associations, and balances of NOTE: Latest monthly and weekly figures are available from the Board's H.6 institution-only money market mutual funds. (508) release. Back data are available from the Banking Section, Division of 2. L: M3 plus other liquid assets such as term Eurodollars held by U.S. Research and Statistics, Board of Governors of the Federal Reserve System, residents other than banks, bankers acceptances, commercial paper, Treasury Washington, D.C. 20551. bills and other liquid Treasury securities, and U.S. savings bonds. NOTES TO TABLE 1.20 1. Reserve aggregates include required reserves of member banks and Edge al phase-in program of the Monetary Control Act of 1980, the net changes in Act corporations and other depository institutions. Discontinuities associated required reserves of depository institutions have been as follows: Effective Nov. with the implementation of the Monetary Control Act, the inclusion of Edge Act 13, 1980, a reduction of $2.9 billion; Feb. 12, 1981, an increase of $245 million; corporation reserves, and other changes in Regulation D have been removed. Mar. 12, 1981, an increase of $75 million; May 14, 1981, an increase of $245 Beginning with the week ended December 23, 1981, reserve aggregates have been million; Aug. 13, 1981, an increase of $230 million; Sept. 3, 1981, a reduction of reduced by shifts of reservable liabilities to international banking facilities (IBFs). $1.1 billion; Nov. 12, 1981, an increase of $210 million; Jan. 14, 1982, a reduction On the basis of reports of liabilities transferred to IBFs by U.S. commercial banks of $60 million; Feb. 11, 1982 an increase of $170 million; Mar. 4, 1982, an and U.S. agencies and branches of foreign banks, it is estimated that required estimated reduction of $2.0 billion; May 13, 1982, an estimated increase of $150 reserves were lowered on average $10 millon to $20 million in December 1981 and million; Aug. 12, 1982 an estimated increase of $140 million; and Sept. 2, 1982, an $40 million to $70 million in January 1982. estimated reduction of $1.2 billion. Beginning with the week ended December 23, 2. Reserve balances with Federal Reserve Banks (which exclude required 1981, reserve aggregates have been reduced by shifts of reservable liabilities to clearing balances) plus vault cash at institutions with required reserve balances IBFs. On the basis of reports of liabilities transferred to IBFs by U.S. commercial plus vault cash equal to required reserves at other institutions. banks and U.S. agencies and branches of foreign banks, it is estimated that 3. Includes reserve balances and required clearing balances at Federal Reserve required reserves were lowered on average by $60 million to $90 million in Banks in the current week plus vault cash held two weeks earlier used to satisfy December 1981 and $180 million to $230 million in January 1982, mostly reflecting reserve requirements at all depository institutions plus currency outside the U.S. a reduction in reservable Eurocurrency transactions. Treasury, Federal Reserve Banks, the vaults of depository institutions, and surplus vault cash at depository institutions. NOTE. Latest monthly and weekly figures are available from the Board's 4. Reserves of depository institutions series reflect actual reserve requirement H.3(502) statistical release. Back data and estimates of the impact on required percentages with no adjustments to eliminate the effect of changes in Regulation D reserves and changes in reserve requirements are available from the Banking including changes associated with the implementation of the Monetary Control Section, Division of Research and Statistics, Board of Governors of the Federal Act. Includes required reserves of member banks and Edge Act corporations and Reserve System, Washington, D.C. 20551. beginning November 13, 1980, other depository institutions. Under the transition- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A15 1.22 BANK DEBITS AND DEPOSIT TURNOVER Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1982 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998800'' 11998811'' 11998822'' July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted DEBITS TO Demand deposits2 1 All insured banks 62,757.8 80,858.7 90,914.4 90,280.7 95,177.9 94,480.0 97,097.0 95,475.9 97,748.5' 2 Major New York City banks 25,156.1 33,891.9 37,932.9 36,880.8 39,525.3 37,986.3 42,077.9 38,971.6 42,104.4' 3 Other banks 37,601.7 46,966.9 52,981.6 53,399.9 55,652.6 56,493.7 55,019.1 56,504.4 55,644.1 4 ATS-NOW accounts3 159.3 743.4 1,036.2 1,049.9 1,146.2 1,165.4 1,109.4 1,224.6 1,448.1' 5 Savings deposits4 670.0 672.7 721.4 773.8 770.7 707.8 637.0 697.1 889.3 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 198.7 285.8 324.2 325.0 341.6 341.0 343.0 333.8 342.6' 7 Major New York City banks 803.7 1,105.1 1,287.6 1,265.7 1,424.2 1,282.5 1,298.7 1,263.7 1,381.2' 8 Other banks 132.2 186.2 211.1 214.8 221.8 228.3 219.5 221.4 218.3 9 ATS-NOW accounts3 9.7 14.0 14.5 15.3 16.2 15.9 14.7 15.6 18.4 10 Savings deposits4 3.6 4.1 4.5 5.0 5.0 4.6 4.0 4.3 4.7 Not seasonally adjusted DEBITS TO Demand deposits2 11 All insured banks 63,124.4 81,197.9 91,031.9 91,318.9 94,968.5 95,557.1 93,543.3 91,838.3 107,454.9' 12 Major New York City banks 25,243.1 34,032.0 38,001.0 37,502.5 39,126.7 39,634.0 39,657.6 36,893.5 47,576.3' 13 Other banks 37,881.3 47,165.9 53,030.9 53,816.4 55,841.8 55,923.1 53,885.7 54,944.8 59,878.6 14 ATS-NOW accounts3 158.0 737.6 1,027.1 1,021.0 1,020.5 1,097.3 1,098.0 1,115.0 1,411.9' 15 Savings deposits4 669.8 672.9 720.0 778.2 763.7 695.2 672.7 663.3 878.0 DEPOSIT TURNOVER Demand deposits2 16 All insured banks 202.3 286.1 325.0 328.2 346.9 345.3 327.8 319.3 367.2' 17 Major New York City banks 814.8 1,114.2 1,295.7 1,305.8 1,472.8 1,362.5 1,220.8 1,198.6 1,540.7' 18 Other banks 134.8 186.2 211.5 215.7 225.9 225.8 213.1 213.9 228.8 19 ATS-NOW accounts3 9.7 14.0 14.3 14.8 14.4 15.0 14.5 14.1 17.5 20 Savings deposits4 3.6 4.1 4.5 4.9 4.9 4.4 4.2 4.1 4.7 1. Annual averages of monthly figures. NOTE. Historical data for demand deposits are available back to 1970 estimated 2. Represents accounts of individuals, partnerships, and corporations and of in part from the debits series for 233 SMSA's that were available through June states and political subdivisions. 1977. Historical data for ATS-NOW and savings deposits are available back to 3. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- July 1977. Back data are available on request from the Banking Section, Division counts authorized for automatic transfer to demand deposits (ATS). ATS data of Research and Statistics, Board of Governors of the Federal Reserve System, availability starts with December 1978. Washington, D.C. 20551. 4. Excludes ATS and NOW accounts as well as special club accounts, such as Christmas and vacation clubs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • March 1983 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1981 1982 1983 1981 1982 1983 CCaatteeggoorryy Dec.2 Sept.3 Oct. Nov. Dec. Jan.4 Dec.2 Sept.3 Oct. Nov. Dec. Jan.4 Seasonally adjusted Not seasonally adjusted 1 Total loans and securities5 1,316.3 1,389.4 1,397.5 j1 ,398.5 1,412.1 1,428.1 1,326.1 1,391.0 1,402.8 1,405.4 1,422.5 1,430.5 2 U.S. Treasury securities 111.0 118.2 122.3 126.4 130.9 139.8 111.4 117.8 121.3 125.5 131.5 139.2 3 Other securities 231.4 237.6 237.2 235.8 239.1 243.3 232.8 237.7 237.5 236.3 240.6 243.5 4 Total loans and leases5 973.9 1,033.5 1,038.1 1,036.4 1,042.0 1,045.0 981.8 1,035.5 11,,004444..00 11,,004433..55 11,,005500..44 11,,004477..77 5 Commercial and industrial loans 358.0 392.5 394.8 392.0 392.4 395.2 360.1 392.1 395.4 393.8 394.7 394.1 6 Real estate loans 285.7 299.5 300.5 301.6 303.2 305.3 286.8 300.1 301.7 302.8 304.1 305.9 7 Loans to individuals 185.1 189.6 190.0 190.3 191.8 192.6 186.4 190.9 191.5 191.5 193.1 193.2 8 Security loans 21.9 22.6 24.2 23.4 24.7 22.7 22.7 22.3 23.9 23.9 25.5 22.9 9 Loans to nonbank financial institutions 30.2 32.6 32.4 32.2 31.1 31.7 31.2 32.8 32.7 32.6 32.1 31.9 10 Agricultural loans 33.0 36.3 36.3 36.3 36.3 36.5 33.0 36.8 36.8 36.5 36.3 36.3 11 Leasef inancing receivables.... 12.7 13.1 13.1 13.1 13.1 13.3 12.7 13.1 13.1 13.1 13.1 13.3 12 All other loans 47.2 47.4 46.8 47.5 49.5 47.7 49.2 47.5 48.9 49.3 51.5 50.2 MEMO: 13 Total loans and securities plus loans sold5 6 1,319.1 1,392.2 1,400.3 1,401.5 1,415.0 1,431.1 1,328.9 1,393.8 1,405.6 1,408.3 1,425.4 1,433.5 14 Total loans plus loans sold5 6 .... 976.7 1,036.4 1,040.9 1,039.3 1,045.0 1,048.0 984.7 1,038.4 1,046.9 1,046.4 1,053.3 1,050.7 15 Total loans sold to affiliates5 6.... 2.8 2.8 2.8 2.9 2.9 3.0 2.8 2.8 2.8 2.9 2.9 3.0 16 Commercial and industrial loans plus loans sold6 360.2 394.7 397.0 394.3 394.6 397.5 362.3 394.4 397.7 396.1 396.9 396.5 17 Commercial and industrial loans sold6 2.2 2.3 2.2 2.3 2.3 2.3 2.2 2.3 2.2 2.3 2.3 2.3 18 Acceptances held 8.9 9.3 9.4 8.4 8.5 8.8 9.8 9.4 9.3 8.7 9.5 9.2 19 Other commercial and industrial loans 349.1 383.1 385.3 383.6 383.8 386.4 350.3 382.7 386.1 385.1 385.2 384.9 20 To U.S. addressees7 334.9 369.8 372.7 371.5 373.5 374.1 334.3 369.6 373.4 372.6 372.7 372.7 21 To non-U.S. addressees 14.2 13.3 12.6 12.1 10.3 12.3 16.1 13.1 12.7 12.6 12.4 12.2 22 Loans to foreign banks 19.0 13.8 13.9 14.0 13.5 13.7 20.0 14.2 14.2 14.1 14.5 14.3 1. Includes domestically chartered banks; U.S. branches and agencies of increased $0.2 billion and total loans and commercial and industrial loans foreign banks, New York investment companies majority owned by foreign decreased $0.2 billion. As of February 2, 1983, real estate loans increased $0.5 banks, and Edge Act corporations owned by domestically chartered and foreign billion and commercial and industrial loans decreased $0.5 billion. banks. 5. Excludes loans to commercial banks in the United States. 2. Beginning December 1981, shifts of foreign loans and securities from U.S. 6. Loans sold are those sold outright to a bank's own foreign branches, banking offices to international banking facilities (IBFs) reduced the levels of nonconsolidated nonbank affiliates of the bank, the bank's holding company (if several items. Seasonally adjusted data that include adjustments for the amounts not a bank), and nonconsolidated nonbank subsidiaries of the holding company. shifted from domestic offices to IBFs are available in the Board's G.7 (407) 7. United States includes the 50 states and the District of Columbia. statistical release (available from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551). NOTE. Data are prorated averages of Wednesday estimates for domestically 3. Reclassification of loans beginning September 29, 1982, increased real estate chartered banks, based on weekly reports of a sample of domestically chartered loans $0.3 billion and decreased nonbank financial loans $0.3 billion. banks and quarterly reports of all domestically chartered banks. For foreign- 4. Due to loan reclassifications, several categories have breaks in series: related institutions, data are averages of month-end estimates based on weekly beginning January 12, 1983, real estate loans increased $0.4 billion and loans to reports from large agencies and branches and quarterly reports from all agencies, individuals decreased $0.2 billion. As of January 26. 1983. other securities branches, investment companies, and Edge Act corporations engaged in banking. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS' Monthly averages, billions of dollars 1980 1981 1982 1983 SSoouurrccee Dec. Dec. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Total nondeposit funds 1 Seasonally adjusted2 122.0 98.5 83.4 82.0 84.2 79.8 78.1 71.5 76.2 79.1 78.7 69.8 2 Not seasonally adjusted 122.6 98.9 84.3 85.4 86.3 81.8 82.6 77.2 78.6 84.4 79.3 68.1 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted Ul.l 114.2 113.1 113.2 113.8 114.3 116.7 114.8 121.9 121.7 124.2 129.4 4 Not seasonally adjusted 111.6 114.6 113.9 116.6 115.9 116.3 121.2 120.5 124.2 126.9 124.7 127.7 5 Net balances due to foreign-related institutions, not seasonally adjusted 8.2 -18.6 -32.5 -34.0 -32.5 -37.3 -41.4 -46.1 -48.5 -45.5 -48.4 -62.6 Loans sold to affiliates, not seasonally adjusted4 2.7 2.8 2.8 2.8 3.0 2.8 2.8 2.8 2.8 2.9 2.9 3.0 MEMO 7 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted5 -14.7 -22.5 -29.8 -29.9 -29.2 -33.0 -34.4 -38.7 -40.4 -38.4 -39.5 -49.9 8 Gross due from balances 37.5 54.9 57.4 58.1 57.7 60.6 65.1 68.5 69.8 69.9 72.2 80.6 9 Gross due to balances 22.8 32.4 27.6 28.3 28.5 27.6 30.6 29.8 29.4 31.5 32.7 30.7 10 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted6 22.9 3.9 -2.7 -4.1 -3.3 -4.4 -7.0 -7.3 -8.1 -7.1 -8.9 -12.7 11 Gross due from balances 32.5 48.1 49.1 49.5 50.2 52.6 53.4 54.1 53.9 53.6 54.8 57.4 12 Gross due to balances 55.4 52.0 46.4 45.4 46.9 48.3 46.4 46.7 45.8 46.5 45.9 44.7 Security RP borrowings 13 Seasonally adjusted' 64.0 70.0 71.9 69.0 69.1 69.3 71.9 68.5 75.2 74.4 77.8 81.8 14 Not seasonally adjusted 62.3 68.2 70.4 70.0 68.7 68.9 73.9 71.7 75.0 77.1 75.8 77.4 U.S. Treasury demand balances8 15 Seasonally adjusted 9.5 11.8 13.6 15.3 9.9 8.4 9.2 10.6 13.6 9.8 11.5 15.5 16 Not seasonally adjusted 9.0 11.2 13.8 15.4 10.8 8.3 8.2 12.4 16.5 7.9 10.9 16.6 Time deposits, $100,000 or more9 17 Seasonally adjusted 267.0 324.0 334.4 341.1 349.5 360.1 367.0 366.5 367.4 360.4 347.0 318.8 18 Not seasonally adjusted 272.4 330.3 335.6 340.0 344.6 350.5 359.2 361.6 364.7 361.5 353.6 325.0 IBF ADJUSTMENTS FOR SELECTED ITEMS10 19 22.4 31.4 31.7 32.0 32.2 32.4 32.4 2222200000 11111.....77777 22222.....44444 22222.....44444 22222.....44444 22222.....44444 22222.....44444 22222.....44444 2222211111 Item 5 2222200000.....77777 2222299999.....00000 2222299999.....33333 2222299999.....66666 2222299999.....88888 3333300000.....00000 3333300000.....00000 2222222222 Item 7 33333.....11111 55555.....00000 55555.....00000 55555.....00000 55555.....11111 55555.....11111 55555.....11111 2222233333 Item 10 1111177777.....66666 2222244444.....00000 2222244444.....33333 2222244444.....66666 2222244444.....77777 2222244444.....99999 2222244444.....99999 1. Commercial banks are those in the 50 states and the District of Columbia participations in pooled loans. Includes averages of daily figures for member with national or state charters plus agencies and branches of foreign banks, New banks and averages of current and previous month-end data for foreign-related York investment companies majority owned by foreign banks, and Edge Act institutions. corporations owned by domestically chartered and foreign banks. 4. Loans initially booked by the bank and later sold to affiliates that are still 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from held by affiliates. Averages of Wednesday data. nonbanks and not seasonally adjusted net Eurodollars and loans to affiliates. 5. Averages of daily figures for member and nonmember banks. Includes averages of Wednesday data for domestically chartered banks and 6. Averages of daily data. averages of current and previous month-end data for foreign-related institutions. 7. Based on daily average data reported by 122 large banks. 3. Other borrowings are borrowings on any instrument, such as a promissory 8. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at note or due bill, given for the purpose of borrowing money for the banking commercial banks. Averages of daily data. business. This includes borrowings from Federal Reserve Banks and from foreign 9. Averages of Wednesday figures. banks, term federal funds, overdrawn due from bank balances, loan RPs, and 10. Estimated effects of shifts of foreign assets from U.S. banking offices to international banking facilities (IBFs). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic NonfinancialS tatistics • March 1983 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars except for number of banks 1982 1983 Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. DOMESTICALLY CHARTERED COMMERCIAL BANKS1 1 Loans and securities, excluding interbank 1,292.6 1,300.7 1,315.4 1,313.2 1,318.8 1,337.1 1,343.0 1,347.0 1,370.4 1,370.7 1,373.7 2 Loans, excluding interbank 947.2 954.3 969.1 966.6 970.6 985.9 988.5 990.4 1,000.8 993.3 991.4 3 Commercial and industrial 336.7 341.9 348.7 346.4 346.2 354.4 355.2 354.8 357.3 355.6 356.3 4 Other 610.5 612.4 620.4 620.3 624.4 631.5 633.3 635.6 643.5 638.2 635.8 5 U.S. Treasury securities 113.0 111.5 113.4 113.4 113.7 115.0 119.4 122.2 129.0 136.0 141.4 6 Other securities 232.4 234.9 232.9 233.2 234.5 236.2 235.1 234.4 240.5 241.6 240.8 7 Cash assets, total 153.6 153.0 165.4 154.5 160.8 157.4 162.1 169.7 184.4 167.8 184.7 8 Currency and coin 19.9 20.0 20.1 20.5 20.3 20.4 20.5 19.0 23.0 20.4 20.3 9 Reserves with Federal Reserve Banks 25.5 21.7 18.2 25.1 26.1 17.0 23.5 22.0 25.4 23.9 25.3 10 Balances with depository institutions . 52.4 54.9 59.6 55.4 58.8 60.4 61.3 64.6 67.6 67.7 71.6 11 Cash items in process of collection ... 55.8 56.3 67.4 53.6 55.5 59.6 56.8 64.1 68.4 55.9 67.5 12 Other assets2 206.6 209.9 223.2 224.2 231.3 234.9 237.0 241.8 265.3 260.0 263.6 13 Total assets/total liabilities and capital ... 1,652.9 1,663.6 1,704.0 1,692.0 1,710.9 1,729.3 1,742.1 1,758.6 1,820.1 1,798.6 1,822.0 14 Deposits 1,231.0 1,244.0 1,284.8 1,266.4 1,279.1 1,290.7 1,300.2 1,316.9 1,361.8 1,340.4 1,368.3 15 Demand 315.5 315.4 345.2 314.4 315.5 323.0 326.5 338.1 363.9 324.0 337.9 16 Savings 226.6 227.6 228.9 227.1 229.5 230.9 238.2 244.9 296.4 361.5 395.2 17 Time 688.9 701.0 710.7 724.8 734.1 736.8 735.4 733.9 701.5 655.1 635.2 18 Borrowings 201.1 195.1 189.7 195.4 196.0 202.8 203.7 198.1 215.1 221.6 218.0 19 Other liabilities 92.4 93.9 96.6 99.1 103.9 103.4 106.2 109.3 109.2 106.4 106.0 20 Residual (assets less liabilities) 128.4 130.6 133.0 131.1 131.9 132.5 132.0 134.3 133.9 130.3 129.6 MEMO: 21 U.S. Treasury note balances included in borrowing 16.6 7.1 7.5 8.0 5.9 17.0 11.7 2.4 10.7 17.1 7.0 22 Number of banks 14,710 14,722 14,736 14,752 14,770 14,785 14,797 14,782 14,787 14,780 14,812 ALL COMMERCIAL BANKING INSTITUTIONS3 23 Loans and securities, excluding interbank 1,350.7 1,358.5 1,374.3 1,371.3 1,376.6 1,397.3 1,401.7 1,413.7 1,429.8 1,427.4 1,429.8 24 Loans, excluding interbank 1,000.6 1,007.6 1,023.7 1,020.8 1,024.7 1,042.4 1,042.3 1,052.1 1,054.9 1,044.8 1,042.3 25 Commercial and industrial 374.7 379.3 386.7 384.4 384.5 395.0 393.1 398.3 395.9 393.0 392.9 26 Other 625.8 628.3 637.0 636.4 640.2 647.4 649.2 653.8 659.0 652.4 650.0 27 U.S. Treasury securities 116.1 114.3 116.2 115.7 115.8 117.2 122.7 125.7 132.8 139.5 145.1 28 Other securities 234.1 236.6 234.4 234.8 236.1 237.7 236.7 235.9 242.1 243.2 242.4 29 Cash assets, total 168.1 167.7 180.3 169.3 176.2 173.7 178.7 181.2 200.7 183.7 200.5 30 Currency and coin 19.9 20.0 20.2 20.5 20.4 20.4 20.5 19.0 23.0 20.4 20.3 31 Reserves with Federal Reserve Banks 26.8 23.0 19.6 26.5 27.5 18.4 25.0 23.4 26.8 25.3 26.7 32 Balances with depository institutions . 64.6 67.3 72.2 67.8 71.8 74.2 75.3 74.4 81.4 81.1 84.9 33 Cash items in process of collection ... 56.8 57.3 68.4 54.6 56.5 60.6 57.8 64.3 69.4 56.9 68.6 34 Other assets2 280.3 285.9 300.0 299.4 306.8 310.3 313.9 323.3 341.7 333.2 330.2 35 Total assets/total liabilities and capital ... 1,799.1 1,812.1 1,854.7 1,840.1 1,859.6 1,881.3 1,894.2 1,918.2 1,972.2 1,944.3 1,960.4 36 Deposits 1,272.7 1,286.2 1,325.8 1,307.3 1,321.7 1,335.5 1,345.2 1,358.1 1,409.7 1,385.3 1,412.6 37 Demand 327.9 327.9 357.4 326.8 327.7 335.1 338.9 344.9 376.2 335.9 350.2 38 Savings 226.9 227.8 229.1 227.4 229.7 231.1 238.5 245.1 296.7 361.9 395.6 39 Time 717.9 730.4 739.3 753.1 764.3 769.2 767.8 768.0 736.7 687.7 666.8 40 Borrowings 260.8 255.3 253.2 260.0 260.0 267.6 268.3 267.0 278.3 283.5 276.0 41 Other liabilities 135.3 138.2 140.8 139.8 144.1 143.8 146.9 156.6 148.4 143.5 140.4 42 Residual (assets less liabilities) 130.3 132.5 134.9 133.0 133.8 134.4 133.9 136.6 135.8 132.1 131.5 MEMO: 43 U.S. Treasury note balances included in borrowing 16.6 7.1 7.5 8.0 5.9 17.0 11.7 2.4 10.7 17.1 7.0 44 Number of banks 15,215 15,235 15,235 15,271 15,289 15,311 15,330 15,318 15,329 15,332 15,366 1. Domestically chartered commercial banks include all commercial banks in NOTE. Figures are partly estimated. They include all bank-premises subsidiarthe United States except branches of foreign banks; included are member and ies and other significant majority-owned domestic subsidiaries. Data for domestinonmember banks, stock savings banks, and nondeposit trust companies. cally chartered commercial banks are for the last Wednesday of the month. Data 2. Other assets include loans to U.S. commercial banks. for other banking institutions are estimates made on the last Wednesday of the 3. Commercial banking institutions include domestically chartered commercial month based on a weekly reporting sample of foreign-related institutions and banks, branches and agencies of foreign banks, Edge Act and Agreement quarter-end condition report data. corporations, and New York State foreign investment corporations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A19 1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $750 Million or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures 1982 1983 Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26P Feb. 2P Feb. 9P Feb. 16? Feb. 23" 1 Cash items in process of collection 54,686 54,325 48,894 49,770 44,369 48,524 40,860 48,041 53,290 2 Demand deposits due from banks in the United States. 9,424 8,713 7,493 8,162 7,247 7,079 6,604 7,629 8,235 3 All other cash and due from depository institutions ... 38,553 35,759 38,658 39,236 37,333 35,750 34,195 34,519 37,590 4 Total loans and securities 655,562 671,742 661,699 658,713 653,895 662,792 653,273 657,877 650,267 Securities 5 U.S. Treasury securities 44,586 48,816 47,182 46,129 46,738 48,816 47,520 48,300 47,387 6 Trading account 7,856 10,720 9,215 8,204 8,436 10,139 8,794 9,246 8,209 7 Investment account, by maturity 36,730 38,096 37,967 37,925 38,302 38,677 38,726 39,054 39,178 8 One year or less 12,097 12,261 11,861 11,671 11,600 11,881 11,721 11,654 11,731 9 Over one through fivey ears 22,491 23,022 23,270 23,385 23,947 24,060 24,234 24,748 24,790 10 Over five years 2,142 2,813 2,836 2,868 2,754 2,736 2,771 2,652 2,656 11 Other securities 81,277 84,902 82,175 82,271 81,783 83,022 81,194 81,574 81,514 12 Trading account 5,877 7,447 4,672 4,512 3,897 5,138 3,231 3,761 3,678 13 Investment account 75,400 77,454 77,503 77,758 77,887 77,883 77,963 77,813 77,836 14 U.S. government agencies 15,391 16,050 16,077 16,297 16,196 16,246 16,432 16,484 16,472 15 States and political subdivisions, by maturity 57,034 58,300 58,258 58,260 58,399 58,244 58,162 57,949 57,953 16 One year or less 7,162 7,416 7,226 7,244 7,152 7,171 7,104 6,995 7,156 17 Over one year 49,872 50,884 51,032 51,017 51,247 51,073 51,058 50,955 50,798 18 Other bonds, corporate stocks and securities 2,975 3,104 3,168 3,201 3,292 3,393 3,370 3,380 3,410 Loans 19 Federal funds sold1 41,566 45,581 45,131 42,585 40,519 43,106 41,682 44,493 39,144 20 To commercial banks 29,253 33,435 32,475 30,666 28,620 29,545 28,865 31,638 27,496 21 To nonbank brokers and dealers in securities 9,347 9,257 9,506 8,893 8,561 9,777 9,242 9,192 8,305 22 To others 2,966 2,888 3,150 3,027 3,338 3,784 3,575 3,664 3,343 23 Other loans, gross 501,095 505,583 500,420 500,929 498,053 501,158 496,193 496,828 495,569 24 Commercial and industrial 216,860 219,464 217,238 218,315 216,449 218,545 216,704 217,056 216,219 25 Bankers acceptances and commercial paper 6,075 5,418 5,146 5,349 4,951 5,651 4,255 4,368 4,310 26 All other 210,785 214,047 212,092 212,966 211,498 212,894 212,448 212,687 211,909 27 U.S. addressees 203,968 207,360 205,397 206,309 204,849 206,263 205,815 205,968 205,172 28 Non-U.S. addressees 6,817 6,687 6,696 6,657 6,649 6,631 6,634 6,719 6,738 29 Real estate 132,336 133,469 133,397 133,320 133,531 133,947 133,938 134,193 134,228 30 To individuals for personal expenditures 75,551 76,533 76,275 76,037 75,895 75,616 75,228 75,211 75,020 To financial institutions 31 Commercial banks in the United States 7,804 8,119 7,842 7,687 7,439 7,522 7,475 7,484 7,798 32 Banks in foreign countries 7,506 7,084 7,167 6,864 7,055 7,248 7,188 6,947 7,050 33 Sales finance, personal finance companies, etc. ... 10,693 10,494 10,359 10,406 10,331 10,251 10,125 10,216 10,129 34 Other financial institutions 16,233 16,369 16,350 15,985 16,013 16,112 16,279 16,290 15,968 35 To nonbank brokers and dealers in securities 8,321 7,855 7,279 7,415 6,643 7,131 5,823 5,839 5,160 36 To others for purchasing and carrying securities2 ... 2,902 2,689 2,660 2,607 2,622 2,627 2,593 2,581 2,598 37 To finance agricultural production 6,296 6,359 6,356 6,311 6,287 6,325 6,331 6,312 6,386 38 All other 16,591 17,145 15,495 15,982 15,788 15,832 14,509 14,699 15,013 39 LESS: Unearned income 5,451 5,576 5,604 5,584 5,560 5,520 5,480 5,482 5,473 40 Loan loss reserve 7,510 7,563 7,605 7,616 7,638 7,788 7,836 7,838 7,874 41 Other loans, net 488,133 492,444 487,211 487,728 484,855 487,849 482,877 483,509 482,223 42 Lease financing receivables 11,136 11,256 11,244 11,233 11,223 11,248 11,263 11,230 11,221 43 All other assets 141,168 145,975 149,480 144,758 143,164 146,225 147,146 146,430 144,724 44 Total assets 910,531 927,771 917,468 911,872 897,231 911,618 893,342 905,726 905,327 Deposits 45 Demand deposits 189,652 192,895 176,821 175,373 165,607 173,522 160,606 171,060 174,496 46 Mutual savings banks 627 872 759 736 607 729 638 704 654 47 Individuals, partnerships, and corporations 139,364 144,936 136,104 131,204 126,162 131,260 123,161 129,121 130,715 48 States and political subdivisions 5,487 6,035 4,888 5,172 5,141 5,729 4,834 4,918 4,994 49 U.S. government 1,767 3,033 2,212 4,084 2,090 1,212 1,075 2,360 1,224 50 Commercial banks in the United States 23,613 23,478 18,653 19,744 18,414 19,969 17,512 19,900 22,506 51 Banks in foreign countries 6,650 5,480 5,799 5,542 5,743 5,397 5,463 5,758 5,626 52 Foreign governments and official institutions 1,310 1,057 1,140 998 1,053 1,160 954 1,077 932 53 Certified and officers' checks 10,833 8,004 7,265 7,891 6,398 8,067 6,967 7,220 7,845 54 Time and savings deposits 406,773 412,367 415,185 413,494 413,353 416,778 417,457 416,398 415,704 55 Savings 110,640 123,794 132,129 137,805 141,724 147,847 151,207 153,688 155,580 56 Individuals and nonprofit organizations 103,203 114,277 121,245 125,762 128,788 134,322 136,479 138,848 140,090 57 Partnerships and corporations operated for profit . 6,635 8,594 9,904 10,903 11,810 12,356 13,468 13,555 14,220 58 Domestic governmental units 771 878 936 1,078 1,029 1,075 1,130 1,182 1,179 59 All other 30 46 44 61 97 94 130 102 90 60 Time 296,133 288,573 283,056 275,689 271,629 268,931 266,250 262,710 260,124 61 Individuals, partnerships, and corporations 258,127 251,662 246,154 239,411 235,417 232,919 230,163 226,924 224,430 62 States and political subdivisions 20,584 19,977 20,221 20,114 20,322 20,234 20,477 20,450 20,560 63 U.S. government 644 614 568 547 398 418 411 410 423 64 Commercial banks in the United States 12,119 11,778 11,706 11,237 11,178 11,120 11,086 10,882 10,813 65 Foreign governments, official institutions, and banks 4,658 4,542 4,408 4,380 4,314 4,240 4,112 4,044 3,898 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 1,123 50 1,535 1,850 50 1,982 185 2,911 67 Treasury tax-and-loan notes 7,938 9,449 8,764 10,554 12,993 9,484 3,342 3,182 4,854 68 All other liabilities for borrowed money3 158,222 166,779 168,379 166,655 160,401 162,113 164,180 165,858 165,926 69 Other liabilities and subordinated notes and debentures 89,411 87,264 87,762 85,114 85,907 88,414 88,164 87,044 85,180 70 Total liabilities 853,119 868,805 858,446 853,040 838,312 852,294 833,934 846,452 846,161 71 Residual (total assets minus total liabilities)4 57,412 58,966 59,022 58,832 58,919 59,324 59,407 59,273 59,166 1. Includes securities purchased under agreements to resell. 4. Not a measure of equity capital for use in capital adequacy analysis or for 2. Other than financial institutions and brokers and dealers. other analytic uses. 3. Includes federal funds purchased and securities sold under agreements to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • March 1983 1.27 LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1 Billion or More on December 31, 1977, Assets and Liabilities Millions of dollars, Wednesday figures 1982 1983 Adjustbank, Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26P Feb. 2" Feb. 9P Feb. 16P Feb. 23P 1982 1 Cash items in process of collection 51,767 51,057 46,005 46,767 41,835 45,652 38,400 44,974 49,988 146 2 Demand deposits due from banks in the United States 8,577 7,928 6,836 7,426 6,500 6,365 6,008 7,046 7,418 180 3 All other cash and due from depository institutions .. 35,695 32,858 35,586 36,016 34,211 32,735 31,299 31,395 34,452 174 4 Total loans and securities 611,936 624,963 615,485 612,858 608,499 616,962 608,012 612,162 605,012 3,763 Securities 5 U.S. Treasury securities 40,746 44,793 43,154 42,068 42,782 44,862 43,508 44,078 43,142 293 6 Trading account 7,782 10,621 9,112 8,084 8,328 10,026 8,668 9,134 8,094 7 Investment account, by maturity 32,964 34,172 34,042 33,984 34,454 34,835 34,840 34,943 35,048 292 8 One year or less 10,701 10,722 10,372 10,189 10,177 10,443 10,285 10,162 10,243 113 9 Over one through five years 20,399 20,919 21,116 21,208 21,713 21,836 21,976 22,322 22,340 157 10 Over five years 1,863 2,532 2,555 2,588 2,563 2,556 2,579 2,459 2,464 22 11 Other securities 74,538 77,744 75,001 75,039 74,386 75,590 73,791 74,079 74,106 774 12 Trading account 5,649 7,278 4,515 4,303 3,730 4,970 3,080 3,495 3,507 4 13 Investment account 68,889 70,467 70,486 70,736 70,656 70,620 70,711 70,584 70,599 770 14 U.S. government agencies 14,148 14,639 14,643 14,858 14,778 14,797 14,992 15,056 15,030 301 15 States and political subdivisions, by maturity 51,996 52,962 52,927 52,930 52,847 52,686 52,618 52,421 52,442 379 16 One year or less 6,452 6,660 6,485 6,500 6,408 6,400 6,331 6,238 6,400 58 17 Over one year 45,544 46,302 46,442 46,430 46,439 46,286 46,287 46,182 46,042 322 18 Other bonds, corporate stocks and securities 2,745 2,865 2,916 2,948 3,031 3,136 3,101 3,108 3,128 90 Loans 19 Federal funds sold1 36,373 39,209 39,242 37,195 35,263 37,433 36,519 39,144 34,207 161 20 To commercial banks 24,889 27,888 27,517 26,128 24,078 24,581 24,315 26,994 23,187 161 21 To nonbank brokers and dealers in securities 8,656 8,567 8,661 8,119 7,964 9,124 8,684 8,548 7,748 22 To others 2,828 2,754 3,065 2,948 3,220 3,728 3,520 3,602 3,272 23 Other loans, gross 472,254 475,324 470,266 470,726 468,234 471,360 466,481 467,154 465,877 2,724 24 Commercial and industrial 205,698 207,907 205,747 206,813 205,319 207,372 205,521 205,914 205,066 562 25 Bankers acceptances and commercial paper 5,728 5,018 4,708 4,921 4,554 5,276 3,872 3,976 3,943 9 26 All other 199,970 202,889 201,039 201,892 200,765 202,096 201,650 201,938 201,124 553 27 U.S. addressees 193,273 196,332 194,457 195,346 194,221 195,566 195,115 195,318 194,484 551 28 Non-U.S. addressees 6,697 6,556 6,582 6,546 6,544 6,529 6,534 6,620 6,639 2 29 Real estate 124,931 125,567 125,460 125,350 125,594 126,018 126,003 126,277 126,297 1,373 30 To individuals for personal expenditures 67,454 68,030 67,813 67,600 67,471 67,252 66,904 66,884 66,730 704 To financial institutions 31 Commercial banks in the United States 7,621 7,947 7,664 7,500 7,240 7,340 7,302 7,289 7,567 32 Banks in foreign countries 7,440 7,020 7,099 6,794 6,981 7,171 7,118 6,876 6,983 33 Sales finance, personal finance companies, etc. ... 10,503 10,307 10,191 10,236 10,167 10,084 9,961 10,053 9,965 2 34 Other financiali nstitutions 15,763 15,820 15,782 15,401 15,416 15,503 15,677 15,697 15,374 26 35 To nonbank brokers and dealers in securities 8,268 7,786 7,237 7,377 6,610 7,091 5,797 5,815 5,122 36 To others for purchasing and carrying securities2 ... 2,681 2,457 2,429 2,374 2,390 2,394 2,356 2,346 2,353 2 37 To finance agricultural production 6,125 6,177 6,169 6,129 6,084 6,139 6,141 6,128 6,201 19 38 All other 15,770 16,304 14,675 15,150 14,962 14,997 13,700 13,875 14,218 37 39 LESS: Unearned income 4,836 4,942 4,969 4,949 4,926 4,899 4,858 4,860 4,852 164 40 Loan loss reserve 7,138 7,165 7,210 7,221 7,241 7,384 7,429 7,434 7,469 25 41 Other loans, net 460,280 463,216 458,087 458,555 456,067 459,077 454,194 454,861 453,556 22,,553355 42 Lease financing receivables 10,743 10,857 10,844 10,833 10,824 10,848 10,863 10,831 10,823 43 All other assets 136,889 141,792 145,341 140,605 139,144 142,013 142,963 142,456 140,731 296 44 Total assets 855,606 869,455 860,097 854,504 841,014 854,574 837,546 848,865 848,424 4,559 Deposits 45 Demand deposits 176,773 178,610 163,988 162,715 153,497 160,854 148,882 158,583 162,039 920 46 Mutual savings banks 610 843 736 715 587 694 610 677 626 7 47 Individuals, partnerships, and corporations 129,320 134,121 126,156 121,680 116,831 121,511 113,874 119,485 121,175 832 48 States and political subdivisions 4,870 5,341 4,276 4,607 4,538 5,150 4,279 4,373 4,424 3366 49 U.S. government 1,619 2,717 1,946 3,445 1,890 1,028 974 2,105 1,069 88 50 Commercial banks in the United States 22,003 21,570 17,059 18,193 16,835 18,287 16,113 18,262 20,785 5 51 Banks in foreign countries 6,604 5,434 5,758 5,506 5,698 5,347 5,412 5,713 5,587 2 52 Foreign governments and official institutions 1,309 1,055 1,139 994 1,050 1,155 953 1,075 931 53 Certified and officers' checks 10,439 7,528 6,918 7,576 6,068 7,683 6,667 6,892 7,442 31 54 Time and savings deposits 380,614 384,499 387,140 385,496 385,499 388,757 389,232 388,042 387,129 3,024 55 Savings 102,276 114,119 121,943 127,332 131,088 136,814 139,918 142,254 144,042 990 56 Individuals and nonprofit organizations 95,414 105,409 111,978 116,249 119,185 124,365 126,424 128,695 129,849 952 57 Partnerships and corporations operated for profit . 6,102 7,833 9,044 10,007 10,842 11,351 12,319 12,362 13,012 34 58 Domestic governmental units 730 831 877 1,020 968 1,008 1,050 1,100 1,098 4 59 All other 30 46 44 56 92 89 124 96 83 60 Time 278,338 270,380 265,197 258,164 254,411 251,942 249,314 245,788 243,086 2,034 61 Individuals, partnerships, and corporations 242,564 235,767 230,598 224,147 220,400 218,202 215,570 212,324 209,715 1,917 62 States and political subdivisions 18,678 17,984 18,228 18,152 18,427 18,274 18,436 18,429 18,545 114 63 U.S. government 576 545 502 483 334 349 339 333 333 64 Commercial banks in the United States 11,862 11,541 11,462 11,001 10,936 10,877 10,857 10,659 10,596 3 65 Foreign governments, official institutions, and banks 4,658 4,542 4,408 4,380 4,314 4,240 4,112 4,044 3,898 Liabilities for borrowed money 66 Borrowings from Federal Reserve Banks 1,025 50 1,475 1,850 50 1,902 185 2,896 67 Treasury tax-and-loan notes 7,391 8,983 8,283 9,893 12,258 8,907 3,146 2,934 4,547 68 All other liabilities for borrowed money3 148,841 156,973 158,334 156,524 150,767 152,308 154,393 155,842 156,116 224 69 Other liabilities and subordinated notes and debentures 87,138 85,093 85,589 82,913 83,736 86,271 86,055 85,030 83,158 76 70 Total liabilities 801,782 814,208 804,809 799,391 785,809 798,999 781,892 793,327 792,988 4,245 71 Residual (total assets minus total liabilities)4 53,824 55,247 55,288 55,113 55,205 55,575 55,654 55,538 55,436 314 1. Includes securities purchased under agreements to resell. 4. Not a measure of equity capital for use in capital adequacy analysis or for 2. Other than financial institutions and brokers and dealers. other analytic uses. 3. Includes federal funds purchased and securities sold under agreement to repurchase; for information on these liabilities at banks with assets of $1 billion or more on Dec. 31, 1977, see table 1.13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A21 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1982 1983 AAccccoouunntt Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26P Feb. 2P Feb. 9P Feb. 16? Feb. 23P 1 Cash items in process of collection 18,515 15,296 15,459 17,014 14,632 14,529 13,107 14,440 16,167 2 Demand deposits due from banks in the United States.. 1,513 1,271 1,424 1,881 1,485 1,235 1,367 1,420 1,637 3 All other cash and due from depository institutions .... 8,117 9,438 8,864 7,142 8,497 8,845 6,445 7,463 7,508 4 Total loans and securities' 146,974 145,937 145,994 146,775 143,222 145,894 144,091 145,976 142,015 Securities 6 7 Investment account, by maturity 8,686 8,750 8,754 8,715 8,868 9,024 9,036 9,156 9,126 8 One year or less 1,282 1,288 1,287 1,276 1,249 1,355 1,345 1,414 1,390 9 Over one through five years 6,870 6,929 6,934 6,910 7,088 7,138 7,160 7,285 7,277 10 Over five years 534 534 534 529 531 531 531 458 459 H P 13 Investment account 13,774 14,058 13,983 14,000 13,980 14,030 14,039 14,020 14,138 14 U.S. government agencies 1,577 1,542 1,530 1,512 1,496 1,495 1,495 1,503 1,513 15 States and political subdivisions, by maturity 11,435 11,748 11,693 11,715 11,700 11,745 11,758 11,742 11,852 16 One year or less 1,390 1,572 1,534 1,506 1,529 1,539 1,554 1,543 1,645 17 Over one year 10,045 10,175 10,159 10,209 10,172 10,206 10,204 10,199 10,207 18 Other bonds, corporate stocks and securities 762 767 760 772 783 790 786 775 774 Loans 19 Federal funds sold3 11,344 9,190 11,178 11,331 9,347 10,705 11,074 12,321 9,526 20 To commercial banks 6,003 4,303 5,748 6,285 3,882 4,309 5,032 6,155 4,394 21 To nonbank brokers and dealers in securities 3,756 3,422 3,774 3,534 3,715 4,327 4,140 4,206 3,434 22 To others 1,586 1,464 1,656 1,511 1,750 2,069 1,902 1,960 1,698 23 Other loans, gross 117,074 117,740 115,896 116,558 114,854 115,996 113,797 114,334 113,103 74 Commercial and industrial 60,750 61,510 60,988 61,360 60,684 61,418 60,537 60,710 59,797 25 Bankers acceptances and commercial paper 1,619 1,371 1,368 1,202 1,221 1,517 1,035 1,039 1,029 76 All other 59,059 60,139 59,620 60,157 59,463 59,900 59,502 59,671 58,768 27 U.S. addressees 57,614 58,721 58,167 58,706 58,033 58,514 58,099 58,270 57,370 28 Non-U.S. addressees 1,445 1,418 1,453 1,451 1,430 1,386 1,403 1,400 1,397 29 Real estate 19,086 19,040 18,945 18,948 19,010 18,906 18,909 19,035 19,146 30 To individuals for personal expenditures 11,723 11,719 11,622 11,571 11,525 11,480 11,449 11,451 11,428 Tof inancial institutions 31 Commercial banks in the United States 2,931 3,339 3,071 2,735 2,700 2,680 2,518 2,615 3,014 32 Banks in foreign countries 3,191 2,804 2,826 2,557 2,743 2,932 2,892 2,577 2,767 33 Sales finance, personal finance companies, etc 4,406 4,430 4,389 4,428 4,404 4,371 4,325 4,274 4,297 34 Other financial institutions 4,818 4,792 4,756 4,757 4,858 4,853 4,784 4,940 4,809 35 To nonbank brokers and dealers in securities 4,655 4,418 4,534 5,080 3,725 4,221 3,428 3,684 2,728 36 To others for purchasing and carrying securities4 .... 928 713 687 671 684 705 676 670 656 37 To finance agricultural production 387 381 383 412 385 417 419 416 419 38 All other 4,200 4,592 3,696 4,039 4,135 4,013 3,860 3,961 4,042 39 LESS: Unearned income 1,474 1,449 1,453 1,452 1,447 1,430 1,414 1,414 1,417 40 Loan loss reserve 2,430 2,350 2,365 2,378 2,381 2,431 2,441 2,442 2,463 41 Other loans, net 113,170 113,940 112,079 112,728 111,027 112,135 109,942 110,478 109,224 42 Lease financing receivables 2,054 2,060 2,067 2,066 2,066 2,045 2,046 2,041 2,031 43 All other assets5 58,880 63,395 63,417 60,110 58,906 62,187 60,661 61,024 62,002 44 Total assets 236,053 237,398 237,226 234,989 228,809 234,737 227,718 232,364 231,360 Deposits 45 Demand deposits 53,766 51,308 48,075 48,650 45,179 46,904 42,163 45,424 47,890 46 Mutual savings banks 266 400 401 380 271 332 275 317 292 47 Individuals, partnerships, and corporations 33,504 35,525 34,017 32,717 31,396 32,061 28,932 30,299 32,383 48 States and political subdivisions 516 838 599 772 572 996 751 606 669 49 U.S. government 442 700 599 1,028 574 201 225 551 267 50 Commercial banks in the United States 6,708 5,608 3,764 4,799 4,324 4,543 3,607 4,891 5,344 51 Banks in foreign countries 5,403 4,166 4,514 4,235 4,382 4,016 4,130 4,320 4,300 52 Foreign governments and official institutions 1,086 820 913 791 837 952 748 882 700 53 Certified and officers' checks 5,840 3,249 3,267 3,929 2,824 3,802 3,495 3,557 3,934 54 Time and savings deposits 74,722 73,734 75,110 74,667 75,036 75,939 75,916 75,993 75,675 55 Savings 14,040 15,518 17,128 18,292 19,270 20,608 21,438 22,080 22,686 56 Individuals and nonprofit organizations 13,203 14,538 16,018 17,060 17,908 19,046 19,394 20,230 20,431 57 Partnerships and corporations operated for profit .. 720 859 984 1,070 1,187 1,338 1,719 1,499 1,927 58 Domestic governmental units 116 110 122 154 170 215 285 306 292 59 All other 1 10 3 8 6 9 40 44 36 60 Time 60,682 58,216 57,982 56,375 55,766 55,331 54,479 53,913 52,989 61 Individuals, partnerships, and corporations 50,702 48,689 48,226 46,626 46,049 45,852 45,058 44,518 43,626 62 States and political subdivisions 2,281 2,037 2,138 2,194 2,356 2,246 2,345 2,339 2,364 63 U.S. government 206 210 235 235 85 95 86 86 86 64 Commercial banks in the United States 5,602 5,416 5,592 5,514 5,476 5,394 5,337 5,357 5,307 65 Foreign governments, official institutions, and banks 1,892 1,864 1,789 1,805 1,801 1,744 1,653 1,613 1,605 Liabilities for borrowed money 66 150 1,075 1,545 1,622 150 11,,330000 67 Treasury tax-and-loan notes 2,154 1,839 2,090 2,666 3,070 2,369 938 886688 1,436 68 All other liabilities for borrowed money6 52,862 57,382 57,557 55,760 53,225 54,774 55,681 55,956 54,405 69 Other liabilities and subordinated notes and debentures . 34,078 34,346 34,454 32,818 33,493 34,168 33,886 33,840 32,996 70 Total liabilities 217,732 218,609 218,360 216,106 210,003 215,776 208,734 213,382 212,402 71 Residual (total assets minus total liabilities)7 18,322 18,789 18,866 18,882 18,805 18,960 18,984 18,983 18,958 1. Excludes trading account securities. 5. Includes trading account securities. 2. Not available due to confidentiality. 6. Includes federal funds purchased and securities sold under agreements to 3. Includes securities purchased under agreements to resell. repurchase. 4. Other than financial institutions and brokers and dealers. 7. Not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • March 1983 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1982 1983 Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26? Feb. 2P Feb. Feb. 16p Feb. 23P BANKS WITH ASSETS OF $750 MILLION OR MORE 1 Total loans (gross) and securities adjusted1 631,466 643,328 634,591 633,561 631,034 639,034 630,249 632,075 628,320 2 Total loans (gross) adjusted1 505,603 509,610 505,234 505,162 502,513 507,196 501,534 502,200 499,420 3 Demand deposits adjusted2 109,585 112,059 107,062 101,775 100,734 103,817 101,159 100,758 97,476 4 Time deposits in accounts of $100,000 or more 187,825 180,283 177,067 171,257 169,255 167,805 166,256 163,530 162,027 5 Negotiable CDs 132,340 126,340 124,456 119,944 118,854 118,226 116,981 114,707 113,302 6 Other time deposits 55,484 53,943 52,611 51,313 50,401 49,579 49,276 48,823 48,725 7 Loans sold outright to affiliates3 2,891 2,917 2,974 2,998 2,965 2,972 2,969 3,001 2,965 8 Commercial and industrial 2,236 2,261 2,308 2,336 2,311 2,318 2,326 2,357 2,327 9 Other 655 656 666 661 654 654 643 644 638 BANKS WITH ASSETS OF $1 BILLION OR MORE 10 Total loans (gross) and securities adjusted1 591,400 601,236 592,483 591,400 589,348 597,324 588,681 590,173 586,579 11 Total loans (gross) adjusted1 476,117 478,698 474,328 474,293 472,179 476,872 471,383 472,016 469,331 12 Demand deposits adjusted2 101,384 103,265 98,979 94,310 92,936 95,887 93,395 93,242 90,196 13 Time deposits in accounts of $100,000 or more 178,745 171,353 168,300 162,721 160,906 159,620 158,074 155,318 153,644 1 1 5 4 O Ne th g e o r ti a ti b m le e C d D ep s o sits 1 5 2 1 7 , ,0 6 5 9 1 4 1 5 2 0 1 , , 1 2 4 1 2 1 1 4 1 8 9 , , 8 4 1 8 5 5 1 4 1 7 5 , , 5 1 5 6 2 9 1 4 1 6 4 , , 6 2 7 3 2 4 1 4 1 5 3 , , 9 6 2 9 6 4 1 4 1 5 2 , , 6 47 0 1 4 1 4 1 5 0 , , 1 1 9 20 8 1 4 0 4 8 , , 9 70 3 9 6 16 Loans sold outright to affiliates3 2,823 2,848 2,905 2,928 2,894 2,906 2,903 2,934 2,902 1 1 7 8 C O o th m e m r ercial and industrial 2,1 6 7 4 9 4 2,2 6 0 4 2 6 2,2 6 5 5 0 5 2,2 6 8 4 1 7 2,2 6 5 4 3 0 2,2 6 6 4 6 0 2,2 6 7 2 6 7 2,3 6 0 28 6 2,2 6 7 2 7 5 BANKS IN NEW YORK CITY 19 Total loans (gross) and securities adjusted14 141,945 142,095 140,993 141,585 140,467 142,765 140,396 141,062 138,486 20 Total loans (gross) adjusted1 119,485 119,287 118,256 118,869 117,619 119,711 117,321 117,885 115,221 21 Demand deposits adjusted2 28,101 29,704 28,253 25,809 25,649 27,631 25,224 25,541 26,111 22 Time deposits in accounts of $100,000 or more 46,772 44,500 44,688 43,336 43,080 42,797 42,231 41,814 41,141 23 Negotiable CDs 35,612 33,327 33,699 32,444 32,424 32,089 31,554 31,243 30,813 24 Other time deposits 11,159 11,173 10,988 10,892 10,656 10,707 10,677 10,571 10,328 1. Exclusive of loans and federal funds transactions with domestic commercial 3. Loans sold are those sold outright to a bank's own foreign branches, banks. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 2. All demand deposits except U.S. government and domestic banks less cash not a bank), and nonconsolidated nonbank subsidiaries of the holding company, items in process of collection. 4. Excludes trading account securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A23 1.291 LARGE WEEKLY REPORTING BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1982 1983 AAccccoouunntt Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26p Feb. 2" Feb. 9P Feb. 16 P Feb. 23P 1 Cash and due from depository institutions. 7,369 7,575 7,329 7,014 7,042 7,093 7,013 7,210 6,954 2 Total loans and securities 45,249 43,938 44,055 42,707 42,791 42,944 42,184 41,562 41,214 3 U.S. Treasury securities 3,107 3,340 3,144 2,970 2,900 3,293 3,446 3,479 3,052 4 Other securities 874 893 915 913 888 885 882 887 888 5 Federal funds sold1 2,617 1,982 2,622 2,289 2,861 3,036 2,205 1,755 2,225 6 To commercial banks in United States .. 2,243 1,786 2,533 2,130 2,785 2,857 2,112 1,617 2,134 7 To others 373 197 89 158 76 179 92 138 91 8 Other loans, gross 38,650 37,722 37,374 36,536 36,142 35,729 35,650 35,442 35,049 9 Commercial and industrial 19,003 19,074 19,154 18,797 18,408 18,192 18,036 17,918 17,978 10 Bankers acceptances and commercial paper 2,816 2,741 2,847 2,701 2,717 2,619 2,588 2,680 2,747 11 All other 16,187 16,333 16,307 16,096 15,691 15,573 15,448 15,238 15,230 12 U.S. addressees 14,217 14,288 14,328 14,143 13,761 13,647 13,509 13,307 13,270 13 Non-U.S. addressees 1,970 2,045 1,979 1,953 1,930 1,926 1,939 1,931 1,960 14 To financial institutions 15,463 14,889 14,544 14,098 13,963 13,546 13,578 13,438 13,060 15 Commercial banks in United States... 12,285 11,684 11,466 11,045 10,902 10,476 10,590 10,593 10,288 16 Banks in foreign countries 2,622 2,626 2,479 2,464 2,497 2,512 2,415 2,276 2,210 17 Nonbank financial institutions 556 578 600 589 564 558 574 569 562 18 For purchasing and carrying securities .. 480 187 166 175 240 360 312 194 189 19 All other 3,705 3,572 3,511 3,466 3,530 3,630 3,723 3,892 3,822 20 Other assets (claims on nonrelated parties) 12,556 11,478 11,011 10,928 10,974 10,712 10,635 10,482 10,326 21 Net due from related institutions 14,328 14,474 15,100 14,928 14,416 14,906 13,918 14,112 12,960 22 Total assets 79,502 77,466 77,495 75,578 75,223 75,654 73,750 73,367 71,454 23 Deposits or credit balances2 26,473 24,718 24,116 23,686 23,755 23,848 23,695 22,850 23,063 24 Credit balances 206 196 184 221 226 230 216 212 218 25 Demand deposits 2,104 1,676 1,904 1,897 1,764 1,852 1,764 1,796 1,942 26 Individuals, partnerships, and corporations 871 755 882 874 738 761 747 795 861 27 Other 1,233 921 1,022 1,023 1,026 1,091 1,017 1,001 1,081 28 Total time and savings 24,163 22,846 22,028 21,568 21,765 21,765 21,715 20,842 20,903 29 Individuals, partnerships, and corporations 20,929 19,763 19,065 18,593 18,913 18,861 18,747 17,783 17,797 30 Other 3,234 3,083 2,963 2,975 2,852 2,904 2,968 3,060 3,106 31 Borrowings3 32,343 33,612 34,483 32,356 31,859 32,173 31,139 32,036 30,034 32 Federal funds purchased4 8,356 10,350 11,330 10,138 9,308 10,196 9,490 10,610 9,200 33 From commercial banks in United States 6,877 8,834 9,968 8,981 8,242 9,084 8,083 9,054 7,738 34 From others 1,479 1,517 1,362 1,156 1,066 1,112 1,407 1,556 1,463 35 Other liabilities for borrowed money 23,987 23,261 23,154 22,218 22,551 21,977 21,649 21,426 20,834 36 To commercial banks in United States 21,198 20,578 20,404 19,508 20,025 19,598 19,407 19,240 18,502 37 To others 2,788 2,684 2,749 2,711 2,526 2,380 2,242 2,186 2,331 38 Other liabilities to nonrelated parties 12,196 11,292 12,122 11,929 11,731 11,789 11,812 11,615 11,320 39 Net due to related institutions 8,490 7,844 6,773 7,606 7,878 7,843 7,105 6,866 7,037 40 Total liabilities 79,502 77,466 77,495 75,578 75,223 75,654 73,750 73,367 71,454 MEMO 41 Total loans (gross) and securities adjusted* 30,720 30,468 30,056 29,532 29,104 29,610 29,482 29,353 28,792 42 Total loans (gross) adjusted5 26,738 26,235 25,998 25,649 25,316 25,432 25,153 24,987 24,851 1. Includes securities purchased under agreements to resell. 4. Includes securities sold under agreements to repurchase. 2. Balances due to other than directly related institutions. 5. Excludes loans and federal funds transactions with commercial banks in 3. Borrowings from other than directly related institutions. United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic NonfinancialS tatistics • March 1983 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial Loans Millions of dollars Outstanding Net change during IIInnnddduuussstttrrryyy ccclllaaassssssiiifffiiicccaaatttiiiooonnn 1982 1982 Aug. 25 Sept. 29 Oct. 27 Nov. 24 Dec. 29 Q3 Q4 Oct. Nov. Dec. 1 Durable goods manufacturing 29,117 31,424 31,345 30,124 29,940 2,347 -1,484 -80 -1,220 -184 2 Nondurable goods manufacturing 24,866 25,811 24,774 24,632 23,908 512 -1,904 -1,037 -142 -725 3 Food, liquor, and tobacco 4,596 4,838 4,637 4,847 4,405 34 -433 -202 210 -442 4 Textiles, apparel, and leather 5,064 4,855 4,571 4,268 3,812 -7 -1,044 -284 -303 -456 5 Petroleum refining 4,717 5,323 5,464 5,518 5,627 228 304 141 54 110 6 Chemicals and rubber 5,518 5,810 5,426 5,386 5,530 259 -280 -384 -39 143 7 Other nondurable goods 4,971 4,985 4,677 4,614 4,534 1 -451 -308 -63 -80 8 Mining (including crude petroleum and natural gas) 27,313 28,406 29,266 29,633 29,568 154 1,162 860 368 -65 9 Trade 28,320 29,048 28,960 28,732 28,037 -142 -1,011 -88 -227 -696 10 Commodity dealers 1,788 1,977 2,036 2,102 2,305 116 328 60 65 204 II Other wholesale 13,488 13,975 13,692 13,652 13,648 198 -327 -283 -39 -4 12 Retail 13,044 13,096 13,231 12,978 12,084 -456 -1,012 135 -253 -894 13 Transportation, communication, and other public utilities 24,751 24,913 24,840 25,152 24,953 -89 39 -74 313 -200 14 Transportation 8,964 8,976 8,913 9,025 9,103 -251 127 -62 112 78 15 Communication 4,905 5,153 5,254 5,297 5,258 374 106 101 43 -38 16 Other public utilities 10,882 10,785 10,672 10,830 10,591 -212 -194 -112 158 -239 17 Construction 7,825 7,815 7,757 7,759 7,863 55 48 -58 2 103 18 Services 28,938 29,1% 29,587 29,472 30,502 466 1,306 392 -115 1,029 19 All other" 17,536 17,916 17,966 17,945 18,502 680 586 50 -21 557 20 Total domestic loans 188,667 194,530 194,494 193,452 193,272 3,982 -1,258 -36 -1,042 -180 21 MEMO: Term loans (original maturity more than 1 year) included in domestic loans .. 87,027 89,152 89,776 89,944 90,088 -655 936 623 168 144 I. Includes commercial and industrial loans at a few banks with assets of $1 billion or more that do not classify their loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

IPC Demand Deposits A25 1.31 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1981 1982 11997788 1199779922 11998800 DDeecc.. DDeecc.. DDeecc.. June3 Sept. Dec. Mar. June Sept. 1 All holders—Individuals, partnerships, and corporations 294.6 302.2 315.5 277.5 288.9 268.9 271.5 276.7 f 2 Financial business 27.8 27.1 29.8 f 28.2 28.0 27.8 28.6 31.9 3 Nonfinancial business 152.7 157.7 162.3 n.a. 148.6 154.8 138.7 141.4 142.9 4 Consumer 97.4 99.2 102.4 1 82.1 86.6 84.6 83.7 83.3 5 Foreign 2.7 3.1 3.3 1 3.1 2.9 3.1 2.9 2.9 6 Other 14.1 15.1 17.2 Y 15.5 16.7 14.6 15.0 15.7 Weekly reporting banks 1981 1982 11997788 1199779944 11998800 DDeecc.. DDeecc.. DDeecc.. June3 Sept. Dec. Mar. June Sept. 7 All holders—Individuate, partnerships, and corporations 147.0 139.3 147.4 131.3 137.5 126.8 127.9 132.1 f 1 8 Financial business 19.8 20.1 21.8 n.a. 20.7 21.0 20.2 20.2 23.4 9 Nonfinancial business 79.0 74.1 78.3 1 71.2 75.2 67.1 67.7 68.7 10 Consumer 38.2 34.3 35.6 28.7 30.4 29.2 29.7 29.6 11 Foreign 2.5 3.0 3.1 1 2.9 2.8 2.9 2.8 2.7 12 Other 7.5 7.8 8.6 • 7.9 8.0 7.3 7.5 7.7 1. Figures include cash items in process of collection. Estimates of gross 3. Demand deposit ownership survey estimates for June 1981 are not available deposits are based on reports supplied by a sample of commercial banks. Types of due to unresolved reporting errors. depositors in each category are described in the June 1971 BULLETIN ,p. 466. 4. After the end of 1978 the large weekly reporting bank panel was changed to 2. Beginning with the March 1979 survey, the demand deposit ownership 170 large commercial banks, each of which had total assets in domestic offices survey sample was reduced to 232 banks from 349 banks, and the estimation exceeding $750 million as of Dec. 31, 1977. See "Announcements," p. 408 in the procedure was modified slightly. To aid in comparing estimates based on the old May 1978 BULLETIN. Beginning in March 1979, demand deposit ownership and new reporting sample, the following estimates in billions of dollars for estimates for these large banks are constructed quarterly on the basis of 97 sample December 1978 have been constructed using the new smaller sample; financial banks and are not comparable with earlier data. The following estimates in billions business, 27.0; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and of dollars for December 1978 have been constructed for the new large-bank panel; other, 15.1. financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8; foreign, 2.5; other, 6.8. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • March 1983 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1982 1983 1977 1978 19791 1980 1981 IInnssttrruummeenntt Dec. Dec. Dec. Dec. Dec. Aug. Sept. Oct. Nov. Dec.6 Jan. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 65,051 83,438 112,803 124,524 165,508 177,182 173,836 170,253 165,534 166,367 165,192 Financial companies2 Dealer-placed paper3 2 Total 8,796 12,181 17,359 19,790 30,188 38,066 36,692 35,130 35,304 34,590 35,304 3 Bank-related (not seasonally adjusted) 2,132 3,521 2,784 3,561 6,045 6,038 5,924 5,791 6,232 2,026 2,131 Directly placed paper4 4 Total 40,574 51,647 64,757 67,854 81,660 81,707 81,347 79,846 79,143 83,492 82,485 5 Bank-related (not seasonally adjusted) 7,102 12,314 17,598 22,382 26,914 28,901 27,761 27,712r 27,769 31,428 31,198 6 Nonfinancial companies5 15,681 19,610 30,687 36,880 53,660 57,409 55,797 55,277 51,087 48,285 47,403 Bankers dollar acceptances (not seasonally adjusted) 7 Total 25,450 33,700 45,321 54,744 69,226 72,709 73,818 75,811 77,125 79,543 Holder 8 Accepting banks 10,434 8,579 9,865 10,564 10,857 11,805 10,752 10,661 10,596 10,910 9 Own bills 8,915 7,653 8,327 8,963 9,743 10,740 9,370 9,399 9,455 9,471 10 Bills bought 1,519 927 1,538 1,601 1,115 1,065 1,382 1,262 1,140 1,439 Federal Reserve Banks 11 Own account 954 587 704 776 195 565 813 0 0 1,480 n.a. 12 Foreign correspondents 362 664 1,382 1,791 1,442 1,239 1,139 1,080 992 949 13 Others 13,700 23,870 33,370 41,614 56,926 59,664 61,927 64,070 65,537 66,204 Basis 14 Imports into United States 6,378 8,574 10,270 11,776 14,765 14,921 16,075 16,511 16,716 17,683 15 Exports from United States 5,863 7,586 9,640 12,712 15,400 15,883 15,608 16,463 16,711 16,328 16 All other 13,209 17,540 25,411 30,257 39,061 42,692 42,136 42,837 43,699 45,532 1. A change in reporting instructions results in offsetting shifts in the dealer- 5. Includes public utilities and firms engaged primarily in such activities as placed and directly placed financial company paper in October 1979. communications, construction, manufacturing, mining, wholesale and retail trade, 2. Institutions engaged primarily in activities such as, but not limited to, transportation, and services. commercial, savings, and mortgage banking; sales, personal, and mortgage 6. Effective December 1, 1982, there was a break in the commercial paper financing; factoring, finance leasing, and other business lending; insurance series. The key changes in the content of the data involved additions to the underwriting; and other investment activities. reporting panel, the exclusion of broker or dealer placed borrowings under any 3. Includes all financial company paper sold by dealers in the open market. master note agreements from the reported data, and the reclassification of a large 4. As reported by financial companies that place their paper directly with portion of bank-related paper from dealer-placed to directly placed. investors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Business Lending All 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective date Effective Date Rate Average rate 1981—Nov. 9 17.00 July 29 15.50 1981—July 20.39 1982—May 17 16.50- Aug. 2 15.00 Aug 20.50 17.00 16 14.50 Sept 20.08 July 2 2 0 4 1 1 6 6 . .5 00 0 2 1 3 8 1 1 3 4 . . 5 0 0 0 O No ct v 1 1 8 6 . . 4 8 5 4 Sept Dec. 1 15.75 Oct. 7 13.00 Dec 15.75 Oct 1982—Feb. 2 16.50 14 12.00 1982—Jan 15.75 2 1 3 8 1 16 7 . . 5 0 0 0 1983— N Ja o n v . . 1 2 1 2 1 1 1 1. .0 50 0 M Fe a b r 1 1 6 6 . . 5 5 0 6 1983—J D a e n c July 20 16.00 Feb. 28 10.50 Apr 16.50 Feb 1.34 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 1-6, 1982 Size of loan (in thousands of dollars) All Item sizes I RUV\ 1-24 25-49 50-99 100-499 500-999 and over SHORT-TERM COMMERCIAL AND INDUSTRIAL LOANS 1 Amount of loans (thousands of dollars) 37,830,563 1,004,140 642,584 562,394 2,129,432 913,862 32,578,151 2 Number of loans 170,984 123,157 20,331 9,027 12,408 1,403 4,658 3 Weighted-average maturity (months) 1.2 3.6 3.6 4.1 4.8 3.2 .8 4 Weighted-average interest rate (percent per annum) .. 11.26 15.63 15.32 13.80 13.85 12.93 10.79 5 Interquartile range1 10.38-11.34 14.37-16.99 13.72-16.45 12.68-14.45 12.68-15.01 12.25-13.80 10.38-10.90 Percentage of amount of loans 6 With floating rate 26.4 32.5 39.5 70.8 65.4 65.0 21.6 7 Made under commitment 70.1 40.8 35.8 64.5 54.4 68.9 72.8 8 With no stated maturity 9.6 15.9 18.7 40.0 22.2 29.5 7.3 1-99 LONG-TERM COMMERCIAL AND INDUSTRIAL LOANS 9 Amount of loans (thousands of dollars) 4,007,972 380,177 459,970 204,266 2,963,558 10 Number of loans 25,270 22,129 2,265 311 565 11 Weighted-average maturity (months) 46.2 43.9 26.4 45.3 49.6 12 Weighted-average interest rate (percent per annum) .. 12.24 15.17 13.98 13.02 11.54 13 Interquartile range1 10.68-13.55 13.80-16.65 13.50-14.94 12.55-13.88 10.62-12.68 Percentage of amount of loans 14 With floating rate 77.8 49.0 67.9 81.6 82.7 15 Made under commitment 76.1 44.1 32.4 69.6 87.5 1-24 25-49 50-99 500 and over CONSTRUCTION AND LAND DEVELOPMENT LOANS 16 Amount of loans (thousands of dollars) 1,433,072 157,866 179,347 85,282 531,567 479,010 17 Number of loans 25,255 16,181 4,750 1,278 2,806 241 18 Weighted-average maturity (months) 11.1 14.4 16.0 6.4 8.3 12.2 19 Weighted-average interest rate (percent per annum) .. 15.14 16.74 17.44 18.52 15.01 13.30 20 Interquartile range1 12.73-16.09 15.02-18.10 14.75-18.97 14.23-20.57 12.69-15.58 11.82-14.50 Percentage of amount of loans 21 With floating rate 56.6 27.8 27.2 34.9 47.4 91.1 22 Secured by real estate 71.6 75.0 85.6 92.8 69.2 64.3 23 Made under commitment 39.6 44.4 43.1 29.7 21.5 58.7 24 With no stated maturity 2.9 3.7 .4 4.8 2.1 4.0 Type of construction 25 1- to 4-family 43.3 74.8 64.2 72.2 56.7 5.2 26 Multifamily 12.1 1.5 18.8 7.6 4.6 22.2 27 Nonresidential 44.6 23.7 17.0 20.2 38.7 72.6 All sizes 1-9 10-24 25-49 50-99 100-249 250 and over LOANS TO FARMERS 28 Amount of loans (thousands of dollars) 1,457,533 158,122 234,089 169,062 282,570 200,860 412,831 29 Number of loans 67,611 40,418 15,969 5,177 4,206 1,304 536 30 Weighted-average maturity (months) 5.8 5.4 7.1 6.4 5.7 6.1 4.7 31 Weighted-average interest rate (percent per annum) .. 14.84 15.60 15.38 15.34 15.57 15.01 13.46 32 Interquartile range1 13.96-15.71 15.00-16.21 14.65-16.11 14.57-16.02 15.03-16.08 14.00-15.57 11.01-15.22 By purpose of loan 33 Feeder livestock 13.90 15.48 15.19 15.22 15.01 14.35 12.66 34 Other livestock 15.49 15.46 15.42 15.34 15.58 * * 35 Other current operating expenses 15.33 15.65 15.40 15.42 15.50 14.56 15.20 36 Farm machinery and equipment 15.68 15.53 15.16 15.76 * * * 37 Other 14.53 15.62 15.66 14.84 16.26 14.65 13.74 1. Interest rate range that covers the middle 50 percent of the total dollar NOTE. For more detail, see the Board's E.2 (111) statistical release, amount of loans made. 2. Fewer than 10 sample loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • March 1983 1.35 INTEREST RATES Money and Capital Markets Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted. 1982 1983 1983, week ending IInnssttrruummeenntt 11998800 11998811 11998822 Nov. Dec. Jan. Feb. Jan. 28 Feb. 4 Feb. 11 Feb. 18 Feb. 25 MONEY MARKET RATES 1 Federal funds'-2 13.36 16.38 12.26 9.20 8.95 8.68 8.51 8.44 8.53 8.50 88..6622 88..4477 Commercial paper3-4 2 1-month 12.76 15.69 11.83 8.66 8.53 8.19 8.30 8.23 8.39 8.37 8.32 8.14 3 3-month 12.66 15.32 11.89 8.69 8.51 8.17 8.34 8.26 8.43 8.45 8.34 8.16 4 6-month 12.29 14.76 11.89 8.72 8.50 8.15 8.39 8.32 8.49 8.54 8.37 8.19 Finance paper, directly placed3-4 5 1-month 12.44 15.30 11.64 8.51 8.35 8.03 8.25 8.15 8.33 8.36 8.27 8.09 6 3-month 11.49 14.08 11.23 8.39 8.18 7.96 8.24 8.03 8.23 8.34 8.31 8.07 7 6-month 11.28 13.73 11.20 8.42 8.20 7.97 8.26 8.01 8.21 8.35 88..3366 8.08 Bankers acceptances4-5 8 3-month 12.72 15.32 11.89 8.76 8.54 8.19 8.36 8.32 8.52 8.45 8.34 8.16 9 6-month 12.25 14.66 11.83 8.77 8.50 8.19 8.41 8.46 8.60 8.52 88..3399 88..1188 Certificates of deposit, secondary market6 10 1-month 12.91 15.91 12.04 8.82 8.64 8.28 8.40 8.32 8.46 8.45 8.42 8.27 11 3-month 13.07 15.91 12.27 8.95 8.66 8.36 8.54 8.51 8.68 8.63 8.54 8.34 12 6-month 12.99 15.77 12.57 9.13 8.80 8.46 8.77 8.74 8.96 8.91 8.77 8.50 13 Eurodollar deposits, 3-month2 14.00 16.79 13.12 9.77 9.47 8.97 9.14 9.19 9.35 9.30 9.11 99..0011 U.S. Treasury bills4 Secondary market7 14 3-month 11.43 14.03 10.61 8.07 7.94 7.86 8.11 8.05 8.16 8.22 8.16 7.91 15 6-month 11.37 13.80 11.07 8.34 8.16 7.93 8.23 8.13 8.29 8.34 8.28 8.00 16 1-year 10.89 13.14 11.07 8.44 8.23 8.01 8.28 8.19 8.34 8.41 8.33 8.06 Auction average8 17 3-month 11.506 14.077 10.686 8.042 8.013 7.810 8.130 8.055 8.122 8.252 8.256 7.888 18 6-month 11.374 13.811 11.084 8.319 8.225 7.898 8.233 8.144 8.225 8.345 8.389 7.973 1199 1100..774488 1133..115599 1111..009999 88..556677 88..223344 88..000077 88..330088 88..000077 88..330088 CAPITAL MARKET RATES U.S. Treasury notes and bonds9 Constant maturities10 20 1-year 12.05 14.78 12.27 9.16 8.91 8.62 8.92 8.83 8.98 9.06 8.98 8.67 21 2-vear 11.77 14.56 12.80 9.80 9.66 9.33 9.64 9.49 9.68 9.79 9.69 9.38 T> 9 70 9 90 23 3-year 11.55 14.44 12.92 9.98 9.88 9.64 9.91 9.87 10.00 10.06 9.95 9.66 24 5-year 11.48 14.24 13.01 10.38 10.22 10.03 10.26 10.22 10.38 10.45 10.28 9.95 25 7-year 11.43 14.06 13.06 10.53 10.49 10.36 10.56 10.58 10.74 10.78 10.59 10.17 26 10-year 11.46 13.91 13.00 10.55 10.54 10.46 10.72 10.68 10.88 10.92 10.75 10.40 27 20-year 11.39 13.72 12.92 10.57 10.62 10.78 11.03 11.01 11.16 11.21 11.06 10.71 28 30-year 11.30 13.44 12.76 10.54 10.54 10.63 10.88 10.87 11.01 11.05 10.91 10.59 Composite12 29 Over 10 years (long-term) 10.81 12.87 12.23 10.18 10.33 10.37 10.60 10.61 10.74 10.77 10.62 10.30 State and local notes and bonds Moody's series13 30 Aaa 7.85 10.43 10.88 9.45 9.34 9.00 8.80 8.70 9.00 8.90 8.75 8.55 31 Baa 9.01 11.76 12.48 10.79 10.80 10.98 10.59 11.10 11.00 10.75 10.40 10.20 32 Bond Buyer series14 8.59 11.33 11.66 10.07 9.96 9.50 9.58 9.66 9.74 9.72 9.53 9.34 Corporate bonds Seasoned issues15 33 All industries 12.75 15.06 14.94 13.08 13.02 12.90 13.02 12.97 13.07 13.10 13.05 12.87 34 Aaa 11.94 14.17 13.79 11.68 11.83 11.79 12.01 11.94 12.06 12.11 12.08 11.82 35 Aa 12.50 14.75 14.41 12.51 12.44 12.35 12.58 12.45 12.60 12.69 12.61 12.43 36 A 12.89 15.29 15.43 13.81 13.66 13.53 13.52 13.53 13.58 13.58 13.54 13.40 37 Baa 13.67 16.04 16.11 14.30 14.14 13.94 13.95 13.96 14.01 14.02 13.97 1133..8811 Aaa utility bonds16 38 12.74 15.56 14.41 11.76 11.84 12.05 12.08 12.05 12.25 1111..9900 39 Recently offered issues 12.70 15.56 14.45 11.88 11.91 11.84 12.09 12.02 12.26 12.12 12.10 1111..8888 MEMO: Dividend/price ratio17 40 Preferred stocks 10.60 12.36 12.53 11.18 11.20 11.23 11.13 11.15 11.17 11.19 11.09 11.06 41 Common stocks 5.26 5.20 5.81 4.92 4.93 4.79 4.74 4.87 4.81 4.74 4.67 4.73 1. Weekly and monthly figures are averages of all calendar days, where the 11. Each weekly figure is calculated on a biweekly basis and is the average of rate for a weekend or holiday is taken to be the rate prevailing on the preceding five business days ending on the Monday following the calendar week. The business day. The daily rate is the average of the rates on a given day weighted by biweekly rate is used to determine the maximum interest rate payable in the the volume of transactions at these rates. following two-week period on small saver certificates. (See table 1.16.) 2. Weekly figures are statement week averages—that is, averages for the 12. Unweighted averages of yields (to maturity or call) for all outstanding notes week ending Wednesday. and bonds neither due nor callable in less than 10 years, including several very low 3. Unweighted average of offering rates quoted by at least five dealers (in the yielding "flower" bonds. case of commercial paper), or finance companies (in the case of finance paper). 13. General obligations only, based on figures for Thursday, from Moody's Before November 1979, maturities for data shown are 30-59 days, 90-119 days, Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90—119 days, and 150— 14. General obligations only, with 20 years to maturity, issued by 20 state and 179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 4. Yields are quoted on a bank-discount basis, rather than an investment yield 15. Daily figures from Moody's Investors Service. Based on yields to maturity basis (which would give a higher figure). on selected long-term bonds. 5. Dealer closing offered rates for top-rated banks. Most representative rate 16. Compilation of the Federal Reserve. Issues included are long-term (20 (which may be, but need not be, the average of the rates quoted by the dealers). years or more). New-issue yields are based on quotations on date of offering; 6. Unweighted average of offered rates quoted by at least five dealers early in those on recently offered issues (included only for first 4 weeks after termination the day. of underwriter price restrictions), on Friday close-of-business quotations. 7. Unweighted average of closing bid rates quoted by at least five dealers. 17. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Rates are recorded in the week in which bills are issued. sample of ten issues: four public utilities, four industrials, one financial, and one 9. Yields are based on closing bid prices quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields are read from a yield curve at fixed maturities. Based on only recently issued, actively traded securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets A29 1.36 STOCK MARKET Selected Statistics 1982 1983 IInnddiiccaattoorr 11998800 11998811 11998822 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 68.06 74.02 68.93 63.10 62.82 62.91 70.21 76.10 79.75 80.30 83.25 84.74 2 Industrial 78.64 85.44 78.18 71.59 71.37 70.98 80.08 86.67 90.76 92.00 95.37 97.26 3 Transportation 60.52 72.61 60.41 53.07 53.40 53.98 61.39 66.64 71.92 73.40 75.65 79.44 4 Utility 37.35 38.90 39.75 37.34 37.20 38.19 40.36 42.67 43.46 42.93 45.59 45.92 5 Finance 64.28 73.52 71.99 63.19 61.59 62.84 69.66 80.59 88.66 86.22 85.66 86.57 6 Standard & Poor's Corporation (1941-43 = 10)' ... 118.71 128.05 119.71 109.70 109.38 109.65 122.43 132.66 138.10 139.37 145.13 146.80 7 American Stock Exchange (Aug. 31, 1973 = 100) 300.94 343.58 282.62 254.72 250.63 253.54 286.22 308.74 333.54 333.36 360.92 373.84 Volume of trading (thousands of shares) 8 New York Stock Exchange 44,867 46,967 64,617 50,481 54,530 76,031 73,710 98,508 88,431 76,463 88,463 85,026 9 American Stock Exchange 6,377 5,346 5,283 3,720 3,611 5,567 5,064 7,828 8,672 7,475 9,220 8,256 Customer financing (end-of-period balances, in millions of dollars) 10 Regulated margin credit at brokers-dealers2 14,721 14,411 13,325 11,783 11,729 11,396 11,208 11,728 12,459 13,325 13,370 11 Margin stock3 14,500 14,150 12,980 11,540 11,470 11,150 10,950 11,450 12,170 12,980 13,070 12 Convertible bonds 219 259 344 242 258 245 257 277 288 344 299 13 Subscription issues 2 2 1 1 1 1 1 1 1 1 1 n a. Free credit balances at brokers4 14 Margin-account 2,105 3,515 5,735 4,215 4,410 4,470 4,990 5,520 5,600 5,735 6,257 15 Cash-account 6,070 7,150 8,390 6,345 6,730 7,550 7,475 8,120 8,395 8,390 8,230 Margin-account debt at brokers (percentage distribution, end of period) 16 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percent)5 17 Under 40 14.0 37.0 21.0 43.0 44.0 30.0 27.0 21.0 20.0 21.0 18.0 18 40-49 30.0 24.0 24.0 21.0 23.0 26.0 26.0 24.0 21.0 24.0 23.0 19 50-59 25.0 17.0 24.0 16.0 13.0 18.0 20.0 22.0 25.0 24.0 25.0 n a. 20 60-69 14.0 10.0 14.0 9.0 9.0 12.0 12.0 16.0 15.0 14.0 16.0 21 70-79 9.0 6.0 9.0 6.0 6.0 8.0 8.0 9.0 10.0 9.0 9.0 22 80 or more 8.0 6.0 8.0 5.0 5.0 6.0 7.0 8.0 9.0 8.0 9.0 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 21,690 25,870 35,598 29,798 29,773 31,102 31,644 33,689 34,909 35,598 35,654 1 Distribution by equity status I 1 (percent) 24 Net credit status 47.8 58.0 62.0 59.0 59.0 60.0 61.0 61.0 62.0 62.0 57.0 n.a. Debt status, equity of 1 25 60 percent or more 44.4 31.0 29.0 28.0 26.0 28.0 27.0 29.0 29.0 29.0 35.0 1 26 Less than 60 percent 7.7 11.0 9.0 13.0 14.0 12.0 12.0 10.0 9.0 9.0 8.0 Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8 , 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 27 Margin stocks 70 80 65 55 65 50 28 Convertible bonds 50 60 50 50 50 50 29 Short sales 70 8C 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. Each customer's equity in his collateral (market value of collateral less net companies. With this change the index includes 400 industrial stocks (formerly debit balance) is expressed as a percentage of current collateral values. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 6. Balances that may be used by customers as the margin deposit required for financial. additional purchases. Balances may arise as transfers based on loan values of 2. Margin credit includes all credit extended to purchase or carry stocks or other collateral in the customer's margin account or deposits of cash (usually sales related equity instruments and secured at least in part by stock. Credit extended is proceeds) occur. end-of-month data for member firms of the New York Stock Exhange. 7. Regulations G, T, and U of the Federal Reserve Board of Governors, In addition to assigning a current loan value to margin stock generally, prescribed in accordance with the Securities Exchange Act of 1934, limit the Regulations T and U permit special loan values for convertible bonds and stock amount of credit to purchase and carry margin stocks that may be extended on acquired through exercise of subscription rights. securities as collateral by prescribing a maximum loan value, which is a specified 3. A distribution of this total by equity class is shown on lines 17-22. percentage of the market value of the collateral at the time the credit is extended. 4. Free credit balances are in accounts with no unfulfilled commitments to the Margin requirements are the difference between the market value (100 percent) brokers and are subject to withdrawal by customers on demand. and the maximum loan value. The term "margin stocks" is defined in the corresponding regulation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • March 1983 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1982 1983 AAccccoouunntt 11997799 11998800 11998811 May June July Aug. Sept. Oct. Nov. Dec/ Jan." Savings and loan associations 1 Assets 578,962 630,712 664,167 687,273 692,759 697,690 703,399 691,077 692,549 697,189 706,045 716,0 88 2 Mortgages 475,688 503,192 518,547 514,046 512,997 510,678 509,776 493,899 489,923 488,614 482,234 481,346 3 Cash and investment securities' 46,341 57,928 63,123 70,302 70,824 72,854 74,141 74,692 75,638 78,122 84,767 91,912 4 Other 56,933 69,592 82,497 102,925 108,938 114,158 119,482 122,486 126,988 130,453 139,044 142,830 5 Liabilities and net worth 578,962 630,712 664,167 687,273 692,759 697,690 703,399 691,077 692,549 697,189 706,045 716,088 6 Savings capital 470,004 511,636 525,061 535,215 538,667 539,830 542,648 547,628 547,112 548,439 566.189 583,029 7 Borrowed money 55,232 64,586 88,782 94,117 96,850 98,433 98,803 99,771 100,881 102,948 97,979 89,284 8 FHLBB 40,441 47,045 62,794 65,216 66,925 67,019 66,374 65,567 65,015 64,202 63,861 60,148 9 Other 14,791 17,541 25,988 28,901 29,925 31,414 32,429 34,204 35,866 38,746 34,118 29,136 10 Loans in process 9,582 8,767 6,385 6,766 7,116 7,250 7,491 8,084 8,484 8,967 9,934 10,258 11 Other 11,506 12,394 15,544 25,756 24,671 27,375 29,965 19,202 20,018 21,048 15,720 17,675 12 Net worth2 32,638 33,329 28,395 25,419 25,455 24,802 24,492 24,476 24,538 24,754 26,157 26,100 13 MEMO: Mortgage loan commitments outstanding3 16,007 16,102 15,225 16,622 16,828 15,924 16,943 17,256 18,407 19,682 18,054 18,961 Mutual savings banks4 14 Assets 163,405 171,564 175,728 174,952 175,091 175,563 175,563 173,487 172,908 172,287 174,204 Loans 15 Mortgage 98,908 99,865 99,997 96,334 96,346 96,231 94,448 94,382 94,261 94,017 94,452 16 Other 9,253 11,733 14,753 17,409 16,546 17,104 16,919 17,458 17,035 16,702 16,876 Securities 17 U.S. government5 7,658 8,949 9,810 9,968 10,112 10,036 9,653 9.404 9,219 9,456 9,685 18 State and local government 2,930 2,390 2,288 2,259 2,253 2,247 2,214 2,191 2,505 2,496 2,500 19 Corporate and other6 37,086 39,282 37,791 37,486 36,958 36,670 35,956 35,845 35,599 35,753 36,286 20 Cash 3,156 4,334 5,442 5,469 6,040 6,167 6,405 6,695 6,749 6,291 6,920 21 Other assets 4,412 5,011 5,649 6,027 6,836 7,109 7,185 7.514 7,540 7,572 7,485 n a. 22 Liabilities 163,405 171,564 175,728 174,952 175,091 175,563 172,780 173,487 172,908 172,287 174,204 23 Deposits 146,006 154,805 155,110 153,354 154,273 154,204 151,897 153,089 152,210 151,304 155.225 24 Regular7 144,070 151,416 153,003 151,253 152,030 151,845 149,613 150,795 149.928 149,167 152,735 25 Ordinary savings 61,123 53,971 49,425 47,895 47,942 47,534 46,856 47,496 48,520 49.208 56.548 26 Time 82,947 97,445 103,578 103,358 104,088 104,310 102,756 103,299 101,408 99,959 110,330 27 Other 1,936 2,086 2,108 2,101 2,243 2,359 2,285 2,294 2.283 2.137 2.490 28 Other liabilities 5,873 6,695 10,632 12,246 11,230 11,940 11.691 11,166 11.556 11.893 9,742 29 General reserve accounts 11,525 11,368 9,986 9,352 9,588 9,419 21,145 9,232 9.141 9,089 9,238 30 MEMO: Mortgage loan commitments outstanding8 3,182 1,476 1,293 998 1,010 992 1,056 1,217 1.281 1,400 1,285 Life insurance companies 31 Assets 432,282 479,210 525,803 543,470 547,075 551,124 557,094 563,321 571,902 578,200 Securities 32 Government 338 21,378 25,209 27,835 28,243 28,694 30,263 30,759 31,791 32,682 33 United States9 4,888 5,345 8,167 10,187 10,403 10,774 12,214 12,606 13,538 14,370 34 State and local 6,428 6,701 7,151 7,543 7,643 7,705 7,799 7,834 7,871 7,935 35 Foreign10 9,022 9,332 9,891 10,105 10,197 10,215 10,250 10,319 10,382 10,377 n.a. n.a. 222,332 238,113 255,769 264,107 265,080 267,627 270,029 273,539 279.918 283,650 37 Bonds 178,171 190,747 208,098 217,594 219,006 221,503 221,642 223,783 226,879 229,101 38 Stocks 48,757 47,366 47,670 46,513 46,074 46,124 48,387 49,756 53,039 54,549 39 Mortgages 119,421 131,030 137,747 139,455 139,539 140,044 140,244 140,404 140,678 140,956 40 Real estate 13,007 15,063 18,278 19,713 19,959 20,198 20,176 20,268 20,293 20,480 41 Policy loans 44,825 41,411 48,706 50,992 51,438 51,867 52,238 52,525 52,751 52,916 42 Other assets 27,563 31,702 40,094 41,368 42,816 42,694 44,144 45,826 46,471 47,516 Credit unions 43 Total assets/liabilities and capital 65,854 71,709 77,682 82,858 84,107 84,423 85,102 86,554 88,144 89,261 44 Federal 35,934 39,801 42,382 45,077 45,705 45,931 46,310 47,076 47,649 48,272 45 State 29,920 31,908 35,300 37,781 38,402 38,492 38,792 39,478 40,495 40,989 46 Loans outstanding 53,125 47,774 50,448 49,556 49,919 50,133 50,733 51,047 50,934 50,936 47 Federal 28,698 25,627 27,458 27,073 27,295 27,351 27,659 27,862 27,789 27,824 n.a. 48 State 24,426 22,147 22,990 22,483 22,624 22,782 23,074 23,185 23,145 23,139 49 Savings 56,232 64,399 68,871 73,602 74,834 75,088 75,331 76,874 78,529 79,799 50 Federal (shares) 35,530 36,348 37,574 40,213 40,710 40,969 41,178 41,961 42,852 43,413 51 State (shares and deposits) 25,702 28,051 31,297 33,389 34,124 34,119 34,153 34,913 35,677 36,386 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFiissccaall FFiissccaall FFiissccaall Type of account or operation yyeeaarr yyeeaarr yyeeaarr 1981 1982 1982 1983 11998800 11998811 11998822 H2 HI H2 Nov. Dec. Jan. U.S. budget 1 Receipts' 517,112 599,272 617,776 301,777 322,478 286,338 42,007 54,498 57,505 2 Outlays12 576,675 657,204 728,375 358,558 348,678 390,846 66,166 72,436 67,087 3 Surplus, or deficit (-) -59,563 -57,932 -110,609 -56,780 -26,200 -104,508 -24,159 -17,938 -9,582 4 Trust funds 8,801 6,817 5,456 -8,085 -17,690 -6,576 -5,750 3,382 -3,623 5 Federal funds3 -68,364 -64,749 -116,065 -48,697 -43,889 -97,934 -18,409 -21,320 -5,959 OOffff--bbuuddggeett eennttiittiieess ((ssuurrpplluuss,, oorr ddeeffiicciitt ((--)))) 66 FFeeddeerraall FFiinnaanncciinngg BBaannkk oouuttllaayyss -14,549 -20,769 -14,142 -8,728 -7,942 -4,923 -559 -198 -271 77 OOtthheerr'''' 303 -236 -3,190 -1,752 227 -2,267 -127 33 -63 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -73,808 -78,936 -127,940 -67,260 -33,914 -111,699 -24,845 -18,103 -9,916 Source or financing 9 Borrowing from the public 70,515 79,329 134,993 54,081 41,728 119,609 25,923 29,895 6,419 10 Cash and monetary assets (decrease, or increase (-)) -355 -1,878 -11,911 -1,111 -408 -9,057 7,231 -13,002 2,179 11 Other6 3,648 1,485 4,858 14,290 -7,405 1,146 -8,309 1,211 1,318 MEMO; 12 Treasury operating balance (level, end of period) 20,990 18,670 29,164 12,046 10,999 19,773 5,210 19,773 17,502 13 Federal Reserve Banks 4,102 3,520 10,975 4,301 4,099 5,033 2,247 5,033 2,627 14 Tax and loan accounts 16,888 15,150 18,189 7,745 6,900 14,740 2,963 14,740 14,875 1. The Budget of the U.S. Government, Fiscal Year 1983, has reclassified 5. Includes U.S. Treasury operating cash accounts; special drawing rights; gold supplemental medical insurance premiums and voluntary hospital insurance tranche drawing rights; loans to International Monetary Fund; and other cash and premiums, previously included in other social insurance receipts, as offsetting monetary assets. receipts in the health function. 6. Includes accrued interest payable to the public; allocations of special 2. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was drawing rights; deposit funds; miscellaneous liability (including checks outstandreclassified from an off-budget agency to an on-budget agency in the Department ing) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S. of Labor. currency valuation adjustment; net gain/loss for IMF valuation adjustment; and 3. Half-year figures are calculated as a residual (total surplus/deficit less trust profit on the sale of gold. fund surplus/deficit). 4. Other off-budget includes Postal Service Fund; Rural Electrification and SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Telephone Revolving Fund; and Rural Telephone Bank; it also includes petroleum Government." Treasury Bulletin, and the Budget of the United States Governacquisition and transportation and strategic petroleum reserve effective Novem- ment, Fiscal Year 1984. ber 1981. NOTES TO TABLE 1.37 10. Issues of foreign governments and their subdivisions and bonds of the 1. Holdings of stock of the Federal Home Loan Banks are included in "other International Bank for Reconstruction and Development. assets." 2. Includes net undistributed income, which is accrued by most, but not all, NOTE. Savings and loan associations: Estimates by the FHLBB for all associations. associations in the United States. Data are based on monthly reports of federally 3. Excludes figures for loans in process, which are shown as a liability. insured associations and annual reports of other associations. Even when revised, 4. The NAMSB reports that, effective April 1979, balance sheet data are not data for current and preceding year are subject to further revision. strictly comparable with previous months. Beginning April 1979, data are reported Mutual savings banks: Estimates of National Association of Mutual Savings on a net-of-valuation-reserves basis. Before that date, data were reported on a Banks for all savings banks in the United States. gross-of-valuation-reserves basis. Life insurance companies: Estimates of the American Council of Life Insurance 5. Beginning April 1979, includes obligations of U.S. government agencies. for all life insurance companies in the United States. Annual figures are annual- Before that date, this item was included in "Corporate and other." statement asset values, with bonds carried on an amortized basis and stocks at 6. Includes securities of foreign governments and international organizations year-end market value. Adjustments for interest due and accrued and for and, before April 1979, nonguaranteed issues of U.S. government agencies. differences between market and book values are not made on each item separately 7. Excludes checking, club, and school accounts. but are included, in total, in "other assets." 8. Commitments outstanding (including loans in process) of banks in New York Credit unions: Estimates by the National Credit Union Administration for a State as reported to the Savings Banks Association of the state of New York. group of federal and state-chartered credit unions that account for about 30 9. Direct and guaranteed obligations. Excludes federal agency issues not percent of credit union assets. Figures are preliminary and revised annually to guaranteed, which are shown in the table under "Business" securities. incorporate recent benchmark data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • March 1983 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1981 1982 1982 1983 111999888000 111999888111 111999888222 H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 AH sources1 517,112 599,272 617,766 301,777 322,478 286,338 42,007 54,498 57,505 2 Individual income taxes, net 244,069 285,917 297,744 147,035 150,565 145,676 22,452 24,946 34,151 3 Withheld 223,763 256,332 267,513 134,199 133,575 131,567 22,079 23,843 20,953 4 Presidential Election Campaign Fund ... 39 41 39 5 34 5 0 0 0 5 Non withheld 63,746 76,844 84,691 17,391 66,174 20,040 1,153 1,906 13,217 6 Refunds 43,479 47,299 54,498 4,559 49,217 5,938 779 804 18 Corporation income taxes 7 Gross receipts 72,380 73,733 65,991 31,056 37,836 25,661 1,630 9,402 2,394 8 Refunds 7,780 12,596 16,784 738 8,028 11,467 22,,331100 1,238 11,,223300 9 Social insurance taxes and contributions. net 157,803 182,720 201,498 91,592 108,079 94,278 1144,,990022 1155,,777766 1177,,007711 10 Payroll employment taxes and contributions2 133,025 156,932 172,744 82,984 88,795 85,063 12,924 1155,,113388 1155,,447799 11 Self-employment taxes and contributions3 5,723 6,041 7,941 244 7,357 177 0 0 415 12 Unemployment insurance 15,336 15,763 16,600 6,355 9,809 6,857 1,629 264 789 13 Other net receipts1-4 3,719 3,984 4,212 2,009 2,119 2,181 349 373 387 14 Excise taxes 24,329 40,839 36,311 22,097 17,525 16,556 2,925 2,674 2,707 15 Customs deposits 7,174 8,083 8,854 4,661 4,310 4,299 692 724 485 16 Estate and gift taxes 6,389 6,787 7,991 3,742 4,208 3,445 472 572 553 17 Miscellaneous receipts5 12,748 13,790 16,161 8,441 7,984 7,891 1,243 1,643 1,374 OUTLAYS 18 All types1-* 576,675 657,204 728,375 358,558 346,286 390,846 66,166 72,436 67,087 19 National defense 135,856 159,765 187,418 87,421 93,154 100,419 16,937 18,141 16,297 20 International affairs 10,733 11,130 9,982 4,655 5,183 4,406 45 1,044 804 21 General science, space, and technology ... 5,722 6,359 7,070 3,388 3,370 3,903 771 838 487 22 Energy 6,313 10,277 4,674 4,394 2,814 2,059 504 362 296 23 Natural resources and environment 13,812 13,525 12,934 7,296 5,636 6,940 1,100 1,060 1,007 24 Agriculture 4,762 5,572 14,875 5,181 7,087 13,260 3,322 5,326 3,223 25 Commerce and housing credit 7,788 3,946 3,865 1,825 1,410 2,244 -52 968 1,213 26 Transportation 21,120 23,381 20,560 10,753 9,915 10,686 1,876 1,567 1,718 27 Community and regional development 10,068 9,394 7,165 4,269 3,193 4,186 718 638 504 28 Education, training, employment, social services 30,767 31,402 26,300 13,878 12,595 12,187 2,058 2,019 2,259 29 Health1 55,220 65,982 74,017 35,322 37,213 39,073 6,644 6,895 6,612 30 Income security6 193,100 225,101 248,343 129,269 112,782 133,779 22,987 24,263 23,010 31 Veterans benefits and services 21,183 22,988 23,955 12,880 10,865 13,241 2,069 3,202 837 32 Administration of justice 4,570 4,696 4,671 2,290 2,334 2,373 419 382 448 33 General government 4,505 4,614 4,726 2,311 2,410 2,322 524 451 337 34 General-purpose fiscal assistance 8,584 6,856 6,393 3,043 3,325 3,152 302 58 1,269 35 Net Interest' 52,458 68,726 84,697 39,950 41,880 44,948 8,469 6,611 7,616 36 Undistributed offsetting receipts8 -9,887 -16,509 -13,270 -9,564 -6,490 -8,333 -2,529 -1,389 -849 1. The Budget of the U.S. Government, Fiscal Year 1983 has reclassified 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous supplemental medical insurance premiums and voluntary hospital insurance receipts. premiums, previously included in other social insurance receipts, a osffsetting 6. Effective Oct. 1, 1980, the Pension Benefit Guaranty Corporation was receipts in the health function. reclassified from an off-budget agency to an on-budget agency in the Department 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. of Labor. 3. Old-age, disability, and hospital insurance. 7. Net interest function includes interest received by trust funds. 4. Federal employee retirement contributions and civil service retirement and 8. Consists of rents and royalties on the outer continental shelf and U.S. disability fund. government contributions for employee retirement. SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Government" and the Budget of the U.S. Government, Fiscal Year 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1980 1981 1982 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 936.7 970.9 977.4 1,003.9 1,034.7 1,066.4 1,084.7 1,147.0 1,201.9 2 Public debt securities 930.2 964.5 971.2 997.9 1,028.7 1,061.3 1,079.6 1,142.0 1,197.1 3 Held by public 737.7 773.7 771.3 789.8 825.5 858.9 867.9 925.6 987.7 4 Held by agencies 192.5 190.9 199.9 208.1 203.2 202.4 211.7 216.4 209.4 5 Agency securities 6.5 6.4 6.2 6.1 6.0 5.1 5.0 5.0 4.8 6 Held by public 5.0 4.9 4.7 4.6 4.6 3.9 3.9 3.7 3.7 7 Held by agencies 1.5 1.5 1.5 1.5 1.4 1.2 1.1 1.3 1.1 8 Debt subject to statutory limit 931.2 965.5 972.2 998.8 1,029.7 1,062.2 1,080.5 1,142.9 1,197.9 9 Public debt securities 929.6 963.9 970.6 997.2 1,028.1 1,060.7 1,079.0 1,141.4 1,196.5 10 Other debt1 1.6 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.4 11 MEMO: Statutory debt limit 935.1 985.0 985.0 999.8 1,079.8 1,079.8 1,143.1 1,143.1 1,290.2 1. Includes guaranteed debt of government agencies, specified participation NOTE. Data from Treasury Bulletin (U.S. Treasury Department), certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1982 1983 TTyyppee aanndd hhoollddeerr 11997788 11997799 11998800 11998811 Oct. Nov. Dec. Jan. Feb. 1 Total gross public debt 789.2 845.1 930.2 1,028.7 1,142.8 1,161.7 1,197.1 1,201.0 1,215.3 By type ? Interest-bearing debt 782.4 844.0 928.9 1,027.3 1,136.8 1,160.5 1,195.5 1,199.6 1,213.7 3 Marketable 487.5 530.7 623.2 720.3 824.7 852.5 881.5 ! 88.7' 907.7 4 Bills 161.7 172.6 216.1 245.0 283.9 293.5 311.8 308.1 314.9 5 Notes 265.8 283.4 321.6 375.3 438.1 454.2 465.0 473.0 481.3 6 Bonds 60.0 74.7 85.4 99.9 102.7 104.7 104.6 107.6 111.5 7 Nonmarketable1 294.8 313.2 305.7 307.0 312.2 308.0 314.0 310.9 306.1 ft 2 2 2.2 9 State and local government series 24.3 24.6 23.8 23.0 23.8 25.0 25.7 25.6 25.7 10 Foreign issues3 29.6 28.8 24.0 19.0 14.6 14.9 14./ 14.0 12./ 11 Government 28.0 23.6 17.6 14.9 12.2 12.5 13.0 12.7 11.4 1? Public 1.6 5.3 6.4 4.1 2.4 2.4 1.7 1.3 1.3 13 Savings bonds and notes 80.9 79.9 72.5 68.1 67.8 68.1 68.0 68.1 68.3 14 Government account series4 157.5 177.5 185.1 196.7 205.7 199.9 205.4 203.0 199.1 15 Non-interest-bearing debt 6.8 1.2 1.3 1.4 6.0 1.2 1.6 1.4 1.6 By holder5 16 U.S. government agencies and trust funds 170.0 187.1 192.5 203.3 17 Federal Reserve Banks 109.6 117.5 121.3 131.0 18 Private investors 508.6 540.5 616.4 694.5 19 Commercial banks 93.2 96.4 116.0 109.4 20 Mutual savings banks 5.0 4.7 5.4 5.2 21 Insurance companies 15.7 16.7 20.1 19.1 22 Other companies 19.6 22.9 25.7 37.8 n. a. n.a. n.a. n.a. n.a. 23 State and local governments 64.4 69.9 '78.8 85.6 Individuals 24 Savings bonds 80.7 79.9 72.5 68.0 75 Other securities 30.3 36.2 56.7 75.6 26 Foreign and international6 137.8 124.4 127.7 141.4 27 Other miscellaneous investors7 58.9 90.1 106.9 152.3 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Data for Federal Reserve Banks and U.S. government agencies and trust tion Administration, depository bonds, retirement plan bonds, and individual funds are actual holdings; data for other groups are Treasury estimates. retirement bonds. 6. Consists of investments of foreign balances and international accounts in the 2. These nonmarketable bonds, also known as Investment Series B Bonds, United States. may be exchanged (or converted) at the owner's option for 1W percent, 5-year 7. Includes savings and loan associations, nonprofit institutions, corporate marketable Treasury notes. Convertible bonds that have been so exchanged are pension trust funds, dealers and brokers, certain government deposit accounts, removed from this category and recorded in the notes category (line 5). and government sponsored agencies. 3. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners. NOTE. Gross public debt excludes guaranteed agency securities. 4. Held almost entirely by U.S. government agencies and trust funds. Data by type of security from Monthly Statement of the Public Debt of the United States (U.S. Treasury Department); data by holder from Treasury Bulletin. 1.42 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity A ASeries discontinued. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics • March 1983 1.43 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1982 1983 1983, week ending Wednesday IItteemm 11997799 11998800 11998811 Nov. Dec/ Jan. Jan. 19 Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 Immediate delivery1 1 U.S. government securities 13,183 18,331 24,728 35,933 31,388 35,724 34,744 39,180 35,047 34,501 39,963 44,144 By maturity 2 Bills 7,915 11,413 14,768 19,275 18,473 19,439 20,938 20,742 18,261 16,473 21,748 21,292 3 Other within 1 year 454 421 621 748 645 819 719 1,125 655 643 911 637 4 1-5 years 2,417 3,330 4,360 6,875 5,351 6,973 6,268 8,813 7,949 7,213 8,390 12,259 5 5-10 years 1,121 ,464 2,451 4,162 3,794 4,263 4,290 4,208 3,269 4,479 4,351 5,108 6 Over 10 years 1,276 1,704 2,528 4.873 3,124 4,229 3,610 4,291 4,913 5,692 4,563 4,847 By type of customer 7 U.S. government securities dealers 1,448 1,484 1,640 2,151 2,156 2,219 2,299 2,544 11,,554444 11,,992222 11,,770066 22,,114411 8 U.S. government securities brokers 5,170 7,610 11,750 16,819 14,165 17,130 16,311 18,965 17,325 17,237 19,648 21,702 y All others2 6,564 9,237 11,337 16,962 15,066 16,376 16,134 17,670 16,178 15,341 18,609 20,302 10 Federal agency securities 2,723 3,258 3,306 4,951 4,521 5,199 6,026 4,846 3,902 3,472 5,185 4,965 n Certificates of deposit 1,764 2,472 4,477 4,848 4,347 4,747 4,560 4,354 4,794 3,746 3,890 4,824 12 Bankers acceptances 1,807 2,895 2,446 2,827 2,570 2,567 2,524 2,057 2,364 3,109 13 Commercial paper 6,128 7,392 66,,991155 77,,991111 88,,005588 77,,666644 88,,003366 77,,225522 77,,226655 88,,005555 Futures transactions3 14 Treasury bills 3,523 387 4,280 5,166 5,121 6,814 6,140 4,999 6,801 6,178 15 Treasury coupons n a. n.a. 1,330 794 1,534 1,667 1,526 1,989 1,579 1,631 1,958 2,529 16 Federal agency securities 234 195 254 169 164 186 159 182 223333 228811 Forward transactions4 17 U.S. government securities 365 6,747 1,086 1,035 1,349 1,562 1,895 22,,223366 1,220 1,525 18 Federal agency securities 1,370 969 1,073 1,136 1,469 942 857 996688 1,405 1,184 1. Before 1981, data for immediate transactions include forward transactions. from the date of the transaction for government securities (Treasury bills, notes, 2. Includes, among others, all other dealers and brokers in commodities and and bonds) or after 30 days for mortgage-backed agency issues. securities, nondealer departments of commercial banks, foreign banking agencies, NOTE. Averages for transactions are based on number of trading days in the and the Federal Reserve System. period. 3. Futures contracts are standardized agreements arranged on an organized Transactions are market purchases and sales of U.S. government securities exchange in which parties commit to purchase or sell securities for delivery at a dealers reporting to the Federal Reserve Bank of New York. The figures exclude future date. allotments of, and exchanges for, new U.S. government securities, redemptions 4. Forward transactions are agreements arranged in the over-the-counter of called or matured securities, purchases or sales of securities under repurchase market in which securities are purchased (sold) for delivery after 5business days agreement, reverse repurchase (resale), or similar contracts. 1.44 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing Averages of daily figures, in millions of dollars 1982 1983 1983, week ending Wednesday IItteemm 11997799 11998800 11998811 Nov. Dec. Jan. Jan. 12 Jan. 19 Jan. 26 Feb. 2 Feb. 9 Positions Net immediate1 1 U.S. government securities 3,223 4,306 9,033 8,417 14,814' 14,670 15,505 13,888 14,640 12,176 13,244 2 Bills 3,813 4,103 6,485 3,654 8,732 9,953 9,031 9,526 11,004 10,660 10,257 3 Other within 1 year -325 ,062 -1,526 593 428 -230 -35 -325 -482 -675 -584 4 1-5 years -455 434 1,488 2,850 4,249 3,091 3,761 • 2,292 3,143 2,163 2,204 5 5-10 years 160 166 292 -274 -36' -193 382 -73 -874 -930 -205 6 Over 10 years 30 665 2,294 1,594 1,442r 2,049 2,366 2,468 1,849 958 1,571 7 Federal agency securities.. 1,471 797 2,277 5,680 5,948' 5,125 5,352 5,573 4,513 4,208 4,523 8 Certificates of deposit 2,794 3,115 3,435 5,316 6,850' 6,180 6,231 5,793 5,669 6,130 5,969 9 Bankers acceptances 1,746 3,240 4,037' 3,551 3,590 3,546 3,502 3,142 3,014 10 Commercial paper 2,658 3,265 3,157' 3,436 3,391 3,539 3,362 3,533 3,267 Futures positions 11 Treasury bills -8,934 1,761 -4,913' -7,108 -9,586 -8,184 -4,803 -1,281 -747 12 Treasury coupons n.a. n.a. -2,733 -2,700 -2,304' -2,142 -2.667 -2,354 -1,615 -1,031 -947 13 Federal agency securities.. 522 -344 —335r -343 -494 -326 -233 -66 -153 Forward positions 14 U.S. government securities -603 -828 1,235 -1,397 -1,309 -1,697 -1,713 -1,033 -1,041 15 Federal agency securities.. -451 -2,028 -2,108 -2,329 -2,598 -2,645 -1,873 -1,573 -2,039 Financing2 Reverse repurchase agreements3 16 Overnight and continuing 14,568 22,186 29,053 27,038 29,157 25,803 25,001 25,818 17 Term agreements 32,048 55,024 61,639 49,013 49,164 49,171 48,990 50,747 Repurchase agreements4 18 Overnight and continuing 35,919 43,112 57,009 59,753 60,438 56,805 56,893 58,250 19 Term agreements 29,449 54,999 50,073 43,846 44,157 44,198 45,023 43,761 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A35 1.45 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1982 AAggeennccyy 11997788 11997799 11998800 June July Aug. Sept. Oct. Nov. Dec. 1 Federal and federally sponsored agencies' 137,063 163,290 193,229 238,787 242,565 243,623 246,050 245,698 243,634 247,218 2 Federal agencies 23,488 24,715 28,606 32,274 32,302 32,280 32,606 32,713 32,772 33,055 3 Defense Department2 968 738 610 419 408 399 388 377 364 354 4 Export-Import Bank3'4 8,711 9,191 11,250 13,939 13,938 13,918 14,042 14,000 13,999 14,218 5 Federal Housing Administration5 588 537 477 358 353 345 335 323 311 288 6 Government National Mortgage Association participation certificates6 3,141 2,979 2,817 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service7 2,364 1,837 1,770 1,471 1,471 1,471 1,471 1,471 1,471 1,471 8 Tennessee Valley Authority 7,460 8,997 11,190 13,715 13,760 13,775 14,010 14,185 14,270 14,365 9 United States Railway Association7 356 436 492 207 207 207 195 192 192 194 10 Federally sponsored agencies' 113,575 138,575 164,623 206,513 210,263 211,343 213,444 212,985 210,862 214,163 11 Federal Home Loan Banks 27,563 33,330 41,258 61,883 62,058 61,747 61,251 60,904 60,356 61,447 12 Federal Home Loan Mortgage Corporation 2,262 2,771 2,536 3,099 3,099 3,099 3,099 3,099 3,099 3,099 13 Federal National Mortgage Association 41,080 48,486 55,185 62,660 65,563 65,733 68,130 67,916 66,852 70,052 14 Federal Land Banks 20,360 16,006 12,365 8,217 7,652 7,652 7,652 6,813 6,813 6,813 15 Federal Intermediate Credit Banks 11,469 2,676 1,821 926 926 926 926 926 926 926 16 Banks for Cooperatives 4,843 584 584 220 220 220 220 220 220 220 17 Farm Credit Banks' 5,081 33,216 48,153 64,506 65,743 65,657 65,553 66,449 65,877 65,014 18 Student Loan Marketing Association 915 1,505 2,720 5,000 5,000 6,307' 6,61 K 6,657 6,718 6,591 19 Other 2 1 1 2 2 2 2 1 1 1 MEMO: 20 Federal Financing Bank debt1' 51,298 67,383 87,460 120,241 121,261 122,623 124,357 125,064 125,707 126,424 Lending to federal and federally sponsored agencies 21 Export-Import Bank4 6,898 8,353 10,654 13,829 13,829 13,823 13,954 13,954 13,954 14,177 22 Postal Service7 2,114 1,587 1,520 1,221 1,221 1,221 1,221 1,221 1,221 1,221 23 Tennessee Valley Authority 5,635 7,272 9,465 11,990 12,035 12,050 12,285 12,460 12,545 12,640 24 United States Railway Association7 356 436 492 207 207 207 195 192 192 194 Other Lending9 25 Farmers Home Administration 23,825 32,050 39,431 52,346 52,711 53,311 53,736 53,661 53,661 53,261 26 Rural Electrification Administration 4,604 6,484 9,1% 15,454 15,688 15,916 16,282 16,600 16,750 17,157 27 Other 6,951 9,696 13,982 20,194 20,570 21,095 21,684 26,976 27,384 27,774 1. In September 1977 the Farm Credit Banks issued their first consolidated and Urban Development; Small Business Administration; and the Veterans bonds, and in January 1979 they began issuing these bonds on a regular basis to Administration. replace the financing activities of the Federal Land Banks, the Federal Intermedi- 7. Off-budget. ate Credit Banks, and the Banks for Cooperatives. Line 17 represents those 8. The FFB, which began operations in 1974, is authorized to purchase or sell consolidated bonds outstanding, as well as any discount notes that have been obligations issued, sold, or guaranteed by other federal agencies. Since FFB issued. Lines 1 and 10 reflect the addition of this item. incurs debt solely for the purpose of lending to other agencies, its debt is not 2. Consists of mortgages assumed by the Defense Department between 1957 included in the main portion of the table in order to avoid double counting. and 1963 under family housing and homeowners assistance programs. 9. Includes FFB purchases of agency assets and guaranteed loans; the latter 3. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. contain loans guaranteed by numerous agencies with the guarantees of any 4. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. particular agency being generally small. The Farmers Home Administration item 5. Consists of debentures issued in payment of Federal Housing Administration consists exclusively of agency assets, while the Rural Electrification Administrainsurance claims. Once issued, these securities may be sold privately on the tion entry contains both agency assets and guaranteed loans. securities market. 6. Certificates of participation issued prior to fiscal 1969 by the Government National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing NOTES TO TABLE 1.44 1. Immediate positions are net amounts (in terms of par values) of securities 3. Includes all reverse repurchase agreements, including those that have been owned by nonbank dealer firms and dealer departments of commercial banks on a arranged to make delivery on short sales and those for which the securities commitment, that is, trade-date basis, including any such securities that have obtained have been used as collateral on borrowings, i.e., matched agreements. been sold under agreements to repurchase (RPs). The maturities of some 4. Includes both repurchase agreements undertaken to finance positions and repurchase agreements are sufficiently long, however, to suggest that the securi- "matched book" repurchase agreements. ties involved are not available for trading purposes. Securities owned, and hence dealer positions, do not include securities to resell (reverse RPs). Before 1981, NOTE. Data for positions are averages of daily figures, in terms of par value, data for immediate positions include forward positions. based on the number of trading days in the period. Positions are shown net and are 2. Figures cover financing involving U.S. government and federal agency on a commitment basis. Data for financing are based on Wednesday figures, in securities, negotiable CDs, bankers acceptances, and commercial paper. terms of actual money borrowed or lent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • March 1983 1.46 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1982 TTTyyypppeee ooofff iiissssssuuueee ooorrr iiissssssuuueeerrr,,, ooorrr uuussseee 11997799 11998800 11998811 Juner July Aug/ Sept/ Oct/ Nov/ Dec. 1 All issues, new and refunding1 43,365 48,367 47,732 5,783 5,583 6,510 6,497 8,260 9,850 9,085 Type of issue 2 General obligation 12,109 14,100 12,394 1,806 974 1,683 1,701 2,262 3,352 1,543 3 U.S. government loans2 53 38 34 16 22 25 30 30 34 37 4 Revenue 31,256 34,267 35,338 3,977 4,609 4,827 4,796 5,998 6,498 7,542 5 U.S. government loans2 67 57 55 45 49 52 54 57 57 62 Type of issuer 6 State 4,314 5,304 5,288 1,074 257 835 1,077 1,010 1,088 169 7 Special district and statutory authority 23,434 26,972 27,499 2,867 3,695 3,654 3,455 5,101 5,269 5,824 8 Municipalities, counties, townships, school districts 15,617 16,090 14,945 1,842 1,631 2,021 1,965 2,149 3,493 3,092 9 Issues for new capital, total 41,505 46,736 46,530 5,693 5,396 6,083 6,294 7,073 9,106 8,886 Use of proceeds 10 Education 5,130 4,572 4,547 717 293 516 830 532 716 810 11 Transportation 2,441 2,621 3,447 245 118 768 551 636 1,286 1,338 12 Utilities and conservation 8,594 8,149 10,037 830 1,272 685 283 1,335 1,961 1,830 13 Social welfare 15,968 19,958 12,729 2,307 2,705 2,500 2,542 2,619 2,204 2,963 14 Industrial aid 3,836 3,974 7,651 416 562 728 1,048 556 729 1,066 15 Other purposes 5,536 7,462 8,119 1,178 446 886 1,040 1,395 2,210 879 1. Par amounts of long-term issues based on date of sale. SOURCE. Public Securities Association. 2. Consists of tax-exempt issues guaranteed by the Farmers Home Administration. 1.47 NEW SECURITY ISSUES of Corporations Millions of dollars 1982 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998800 11998811 11998822 June' July' Aug/ Sept/ Oct/ Nov/ Dec. 1 All issues1 73,694 69,992 83,787 4,928 6,222 9,318 8,247 9,988 8,802 9,830 2 Bonds S3,206 44,643 53,225 3,228 3,934 6,553 5,762 7,120 5,412 5,636 Type of offering 3 Public 41,587 37,653 43,427 2,398 2,868 5,546 5,308 6,425 4,927 4,264 4 Private placement 11,619 6.989 9,798 830 1,066 1,007 454 695 485 1,372 Industry group 5 Manufacturing 15,409 12,325 13,307 462 1,638 1,602 1,730 2,044 2,138 1,204 6 Commercial and miscellaneous 6,693 5,229 5,681 343 493 1,202 481 417 523 565 7 Transportation 3,329 2,054 1,474 82 58 402 64 285 88 120 8 Public utility 9,557 8,963 12,155 761 717 934 1,021 1,663 1,246 944 9 Communication 6,683 4,280 2,265 176 84 205 311 208 115 372 10 Real estate and financial 11,534 11,793 18,343 1,403 944 2.208 2,156 2,504 1,302 2,431 11 Stocks2 20,489 25,349 30,563 1,700 2,288 2,765 2,485 2,868 3,390 4,194 Type 12 Preferred 3,631 1,797 5,115 67 644 622 522 611 573 421 13 Common 16,858 23,522 25,448 1,633 1,644 2.143 1,963 2,257 2,817 3,773 Industry group 14 Manufacturing 4,839 5,073 5,650 502 187 718 345 666 481 920 15 Commercial and miscellaneous 5,245 7,557 7,770 317 615 375 742 640 1,024 693 16 Transportation 549 779 709 52 5 62 84 80 225 22 17 Public utility 6,230 5,577 7,517 277 331 759 1,003 620 752 742 18 Communication 567 1,778 2,227 17 96 495 4 33 14 1,361 19 Real estate and financial 3,059 4,585 6,690 534 1.054 357 307 829 894 455 1. Figures, which represent gross proceeds of issues maturing in more than one 2. Beginning in August 1981, gross stock offerings include new equity volume year, sold for cash in the United States, are principal amount or number of units from swaps of debt for equity. multiplied by offering price. Excludes offerings of less than $100,000, secondary offerings, undefined or exempted issues as defined in the Securities Act of 1933, SOURCE. Securities and Exchange Commission and the Board of Governors of employee stock plans, investment companies other than closed-end, intracorpo- the Federal Reserve System. rate transactions, and sales to foreigners. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.48 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1982 1983 IItteemm 11998811 11998822 June July Aug. Sept. Oct. Nov. Dec/ Jan. INVESTMENT COMPANIES' 1 Sales of own shares2 20,596 45,675 3,061 3,304 4,322 4,709 5,668 5,815 5,291 8,085 2 Redemptions of own shares3 15,866 30,078 2,038 2,145 2,335 3,052 3,046 3,493 4,835 4,233 3 Net sales 4,730 15,597 1,023 1,159 1,987 1,657 2,622 2,322 456 3,852 4 Assets4 55,207 76,741 54,238 54,592 62,212 63,783 70,964 74,864 76,841 80,102 5 Cash position5 5,277 5,999 6,298 5,992 6,039 5,556 5,948 5,838 6,040 6,940 6 Other 49,930 70,742 47,940 48,600 56,173 58,227 65,016 69,026 70,801 73,162 1. Excluding money market funds. 5. Also includes all U.S. government securities and other short-term debt 2. Includes reinvestment of investment income dividends. Excludes reinvest- securities. ment of capital gains distributions and share issue of conversions from one fund to another in the same group. NOTE. Investment Company Institute data based on reports of members, which 3. Excludes share redemption resulting from conversions from one fund to comprise substantially all open-end investment companies registered with the another in the same group. Securities and Exchange Commission. Data reflect newly formed companies after 4. Market value at end of period, less current liabilities. their initial offering of securities. 1.49 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1981 1982 AAccccoouunntt 11997799 11998800 11998811 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Corporate profits with inventory valuation and capita] consumption adjustment 194.8 181.6 190.6 200.3 185.1 193.1 183.9 157.1 155.4 166.2 2 Profits before tax 252.7 242.4 232.1 253.1 225.4 233.3 216.5 171.6 171.7 180.3 3 Profits tax liability 87.6 84.6 81.2 91.5 79.2 82.4 71.6 56.7 55.3 60.9 4 Profits after tax 165.1 157.8 150.9 161.6 146.2 150.9 144.9 114.9 116.3 119.4 5 Dividends 52.7 58.1 65.1 61.5 64.0 66.8 68.1 68.8 69.3 70.5 6 Undistributed profits 112.4 99.7 85.8 100.1 82.2 84.1 76.8 46.1 47.0 48.8 7 Inventory valuation -43.1 -43.0 -24.6 -35.5 -22.8 -23.0 -17.1 -4.4 -9.4 -10.3 8 Capital consumption adjustment -14.8 -17.8 -16.8 -17.3 -17.5 -17.1 -15.5 -10.1 -6.9 -3.8 SOURCE. Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic NonfinancialS tatistics • March 1983 1.50 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1981 1982 AAccccoouunntt 11997766 11997777 11997788 11997799 11998800 Q2 Q3 Q4 Ql Q2 1 Current assets 827.4 912.7 1,043.7 1,218.2 1,333.5 1,388.3 1,410.9 1,427.1 1,423.6 1,419.4 2 Cash 88.2 97.2 105.5 118.0 127.1 126.2 125.1 131.7 121.3 123.4 3 U.S. government securities 23.5 18.2 17.3 17.0 19.3 19.9 18.0 17.9 17.1 17.4 4 Notes and accounts receivable 292.9 330.3 388.0 461.1 510.6 533.1 542.4 536.7 537.8 534.4 5 Inventories 342.5 376.9 431.6 505.5 543.7 565.3 577.0 587.1 593.8 589.2 6 Other 80.3 90.1 101.3 116.7 132.7 143.8 148.3 153.6 153.6 155.0 7 Current liabilities 495.1 557.1 669.3 807.8 890.9 931.5 967.2 980.0 985.7 982.6 8 Notes and accounts payable 282.1 317.6 382.9 461.2 515.2 525.9 549.5 562.9 555.0 554.9 9 Other 213.0 239.6 286.4 346.6 375.7 405.5 417.7 417.1 430.8 427.8 10 Net working capital 332.4 355.5 374.4 410.5 442.6 456.8 443.7 447.1 437.9 436.8 11 MEMO: Current ratio1 1.671 1.638 1.559 1.508 1.497 1.490 1.459 1.456 1.444 1.445 1. Ratio of total current assets to total current liabilities. All data in this table reflect the most current benchmarks. Complete data are available upon request from the Flow of Funds Section, Division of Research and NOTE. For a description of this series, see "Working Capital of Nonfinancial Statistics. Corporations" in the July 1978 BULLETIN, pp. 533-37. SOURCE. Federal Trade Commission. 1.51 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1981 1982 1983 IInndduussttrryy11 11998811 11998822 11998833'' Q4 Ql Q2 Q3 Q4 Ql' Q21 1 Total nonfarm business 321.49 316.43 310.92 327.83 327.72 323.22 315.79 302.77 302.25 302.20 Manufacturing 2 Durable goods industries 61.84 56.44 54.22 60.78 60.84 59.03 57.14 50.50 52.76 50.85 3 Nondurable goods industries 64.95 63.23 61.69 66.14 67.48 64.74 62.32 59.59 60.05 60.45 Nonmanufacturing 4 Mining 16.86 15.45 15.46 16.81 17.60 16.56 14.63 13.31 14.56 14.62 Transportation 5 Railroad 4.24 4.38 4.21 4.18 4.56 4.73 3.94 4.31 3.69 4.49 6 Air 3.81 3.93 3.33 4.82 3.20 3.54 4.11 4.85 3.71 3.64 7 Other 4.00 3.64 3.46 4.12 4.23 4.06 3.24 3.25 3.56 3.46 Public utilities 8 Electric 29.74 33.40 33.09 31.14 30.95 32.26 34.98 35.12 33.38 32.94 9 Gas and other 8.65 8.55 7.91 8.60 9.17 9.14 8.40 7.77 7.61 8.43 10 Trade and services 86.33 86.95 87.78 88.33 87.80 88.85 87.31 84.00 85.38 85.23 11 Communication and other2 41.06 40.46 39.78 42.92 41.89 40.33 39.73 40.06 37.55 38.09 1. Anticipated by business. SOURCE. Survey of Current Business (U.S. Dept. of Commerce). 2. "Other" consists of construction; social services and membership organizations; and forestry, fisheries, and agricultural services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A39 1.52 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period 1981 1982 AAccccoouunntt 11997777 11997788 11997799 11998800 Q3 Q4 Q1 Q2 Q3 Q4 ASSETS Accounts receivable, gross 1 Consumer 44.0 52.6 65.7 73.6 84.5 85.5 85.1 88.0 88.3 89.5 2 Business 55.2 63.3 70.3 72.3 76.9 80.6 80.9 82.6 82.2 81.0 3 Total 99.2 116.0 136.0 145.9 161.3 166.1 166.0 170.6 170.5 170.4 4 LESS: Reserves for unearned income and losses.... 12.7 15.6 20.0 23.3 27.7 28.9 29.1 30.2 30.4 30.5 5 Accounts receivable, net 86.5 100.4 116.0 122.6 133.6 137.2 136.9 140.4 140.1 139.8 6 Cash and bank deposits 2.6 3.5 1 7 Securities .9 1.3 24.91 27.5 34.5 34.2 35.0 37.3 39.1 39.7 8 All other 14.3 17.3 J 9 Total assets 104.3 122.4 140.9 150.1 168.1 171.4 171.9 177.8 179.2 179.5 LIABILITIES 10 Bank loans 5.9 6.5 8.5 13.2 14.7 15.4 15.4 14.5 16.8 18.6 11 Commercial paper 29.6 34.5 43.3 43.4 51.2 51.2 46.2 50.3 46.7 45.8 Debt 12 Short-term, n.e.c 6.2 8.1 8.2 7.5 11.9 9.6 9.0 9.3 9.9 8.7 13 Long-term, n.e.c 36.0 43.6 46.7 52.4 50.7 54.8 59.0 60.3 60.9 63.5 14 Other 11.5 12.6 14.2 14.3 17.1 17.8 19.0 18.9 20.5 18.7 15 Capital, surplus, and undivided profits 15.1 17.2 19.9 19.4 22.4 22.8 23.3 24.5 24.5 24.2 16 Total liabilities and capital 104.3 122.4 140.9 150.1 168.1 171.4 171.9 177.8 179.2 179.5 1. Beginning Q1 1979, asset items on lines 6, 7, and 8 are combined. NOTE. Components may not add to totals due to rounding. 1.53 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments receivable AAAccccccooouuunnntttsss rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg 1982 1982 1982 DDDeeeccc... 333111,,, 111999888222111 Oct. Nov. Dec. Oct. Nov. Dec. Oct. Nov. Dec. 1 Total 80,952 -1,215 -1,891 -571 18,041 22,319 20,031 19,256 24,210 20,602 2 Retail automotive (commercial vehicles) 12,570 -82 430 142 842 1,330 1,036 924 900 894 3 Wholesale automotive 12,074 -596 -1,416 -1,087 4,500 6,637 4,965 5,096 8,053 6,052 4 Retail paper on business, industrial, and farm equipment 28,191 -608 -476 222 971 1,297 1,420 1,579 1,773 1,198 5 Loans on commercial accounts receivable and factored commercial accounts receivable 9,073 54 -13 -350 10,102 11,310 10,493 10,048 11,323 10,843 6 All other business credit 19,044 17 -416 502 1,626 1,745 2,117 1,609 2,161 1,615 1. Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics • March 1983 1.54 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1982 1983 IItteemm 11998800 11998811 11998822 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PPRRIIMMAARRYY MMAARRKKEETTSS CCoonnvveennttiioonnaall mmoorrttggaaggeess oonn nneeww hhoommeess TTeerrmmss11 11 PPuurrcchhaassee pprriiccee ((tthhoouussaannddss ooff ddoollllaarrss)) 888333...444 999000...444 94.6 98.4 999111...444 95.0 99.1 97.9 91.8 88.9 22 AAmmoouunntt ooff llooaann ((tthhoouussaannddss ooff ddoollllaarrss)) 555999...222 666555...333 69.8 73.1 666666...555 71.6 74.4 75.6 67.6 65.4 33 LLooaann//pprriiccee rraattiioo ((ppeerrcceenntt)) 777333...222 777444...888 76.6 77.3 777444...111 78.7 77.9 79.0 75.2 75.2 44 MMaattuurriittyy ((yyeeaarrss)) 222888...222 222777...777 27.6 28.4 222666...444 28.1 28.4 27.9 26.9 26.5 55 FFeeeess aanndd cchhaarrggeess ((ppeerrcceenntt ooff llooaann aammoouunntt))22 222...000999 222...666777 2.95 3.15 222...888777 3.04 2.74 2.76 2.98 2.46 66 CCoonnttrraacctt rraattee ((ppeerrcceenntt ppeerr aannnnuumm)) 111222...222555 111444...111666 14.47 15.01 111555...000555 14.34 13.86 13.26 13.09 13.00 YYiieelldd ((ppeerrcceenntt ppeerr aannnnuumm)) 77 FFHHLLBBBB sseerriieess33 111222...666555 111444...777444 15.12 15.70 111555...666888 14.98 14.41 13.81 13.69 13.49 88 HHUUDD sseerriieess44 111333...999555 111666...555222 15.79 16.50 111555...444000 15.05 13.95 13.80 13.62 13.44 SSEECCOONNDDAARRYY MMAARRKKEETTSS YYiieelldd ((ppeerrcceenntt ppeerr aannnnuumm)) 99 FFHHAA mmoorrttggaaggeess ((HHUUDD sseerriieess))55 111333...444444 111666...333111 15.31 16.29 111444...666111 14.03 12.99 12.82 12.80 12.87 1100 GGNNMMAA sseeccuurriittiieess66 111222...555555 111555...222999 14.68 15.56 111444...555111 13.57 12.83 12.66 12.60 12.29 FFNNMMAA aauuccttiioonnss77 111444...111111 111666...777000 111555...777888 111444...444333 111666...666444 1155..9955 1166..8855 111555...777888 1155..3366 1133..9922 1133..7755 1133..7722 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total 55,104 58,675 66,031 66,158 67,810 68,841 69,152 70,126 71,814 73,106 14 FHA/VA-insured 37,365 39,341 39,718 39,853 39,922 39,871 39,523 39,174 39,057 38,924 15 Conventional 17,725 19,334 26,312 26,305 27,888 28,970 29,629 30,952 32,757 34,182 Mortgage transactions (during period) 16 Purchases 8,099 6,112 15,116 1,354 1,931 1,670 1,449 1,681 2,495 2,045 17 Sales 0 2 0 0 0 0 0 0 0 0 Mortgage commitments8 18 Contracted (during period) 8,083 9,331 22,105 2,016 1,820 1,482 1,426 2,795 3,055 2,006 19 Outstanding (end of period) 3,278 3,717 7,606 7,674 6,900 6,587 6,268 7,286 7,606 7,487 Auction of 4-month commitments to buy Government-underwritten loans 20 Offered 8,605.4 2,487.2 307.4 8.9 43.3 16.4 2.5 27.0 4.6 2.0 21 Accepted 4,002.0 1,478.0 104.3 0.0 5.7 0.0 0.0 0.0 0.0 0.0 Conventional loans 22 Offered 3,639.2 2,524.7 445.3 37.2 70.1 27.5 13.6 22.1 23.2 7.8 23 Accepted 1,748.5 1,392.3 237.6 23.6 42.9 0.0 8.9 11.4 15.3 0.0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)9 24 Total 4,362 5,245 5,153 5,309 5,201 5,207 4,957 4,676 4,733 n.a. 25 FHA/VA 2,116 2,236 1,921 2,232 2,216 2,225 1,016 1,012 1,009 n.a. 26 Conventional 2,246 3,010 3,224 3,077 2,985 2,982 3,891 3,663 3,724 n.a. Mortgage transactions (during period) 27 Purchases 3,723 3,789 23,671 2,237 2,529 1,799 2,000 1,917 3,916 n.a. 28 Sales 2,527 3,531 24,164 2,204 2,619 1,923 2,197 2,182 3,798 n.a. Mortgage commitments10 29 Contracted (during period) 3,859 6,974 28,187 2,189 2,768 2,892 2,506 1,714 1,068 n.a. 30 Outstanding (end of period) 447 3,518 7,549 8,544 9,318 10,211 10,572 10,407 7,549 n.a. 1. Weighted averages based on sample surveys of mortgages originated by ing prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the major institutional lender groups. Compiled by the Federal Home Loan Bank prevailing ceiling rate. Monthly figures are unweighted averages of Monday Board in cooperation with the Federal Deposit Insurance Corporation. quotations for the month. 2. Includes all fees, commissions, discounts, and "points" paid (by the 7. Average gross yields (before deduction of 38 basis points for mortgage borrower or the seller) to obtain a loan. servicing) on accepted bids in Federal National Mortgage Association's auctions 3. Average effective interest rates on loans closed, assuming prepayment at the of 4-month commitments to purchase home mortgages, assuming prepayment in end of 10 years. 12 years for 30-year mortgages. No adjustments are made for FNMA commitment 4. Average contract rates on new commitments for conventional first mort- fees or stock related requirements. Monthly figures are unweighted averages for gages, rounded to the nearest 5 basis points; from Department of Housing and auctions conducted within the month. Urban Development. 8. Includes some multifamily and nonprofit hospital loan commitments in 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing addition to 1- to 4-family loan commitments accepted in FNMA's free market Administration-insured first mortgages for immediate delivery in the private auction system, and through the FNMA-GNMA tandem plans. secondary market. Any gaps in data are due to periods of adjustment to changes in 9. Includes participation as well as whole loans. maximum permissible contract rates. 10. Includes conventional and government-underwritten loans. 6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities, assum- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate Debt A41 1.55 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1981 1982 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998800 11998811 11998822 Q3 Q4 Ql Q2 Q3 Q4 1 All holders 1,471,786 1,583,732 1,654,446'' 1,561,813 1,583,732 1,603,450 1,624,707 1,633,059' 1,654,446' 2 1- to 4-family 986,979 1,060,633 1,104,528' 1,047,799 1,060,633 1,071,462 1,082,971 1,089,504' 1,104,528' 3 Multifamily 137,134 141,442 148,218' 140,243 141,442 143,812 145,559 145,399' 148,218' 4 Commercial 255,655 279,930 294,641'' 273,765 279,930 284,261 290,693 291,740 294,641' 5 Farm 92,018 101,727 107,059' 100,006 101,727 103,915 105,484 106,416 107,059' 6 Major financial institutions 997,168 1,040,827 1,021,225 1,034,032 1,040,827 1,041,702 1,042,904 1,027,027 1,021,225 7 Commercial banks' 263,030 284,536 301,742 279,017 284,536 289,365 294,022 298,342 301,742 8 1- to 4-family 160,326 170,013 177,122 167,550 170,013 171,350 172,596 175,126 177,122 9 Multifamily 12,924 15,132 15,841 14,481 15,132 15,338 15,431 15,666 15,841 10 Commercial 81,081 91,026 100,269 88,588 91,026 94,256 97,522 99,050 100,269 11 Farm 8,699 8,365 8,510 8,398 8,365 8,421 8,473 8,500 8,510 12 Mutual savings banks 99,865 99,997 93.882 99,994 99,997 97,464 96,346 94,382 93,882 13 1- to 4-family 67,489 68,187 63,708 68,116 68,187 66,305 65,381 63,849 63,708 14 Multifamily 16,058 15,960 14,946 15,939 15,960 15,536 15,338 15,026 14,946 15 Commercial 16,278 15,810 15,200 15,909 15,810 15,594 15,598 15,479 15,200 16 Farm 40 40 28 30 40 29 29 28 28 17 Savings and loan associations 503,192 518,547 484,297 518,985 518,547 516,111 512,997 493,899 484,297 18 1- to 4-family 419,763 433,142 400,563 433,923 433,142 430,178 425,890 410,035 400,563 19 Multifamily 38,142 37,699 36,177 37,990 37,699 37,986 38,321 36,894 36,177 20 Commercial 45,287 47,706 47,557 47,072 47,706 47,947 48,786 46,970 47,557 21 Life insurance companies 131,081 137,747 141,304 136,036 137,747 138,762 139,539 140,404 141,304 22 1- to 4-family 17,943 17,201 16,975 17,376 17,201 17,086 16,451 16,865 16,975 23 Multifamily 19,514 19,283 19,107 19,441 19,283 19,199 18,982 18,967 19,107 24 Commercial 80,666 88,163 92,322 86,070 88,163 89,529 91,113 91,640 92,322 25 Farm 12,958 13,100 12,900 13,149 13,100 12,948 12,993 12,932 12,900 26 Federal and related agencies 114,300 126,112 139,291' 121,772 126,112 128,721 131,485 134,449' 139,291' 27 Government National Mortgage Association... 4,642 4,765 4,556 4,382 4,765 4,438 4,669 4,110 4,556 28 1- to 4-family 704 693 683 696 693 689 688 682 683 29 Multifamily 3,938 4,072 3,873 3,686 4,072 3,749 3,981 3,428 3,873 30 Farmers Home Administration 3,492 2,235 1,785 1,562 2,235 2,469 1,335 947 1,785' 31 1- to 4-family 916 914 783 500 914 715 491 302 783' 32 Multifamily 610 473 218 242 473 615 179 46 218' 33 Commercial 411 506 377 325 506 499 256 164 377' 34 Farm 1,555 342 407 495 342 640 409 435 407' 35 Federal Housing and Veterans Administration 5,640 5,999 5,947' 6,005 5,999 6,003 5,908 5,362' 5,947' 36 1- to 4-family 2,051 2,289 2,097' 2,240 2,289 2,266 2,218 2,130' 2,097' 37 Multifamily 3,589 3,710 3,850 3,765 3,710 3,737 3,690 3,232' 3,850 38 Federal National Mortgage Association 57,327 61,412 71,814 59,682 61,412 62,544 65,008 68,841 71,814 39 1- to 4-family 51,775 55,986 66,500 54,227 55,986 57,142 59,631 63,495 66,500 40 Multifamily 5,552 5,426 5,314 5,455 5,426 5,402 5,377 5,346 5,314 41 Federal Land Banks 38,131 46,446 50,433 44,708 46,446 47,947 49,270 49,983 50,433 42 1- to 4-family 2,099 2,788 3,077 2,605 2,788 2,874 2,954 3,029 3,077 43 Farm 36,032 43,658 47,356 42,103 43,658 45,073 46,316 46,954 47,356 44 Federal Home Loan Mortgage Corporation.... 5,068 5,255 4,756 5,433 5,255 5,320 5,295 5,206 4,756 45 1- to 4-family 3,873 4,018 3,494 4,166 4,018 4,075 4,042 3,944 3,494 46 Multifamily 1,195 1,237 1,262 1,267 1,237 1,245 1,253 1,262 1,262 47 Mortgage pools or trusts2 142,258 162,990 214,430' 158,140 162,990 172,292 183,647 198,365 214,430' 48 Government National Mortgage Association... 93,874 105,790 118,402' 103,750 105,790 108,592 111,459 114,776 118,402' 49 1- to 4-family 91,602 103,007 115,293' 101,068 103,007 105,701 108,487 111,728 115,293' 50 Multifamily 2,272 2,783 3,109 2,682 2,783 2,891 2,972 3,048 3,109 51 Federal Home Loan Mortgage Corporation.... 16,854 19,843R 41,278' 17,936 19,843' 23,960' 28,693' 35,121' 41,278' 52 1- to 4-family 13,471 16,605 46,903 14,401 16,605 21,781 27,193 35,686 46,903 53 Multifamily 3,383 3,955 8,825 3,535 3,955 4,964 6,056 7,568 8,825 54 Federal National Mortgage Association3 n.a. 717 14,450 n.a. 717 2,786 4,556 8,133 14,450 55 1- to 4-family n.a. 717 14,450 n.a. 717 2,786 4,556 8,133 14,450 56 Farmers Home Administration 31,530 36,640 40,300' 36,454 36,640 36,955 38,939 40,335 40,300' 57 1- to 4-family 16,683 18,378 20,005' 18,407 18,378 18,740 19,357 20,079 20,005' 58 Multifamily 2,612 3,426 4,344' 3,488 3,426 3,447 4,044 4,344 4,344' 59 Commercial 5,271 6,161 7,011' 6,040 6,161 6,351 6,762 7,056 7,011' 60 Farm 6,964 8,675 8,940' 8,519 8,675 8,417 8,776 8,856 8,940' 61 Individual and others4 218,060 253,808 279,500 247,869 253,803 260,735 266,671 273,218 279,500 62 1- to 4-family5 138,284 167,412 187,325 162,524 167,412 172,560 177,592 182,554 187,325 63 Multifamily 27,345 28,286 31,352 28,272 28,286 29,703 29,935 30,572 31,352 64 Commercial 26,661 30,558 31,905 29,761 30,558 30,085 30,656 31,381 31,905 65 Farm 25.770 27,547 28,918 27,312 27,547 28,387 28,488 28,711 28,918 1. Includes loans held by nondeposit trust companies but not bank trust NOTE. Based on data from various institutional and governmental sources, with departments. some quarters estimated in part by the Federal Reserve in conjunction with the 2. Outstanding principal balances of mortgages backing securities insured or Federal Home Loan Bank Board and the Department of Commerce. Separation of guaranteed by the agency indicated. nonfarm mortgage debt by type of property, if not reported directly, and 3. Outstanding balances on FNMA's issues of securities backed by pools of interpolations and extrapolations when required, are estimated mainly by the conventional mortgages held in trust. The program was implemented by FNMA in Federal Reserve. Multifamily debt refers to loans on structures of five or more October 1981. units. 4. Other holders include mortgage companies, real estate investment trusts, state and local credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and U.S. agencies for which amounts are small or for which separate data are not readily available. 5. Includes a new estimate of residential mortgage credit provided by individuals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • March 1983 1.56 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change Millions of dollars 1982 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11997799 11998800 11998811 June July Aug. Sept. Oct. Nov. Dec. Amounts outstanding (end of period) 1 Total 312,024 313,472 333,375 331,851 332,471 333,808 335,948 334,871 336,991 By major holder 2 Commercial banks .... 154,177 147,013 149,300 146,775 146,745 147,275 148,280 147,926 148,270 3 Finance companies.... 68,318 76,756 89,818 93,009 93,353 93,207 93,357 92,541 93,462 4 Credit unions 46,517 44,041 45,954 45,882 45,698 46,154 46,846 46,645 46,832 5 Retailers2 28,119 28,448 29,551 26,645 26,710 26,751 26,829 27,046 27,639 6 Savings and loans 8,424 9,911 11,598 12,312 12,520 12,833 13,051 13,457 13,672 7 Gasoline companies ... 3,729 4,468 4,403 4,398 4,600 4,714 4,669 4,322 4,141 8 Mutual savings banks.. 2,740 2,835 2,751 2,830 2,845 2,874 2,916 2,934 2,975 By major type of credit 1 9 0 Au C to o m m o m b e il r e c ial banks .. 1 6 1 7 6 , , 3 3 6 6 7 2 1 6 1 1 6 , , 5 8 3 3 6 8 1 5 2 9 6 , , 1 4 8 3 1 1 1 5 2 8 8 , , 1 41 4 5 0 1 5 2 8 8 , , 1 3 3 5 1 9 1 5 2 8 8 , , 2 2 2 8 2 1 1 5 2 8 9 , , 7 08 6 5 2 1 5 2 8 8 , , 7 6 9 1 6 9 1 5 2 8 9 , , 9 5 9 9 6 4 11 Indirect paper .... 38,338 35,233 35,097 34,903 34,979 34,996 35,449 35,490 35,686 12 Direct loans 29,029 26,303 24,084 23,237 23,152 23,226 23,313 23,306 23,310 13 Credit unions 22,244 21,060 21,975 21,940 21,852 22,071 22,402 22,306 22,395 14 Finance companies .. 26,751 34,242 45,275 48,335 48,376 47,988 47,921 47,518 48,203 1 1 5 6 Re C v o o m lvi m n e g r cial banks .. 5 2 6 9 , , 9 8 3 6 7 2 5 29 8 , , 7 3 6 5 5 2 6 3 3 3 , , 0 1 4 1 9 0 5 31 9 , , 9 3 7 0 4 2 5 32 9 , , 2 8 0 2 5 4 6 3 0 2 , , 4 69 7 1 5 6 3 0 3 , , 9 1 3 0 2 4 6 3 0 3, , 0 8 8 1 5 1 6 33 1 , , 3 5 7 0 1 0 17 Retailers 23,346 24,119 25,536 22,930 23,019 23,070 23,159 23,404 23,988 18 Gasoline companies . 3,729 4,468 4,403 4,398 4,600 4,714 4.669 4,322 4,141 2 1 0 9 M C ob o i m le m h e o r m cia e l banks .. 1 1 0 6 , , 6 8 4 3 7 8 1 10 7 , , 3 3 7 2 1 2 1 1 8 0 , , 4 3 8 0 6 0 1 9 8 , , 9 5 2 4 4 3 1 9 8 , , 8 6 5 0 7 1 1 9 8 , , 7 74 9 1 0 1 9 8 , , 7 7 2 7 3 8 1 9 8 , , 6 8 3 1 1 4 1 9 8 , , 5 8 7 2 8 1 21 Finance companies .. 3,390 3,745 4,494 4,731 4,801 4,916 4,953 4,971 4,970 22 Savings and loans ... 2,307 2,737 3,203 3,400 3,458 3,544 3,604 3,716 3,775 23 Credit unions 494 469 489 486 491 498 496 498 24 Other 121,887 120,960 125,409 125,591 125,687 126,311 127,153 126,627 127,076 25 Commercial banks .. 46,301 45,341 46,709 46,737 46,552 46,572 46,691 46,414 46,325 26 Finance companies .. 38,177 38,769 40,049 39,943 40,176 40,303 40,483 40,052 40,289 27 Credit unions 23,779 22,512 23,490 23,454 23,360 23,592 23,946 23,844 23,939 28 Retailers 4,773 4,329 4,015 3,715 3,691 3,681 3.670 3,642 3,651 29 Savings and loans ... 6,117 7,174 8,395 8,912 9,063 9,289 9,447 9,741 9,897 30 Mutual savings banks 2,740 2,835 2,751 2,830 2,845 2,874 2,916 2,934 2,975 Net change (during period)3 31 Total 38,381 1,448 19,894 1,349 570 66 1,092 -324 2,523 2,192 By major holder 32 Commercial banks 18,161 -7,163 2,284 -100 -66 -252 481 -49 904 1,099 33 Finance companies.... 14,020 8,438 13,062 874 195 -142 115 -393 1,133 845 34 Credit unions 2,185 -2,475 1,913 38 -69 179 346 -32 418 169 35 Retailers2 2,132 329 1,103 304 297 -109 60 -88 -98 -35 36 Savings and loans 1,327 1,485 1,682 187 196 268 181 328 194 171 37 Gasoline companies ... 509 739 -65 38 3 65 -115 -115 -39 -93 38 Mutual savings banks.. 47 95 -85 8 14 57 24 25 11 36 By major type of credit 39 Automobile 14,715 477 9,595 655 61 -402 505 -78 1,816 1,303 40 Commercial banks .. 6,857 -5,830 -2,355 -240 101 -146 435 52 600 479 41 Indirect paper .... 4,488 -3,104 -136 -52 225 -129 332 72 496 463 42 Direct loans 2,369 -2,726 -2,219 -188 -124 -17 103 -20 104 16 43 Credit unions 1,044 -1,184 914 28 -26 65 159 -12 232 62 44 Finance companies .. 6,814 7,491 11,033 867 -14 -321 -89 -118 984 762 45 Revolving 8,628 1,415 4,697 507 612 143 210 108 107 532 46 Commercial banks .. 5,521 -97 3,345 219 266 162 243 246 202 680 47 Retailers 2,598 773 1,417 250 343 -84 82 -23 -56 -55 48 Gasoline companies . 509 739 -65 38 3 65 -115 -115 -39 -93 49 Mobile home 1,603 483 1,161 67 63 141 10 -4 40 -68 50 Commercial banks .. 1,102 -276 -74 -58 -57 -62 -67 -97 -19 -90 51 Finance companies .. 238 355 749 64 73 108 20 -7 3 -25 52 Savings and loans ... 240 430 466 60 47 94 54 100 53 44 53 Credit unions 23 -25 20 1 0 1 3 0 3 3 54 Other 13,435 -927 4,441 120 -166 184 367 -350 560 425 55 Commercial banks .. 4,681 -960 1,368 -21 -376 -206 -130 -250 121 30 56 Finance companies .. 6,986 592 1,280 -57 136 71 184 -268 146 108 57 Credit unions 1,118 -1,266 975 9 -43 113 184 -20 183 104 58 Retailers -466 -444 -314 54 -46 -25 -22 -65 -42 20 59 Savings and loans ... 1,087 1,056 1,217 127 149 174 127 228 141 127 60 Mutual savings banks 47 95 -85 8 14 57 24 25 11 36 1. The Board's series cover most short- and intermediate-term credit extended 3. Net change equals extensions minus liquidations (repayments, charge-offs to individuals through regular business channels, usually to finance the purchase and other credit); figures for all months are seasonally adjusted. of consumer goods and services or to refinance debts incurred for such purposes, and scheduled to be repaid (or with the option of repayment) in two or more NOTE: Total consumer noninstallment credit outstanding—credit scheduled to installments. be repaid in a lump sum, including single-payment loans, charge accounts, and 2. Includes auto dealers and excludes 30-day charge credit held by travel and service credit—amounted to, not seasonally adjusted, $71.3 billion at the end of entertainment companies. 1979, $74.8 billion at the end of 1980, and $80.2 billion at the end of 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Debt A43 1.57 CONSUMER INSTALLMENT CREDIT Extensions and Liquidations Millions of dollars; monthly data are seasonally adjusted. 1982 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11997799 11998800 11998811 June July Aug. Sept. Oct. Nov. Dec. Extensions 1 Total 324,777 306,076 336,341 29,737 27,514 27,579 28,268 28,062 31,610 30,462 By major holder 2 Commercial banks 154,733 134,960 146,186 13,460 12,485 12,499 12,750 13,322 14,616 13,992 3 Finance companies 61,518 60,801 66,344 5,700 4,607 4,685 4,894 4,427 6,231 5,752 4 Credit unions 34,926 29,594 35,444 2,887 2,711 2,904 3,092 2,897 3,438 3,315 5 Retailers' 47,676 49,942 53,430 4,762 4,785 4,3% 4,684 4,431 4,383 4,518 6 Savings and loans 5,901 6,621 8,142 785 803 863 786 %1 884 871 7 Gasoline companies 18,005 22,253 24,902 1,969 1,944 2,021 1,876 1,835 1,867 1,799 8 Mutual savings banks 2,018 1,905 1,893 174 179 211 186 189 191 215 By major type of credit 9 Automobile 93,901 83,454 94,404 8,182 7,332 7,112 7,546 7,970 10,329 9,618 10 Commercial banks 53,554 41,109 42,792 3,404 3,687 3,454 3,702 4,2% 4,7% 4,472 11 Indirect paper 29,623 22,558 24,941 2,036 2,324 1,957 2,077 2,785 3,016 2,744 12 Direct loans 23,931 18,551 17,851 1,368 1,363 1,497 1,625 1,511 1,780 1,728 13 Credit unions 17,397 15,294 18,084 1,497 1,389 1,499 1,579 1,514 1,786 1,743 14 Finance companies 22,950 27,051 33,527 3,281 2,256 2,159 2,265 2,160 3,747 3,403 15 Revolving 120,174 128,068 140,135 13,361 12,551 12,497 12,464 12,340 12,489 12,336 16 Commercial banks 61,048 61,593 67,370 7,141 6,237 6,512 6,336 6,455 6,638 6,473 17 Retailers 41,121 44,222 47,863 4,251 4,370 3,964 4,252 4,050 3,984 4,064 18 Gasoline companies 18,055 22,253 24,902 1,969 1,944 2,021 1,876 1,835 1,867 1,799 19 Mobile home 6,471 5,093 6,028 459 441 581 452 476 484 455 20 Commercial banks 4,542 2,937 3,106 180 173 194 191 174 237 1% 21 Finance companies 797 898 1,313 129 133 193 105 81 84 84 22 Savings and loans 948 1,146 1,432 137 123 181 140 207 147 157 23 Credit unions 184 113 176 13 12 13 16 14 16 18 24 Other 104,231 89,461 95,774 7,735 7,190 7,389 7,806 7,276 8,308 8,053 25 Commercial banks 35,589 29,321 32,918 2,735 2,388 2,339 2,521 2,397 2,945 2,851 26 Finance companies 37,771 32,852 31,504 2,290 2,218 2,333 2,524 2,186 2,400 2,265 27 Credit unions 17,345 14,187 17,182 1,377 1,310 1,392 1,497 1,369 1,636 1,554 28 Retailers 6,555 5,720 5,567 511 415 432 432 381 399 454 29 Savings and loans 4,953 5,476 6,710 648 680 682 646 754 737 714 30 Mutual savings banks 2,018 1,905 1,893 174 179 211 186 189 191 215 Liquidations 31 Total 286,396 304,628 316,447 28,388 26,944 27,513 27,176 28,386 29,087 28,270 By major holder 32 Commercial banks 136,572 142,123 143,902 13,560 12,551 12,75) 12,269 13,371 13,712 12,893 33 Finance companies 47,498 52,363 53,282 4,826 4,412 4,827 4,779 4,820 5,098 4,907 34 Credit unions 32,741 32,069 33,531 2,849 2,780 2,725 2,746 2,929 3,020 3,146 35 Retailers1 45,544 49,613 52,327 4,458 4,488 4,505 4,624 4,519 4,481 4,553 36 Savings and loans 4,574 5,136 6,640 598 607 595 605 633 690 700 37 Gasoline companies 17,496 21,514 24,967 1,931 1,941 1,956 1,991 1,950 1,906 1,892 38 Mutual savings banks 1,971 1,810 1,978 166 165 154 162 164 180 179 By major type of credit 39 Automobile 79,186 82,977 84,809 7,527 7,271 7,514 7,041 8,048 8,513 8,315 40 Commercial banks 46,697 46,939 45,147 3,644 3,586 3,600 3,267 4,244 4,1% 3,993 41 Indirect paper 25,135 25,662 25,077 2,088 2,099 2,086 1,745 2,713 2,520 2,281 42 Direct loans 21,562 21,277 20,070 1,556 1,487 1,514 1,522 1,531 1,676 1,712 43 Credit unions 16,353 16,478 17,169 1,469 1,415 1,434 1,420 1,526 1,554 1,681 44 Finance companies 16,136 19,560 22,494 2,414 2,270 2,480 2,354 2,278 2,763 2,641 45 Revolving 111,546 126,653 135,438 12,854 11,939 12,354 12,254 12,232 12,382 11,804 46 Commercial banks 55,527 61,690 64,025 6,922 5,971 6,350 6,093 6,209 6,436 5,793 47 Retailers 38,523 43,449 46,446 4,001 4,027 4,048 4,170 4,073 4,040 4,119 48 Gasoline companies 17,496 21,514 24,967 1,931 1,941 1,956 1,991 1,950 1,906 1,892 49 Mobile home 4,868 4,610 4,867 392 378 440 442 480 444 523 50 Commercial banks 3,440 3,213 3,180 238 230 256 258 271 256 286 51 Finance companies 559 543 564 65 60 85 85 88 81 109 52 Savings and loans 708 716 966 77 76 87 86 107 94 113 53 Credit unions 161 138 156 12 12 12 13 14 13 15 54 Other 90,796 90,388 91,333 7,615 7,356 7,205 7,439 7,626 7,748 7,628 55 Commercial banks 30,908 30,281 31,550 2,756 2,764 2,545 2,651 2,647 2,824 2,821 56 Finance companies 30,803 32,260 30,224 2,347 2,082 2,262 2,340 2,454 2,254 2,157 57 Credit unions 16,227 15,453 16,207 1,368 1,353 1,279 1,313 1,389 1,453 1,450 58 Retailers 7,021 6,164 5,881 457 461 457 454 446 441 434 59 Savings and loans 3,866 4,420 5,493 521 531 508 519 526 596 587 60 Mutual savings banks 1,971 1,810 1,978 166 165 154 162 164 180 179 1. Includes auto dealers and excludes 30-day charge credit held by travel and entertainment companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • March 1983 1.58 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1980 1981 1982 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11997777 11997788 11997799 11998800 11998811 11998822 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 243.4 317.7 368.6 388.8 355.0 391.1 384.4 325.1 384.9 402.7 379.6 365.1 By sector and instrument 2 U.S. government 69.0 56.8 53.7 37.4 79.2 87.4 46.1 63.3 95.1 81.9 92.9 99.3 3 Treasury securities 69.1 57.6 55.1 38.8 79.8 87.8 46.6 63.9 95.7 82.4 93.2 100.6 4 Agency issues and mortgages -.1 -.9 -1.4 -1.4 -.6 -.5 -.5 -.6 -.6 -.5 -.4 -1.4 5 Private domestic nonfinancial sectors 174.3 260.9 314.9 351.5 275.8 303.7 338.3 261.9 289.7 320.8 286.7 265.8 6 Debt capital instruments 123.6 169.8 198.7 216.0 204.1 175.0 213.1 203.8 204.4 196.5 153.5 157.5 7 Tax-exempt obligations 15.7 21.9 28.4 29.8 35.9 32.9 32.8 30.7 41.0 35.1 30.6 53.1 8 Corporate bonds 22.8 21.0 20.1 22.5 33.2 23.9 22.6 37.3 29.0 24.7 23.0 13.4 Mortgages y Home mortgages 63.9 94.3 112.1 120.1 96.7 78.6 113.9 96.5 96.9 95.2 62.0 54.8 10 Multifamily residential 3.9 7.1 9.2 7.8 8.8 4.6 6.9 8.1 9.5 5.1 4.1 8.5 n Commercial 11.6 18.4 21.7 23.9 20.2 25.3 25.4 20.3 20.1 27.4 23.2 22.2 12 Farm 5.7 7.1 7.2 11.8 9.3 9.8 11.5 10.9 7.8 9.0 10.5 5.4 13 Other debt instruments 50.7 91.1 116.2 135.5 71.7 128.8 125.2 58.1 85.4 124.3 133.2 108.3 14 Consumer credit 25.4 40.2 48.8 45.4 4.9 25.3 41.0 -3.3 13.0 29.4 21.2 14.4 15 Bank loans n.e.c 4.4 26.7 37.1 49.2 35.4 51.1 39.6 18.0 52.7 47.7 54.6 77.1 16 Open market paper 4.0 2.9 5.2 11.1 6.6 19.2 17.4 20.3 -7.1 10.7 27.6 4.4 17 Other 16.9 21.3 25.1 29.7 24.9 33.1 27.2 23.0 26.7 36.5 29.8 12.4 18 By borrowing sector 174.3 260.9 314.9 351.5 275.8 303.7 338.3 261.9 289.7 320.8 286.7 265.8 19 State and local governments 15.2 15.4 19.1 20.2 27.3 22.3 22.5 21.8 32.8 25.1 19.5 41.5 20 Households 89.5 137.3 169.3 176.5 117.5 120.4 165.8 115.2 119.8 141.0 99.9 83.6 21 Farm 10.2 12.3 14.6 21.4 14.4 16.4 22.7 15.7 13.0 19.9 12.8 8.4 22 Nonfarm noncorporate 15.4 28.3 32.4 34.4 33.8 40.5 37.0 27.5 40.2 41.8 39.3 34.9 23 Corporate 44.0 67.6 79.4 99.0 82.8 104.1 90.3 81.7 83.9 93.0 115.2 97.4 24 Foreign net borrowing in U.S 19.3 13.5 33.8 20.2 27.2 27.3 26.6 29.0 25.3 34.0 20.6 17.4 25 Bonds 8.6 5.1 4.2 3.9 .8 5.5 4.9 2.0 -.4 3.3 7.6 2.2 26 Bank loans n.e.c 5.6 3.1 19.1 2.3 11.5 3.7 2.6 5.9 17.2 5.0 2.3 -.4 27 Open market paper 1.9 2.4 6.6 11.2 10.1 13.9 16.3 15.7 4.5 20.6 7.1 12.5 28 U.S. government loans 3.3 3.0 3.9 2.9 4.7 4.3 2.8 5.4 4.0 5.0 3.6 3.2 29 Total domestic plus foreign 262.7 331.2 402.3 409.1 382.2 418.4 411.0 354.2 410.2 436.7 400.2 382.5 Financial sectors 30 Total net borrowing by financial sectors 22.7 48.8 75.0 80.7 61.3 80.7 76.1 57.6 65.0 85.8 75.5 93.3 By instrument 31 U.S. government related 14.3 21.9 36.7 47.3 43.6 45.1 50.8 47.3 39.8 42.5 47.8 59.3 32 Sponsored credit agency securities 2.5 7.0 23.1 24.3 24.4 30.1 25.8 27.1 21.7 26.9 33.3 21.4 33 Mortgage pool securities 12.2 16.1 13.6 23.1 19.2 15.0 25.0 20.2 18.1 15.6 14.5 37.9 34 -.4 -1.2 35 Private financial sectors 8.4 26.9 38.3 33.4 17.7 35.6 25.3 10.3 25.2 43.4 27.8 34.0 36 Corporate bonds 9.8 10.1 7.5 7.8 7.1 -.8 7.7 9.9 4.4 -2.1 .4 -3.4 37 Mortgages 2.1 3.1 .9 -1.2 -.9 -2.9 -2.9 -5.3 3.5 -2.3 -3.5 1.9 38 Bank loans n.e.c -3.7 -.3 2.8 -.4 -.4 2.2 .5 .1 -.9 3.7 .7 5.9 39 Open market paper 2.2 9.6 14.6 18.0 4.8 20.9 10.8 -.1 9.7 24.8 17.0 16.0 40 Loans from Federal Home Loan Banks -2.0 4.3 12.5 9.2 7.1 16.2 9.2 5.8 8.5 19.3 13.2 13.8 By sector 41 Sponsored credit agencies 2.1 5.8 23.1 24.3 24.4 30.1 25.8 27.1 21.7 26.9 33.3 21.4 42 Mortgage pools 12.2 16.1 13.6 23.1 19.2 15.0 25.0 20.2 18.1 15.6 14.5 37.9 43 Private financial sectors 8.2 30.3 40.8 36.6 24.9 44.1 27.9 17.7 32.0 53.0 35.3 50.7 44 Commercial banks 2.3 1.1 1.3 1.6 .5 .4 1.8 .8 .3 .2 .5 .6 45 Bank affiliates 5.4 2.0 7.2 6.5 6.9 8.3 4.9 5.8 8.0 6.9 9.7 9.7 46 Savings and loan associations .1 9.9 14.3 11.4 6.6 13.1 10.2 .1 13.2 19.2 6.9 16.6 47 Finance companies 4.3 16.9 18.1 16.6 6.3 14.1 11.0 6.0 6.5 17.3 11.0 7.6 48 REITs -1.9 -2.5 -1.4 -1.3 -2.2 .2 -1.1 -2.0 -2.5 .2 .2 .1 All sectors 49 Total net borrowing 285.4 379.9 477.4 489.7 443.5 499.1 487.1 411.8 475.2 522.5 475.7 475.8 50 U.S. government securities 83.8 79.9 90.5 84.8 122.9 132.6 97.0 110.7 135.1 124.5 140.7 158.7 51 State and local obligations 15.7 21.9 28.4 29.8 35.9 32.9 32.8 30.7 41.0 35.1 30.6 53.1 52 Corporate and foreign bonds 41.2 36.1 31.8 34.2 41.1 28.5 35.2 49.3 33.0 26.0 30.9 12.2 53 Mortgages 87.1 129.9 151.0 162.4 134.0 115.2 154.7 130.4 137.7 134.3 96.2 92.7 54 Consumer credit 25.4 40.2 48.8 45.4 4.9 25.3 41.0 -3.3 13.0 29.4 21.2 14.4 55 Bank loans n.e.c 6.2 29.5 59.0 51.0 46.5 57.0 42.7 24.0 69.0 56.4 57.6 82.5 56 Open market paper 8.1 15.0 26.4 40.3 21.6 54.0 44.5 35.9 7.2 56.2 51.8 32.8 57 Other loans 17.8 27.4 41.5 41.8 36.6 53.7 39.2 34.1 39.2 60.7 46.6 29.4 External corporate equity funds raised in U.S. 58 Total new share issues 10.6 6.5 1.9 -3.8 22.1 -2.9 -1.7 16.3 27.9 11.2 -17.0 16.3 59 Mutual funds -2.4 .9 -.1 .1 5.0 7.7 -.8 5.5 4.5 8.9 6.5 14.5 60 All other 13.1 5.6 1.9 -3.9 17.1 -10.6 -.9 10.8 23.4 2.3 -23.5 1.8 61 Nonfinancial corporations 10.5 2.7 -.1 -7.8 12.9 -11.5 -6.1 6.9 18.8 .9 -23.8 -.1 62 Financial corporations 2.2 2.5 2.5 3.2 2.1 .9 3.4 1.9 2.3 .8 1.0 2.2 63 Foreign shares purchased in U.S .3 .4 -.5 .8 2.1 * 1.7 1.9 2.2 .7 -.7 -.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.59 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates 1980 1981 1982 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997777 11997788 11997799 11998800 11998811 11998822 HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 243.4 317.7 368.6 388.8 355.0 391.1 384.4 325.1 384.9 402.7 379.6 365.1 By public agencies and foreign 2 Total net advances 49.8 79.2 101.9 74.6 95.8 95.9 101.0 104.6 87.0 98.7 9933..22 92.1 ^ 23.1 34.9 36.1 -6.3 15.7 17.2 16.6 20.5 10.9 15.9 18.5 4 Residential mortgages 12.3 20.0 25.7 35.8 31.7 23.4 36.7 34.9 28.5 21.4 25.5 47.4 5 FHLB advances to savings and loans -2.0 4.3 12.5 9.2 7.1 16.2 9.2 5.8 8.5 19.3 13.2 13.8 6 Other loans and securities 16.4 20.1 27.6 35.9 41.3 39.1 38.6 43.4 39.1 42.1 36.0 30.9 Total advanced, by sector 7 U.S. government 7.9 10.0 17.1 19.0 23.7 24.2 18.7 24.6 22.8 27.1 21.2 14.0 8 Sponsored credit agencies 16.8 22.4 39.9 52.4 44.4 46.0 56.9 45.2 43.7 44.3 47.7 60.5 9 Monetary authorities 9.8 7.1 7.0 7.7 4.5 9.2 14.0 14.9 -5.9 -3.7 22.1 -6.3 10 Foreign 15.2 39.6 38.0 -4.6 23.2 16.6 11.3 19.9 26.5 30.9 2.2 24.0 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies & mortgage pools 14.3 21.9 36.7 47.3 43.6 45.1 50.8 47.3 39.8 42.5 47.8 59.3 12 Foreign 19.3 13.5 33.8 20.2 27.2 27.3 26.6 29.0 25.3 34.0 20.6 17.4 Private domestic funds advanced 13 Total net advances 227.1 273.9 337.1 381.8 329.9 367.6 360.8 296.9 362.9 380.5 354.7 349.8 14 U.S. government securities 60.7 45.1 54.3 91.1 107.2 115.4 80.5 90.2 124.2 108.5 122.3 158.7 15 State and local obligations 15.7 21.9 28.4 29.8 35.9 32.9 32.8 30.7 41.0 35.1 30.6 53.1 16 Corporate and foreign bonds 30.5 22.2 22.4 23.7 25.8 20.6 24.1 31.6 20.1 18.6 22.7 * 17 Residential mortgages 55.4 81.4 95.5 92.0 73.7 59.7 84.0 69.6 77.8 78.8 40.5 15.8 18 Other mortgages and loans 62.9 107.6 149.1 154.3 94.4 155.3 148.7 80.6 108.3 158.7 151.8 135.9 19 LESS: Federal Home Loan Bank advances -2.0 4.3 12.5 9.2 7.1 16.2 9.2 5.8 8.5 19.3 13.2 13.8 Private financial intermediation 20 Credit market funds advanced by private financial institutions 190.9 261.7 302.9 292.2 257.9 301.3 260.7 245.4 270.4 326.3 276.3 277.8 21 Commercial banking 59.6 87.6 128.7 121.1 99.7 103.5 108.1 64.7 134.8 107.8 99.2 120.9 22 Savings institutions 70.2 81.6 73.6 55.5 54.1 24.6 48.9 34.9 73.2 43.9 5.3 29.7 23 Insurance and pension funds 49.7 69.0 75.0 66.4 74.4 75.8 60.1 84.3 64.4 75.8 75.8 87.6 24 Other finance 11.4 23.5 25.6 49.2 29.8 97.4 43.6 61.5 -1.9 98.8 95.9 39.5 75 Sources of funds 190.9 261.7 302.9 292.2 257.9 301.3 260.7 245.4 270.4 326.3 276.3 277.8 26 Private domestic deposits and RP's 124.4 138.9 141.1 142.5 167.8 211.2 145.9 162.5 173.1 212.0 210.3 158.4 27 Credit market borrowing 8.4 26.9 38.3 33.4 17.7 35.6 25.3 10.3 25.2 43.4 27.8 34.0 28 Other sources 58.0 96.0 123.5 116.4 72.4 54.6 89.5 72.7 72.1 70.9 38.2 85.4 29 Foreign funds -4.7 1.2 6.3 25.6 -23.0 -8.8 3.4 -20.0 -26.0 -.7 -16.8 -18.2 30 Treasury balances -.1 4.3 6.8 .4 -2.6 -1.1 -.7 -6.1 1.0 6.0 -8.2 -4.9 31 Insurance and pension reserves 34.3 51.4 62.2 49.1 65.4 70.8 43.8 70.3 60.5 66.0 75.6 77.7 32 Other, net 28.5 39.1 48.3 41.3 32.6 -6.4 43.0 28.6 36.6 -.4 -12.3 30.7 Private domestic nonfinancial investors 33 Direct lending in credit markets 44.7 39.0 72.5 122.9 89.7 101.9 125.4 61.7 117.7 97.5 106.2 106.0 34 U.S. government securities 15.9 24.6 36.3 61.4 38.3 50.4 54.9 23.3 53.3 43.0 57.7 58.8 35 State and local obligations 3.3 -.8 3.6 9.4 12.6 20.3 11.5 6.2 18.9 22.8 17.8 41.8 36 Corporate and foreign bonds 11.8 -5.1 -2.9 10.2 9.3 -7.9 16.9 7.8 10.8 -9.2 -6.6 -26.4 37 Open-market paper 1.9 9.6 15.6 12.1 -3.4 3.5 14.6 -8.1 1.4 -1.4 8.4 7.8 38 Other 11.8 10.7 19.9 29.8 32.9 35.6 27.6 32.5 33.3 42.3 29.0 24.1 39 Deposits and currency 133.4 148.5 152.3 151.9 179.2 221.0 149.9 172.4 186.1 218.6 223.4 158.4 40 Currency 7.3 8.3 9.3 7.9 10.3 9.5 6.3 9.3 11.3 5.8 13.2 2.1 41 Checkable deposits 10.4 17.2 16.3 19.2 4.2 18.3 22.5 -2.5 11.0 26.5 10.1 8.6 42 Small time and savings accounts 123.7 93.5 63.7 61.0 79.5 46.6 50.7 73.4 85.7 26.9 66.3 79.3 43 Money market fund shares * .2 6.9 34.4 29.2 107.5 38.6 61.9 -3.4 104.1 110.8 39.4 44 Large time deposits 12.0 25.8 46.6 21.2 48.3 36.3 39.4 24.4 72.1 46.8 25.7 30.1 45 Security RPs 2.3 2.2 7.5 6.6 6.5 2.5 -5.3 5.3 7.8 7.7 -2.6 1.0 46 Foreign deposits 1.7 1.3 2.0 1.5 1.1 .3 -2.3 .6 1.7 .8 -.2 -2.0 47 Total of credit market instruments, deposits and currency 178.1 187.5 224.9 274.8 269.0 322.8 275.3 234.1 303.8 316.1 329.6 264.4 48 Public holdings as percent of total 19.0 23.9 25.3 18.2 25.1 22.9 24.6 29.5 21.2 22.6 23.3 24.1 49 Private financial intermediation (in percent) 84.0 95.6 89.9 76.5 78.2 82.0 72.3 82.7 74.5 85.8 77.9 79.4 50 Total foreign funds 10.5 40.8 44.3 21.0 .2 7.8 14.8 * .5 30.3 -14.6 5.8 MEMO: Corporate equities not included above 51 Total net issues 10.6 6.5 1.9 -3.8 22.1 -2.9 -1.7 16.3 27.9 11.2 -17.0 16.3 52 Mutual fund shares -2.4 .9 -.1 .1 5.0 7.7 -.8 5.5 4.5 8.9 6.5 14.5 53 Other equities 13.1 5.6 1.9 -3.9 17.1 -10.6 -.9 10.8 23.4 2.3 -23.5 1.8 54 Acquisitions by financial institutions 12.5 7.4 4.6 10.4 14.6 22.9 14.2 8.6 20.7 25.3 20.5 20.8 55 Other net purchases -1.9 -.8 -2.7 -14.2 7.5 -25.8 -15.9 7.7 7.2 -14.1 -37.5 -4.4 NOTES BY LINE NUMBER. 32. Mainly retained earnings and net miscellaneous liabilities. 1. Line 1 of table 1.58. 33. Line 12 less line 20 plus line 27. 2. Sum of lines 3-6 or 7-10. 34-38. Lines 14-18 less amounts acquired by private finance. Line 38 includes 6. Includes farm and commercial mortgages. mortgages. 11. Credit market funds raised by federally sponsored credit agencies, and net 40. Mainly an offset to line 9. issues of federally related mortgage pool securities. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also 48. Line 2/line 1. sum of lines 28, 33, and 39 less lines 40 and 46. 49. Line 20/line 13. 18. Includes farm and commercial mortgages. 50. Sum of lines 10 and 29. 26. Line 39 less lines 40 and 46. 51. 53. Includes issues by financial institutions. 27. Excludes equity issues and investment company shares. Includes line 19. 29. Foreign deposits at commercial banks, bank borrowinjgs from foreign NOTE. Full statements for sectors and transaction types quarterly, and annually branches, and liabilities of foreign banking agencies to foreign affiliates. for flows and for amounts outstanding, may be obtained from Flow of Funds 30. Demand deposits at commercial banks. Section, Division of Research and Statistics, Board of Governors of the Federal 31. Excludes net investment of these reserves in corporate equities. Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • March 1983 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1982 1980 July Aug. Sept. Oct. 1 Industrial production1 Market groupings 2 Products, total 146.7 150.6 141.8 142.1 142.6 142.0 140.8 139.3 139.0 140.0 3 Final, total 145.3 149.5 141.5 142.1 142.5 141.2 140.0 138.7 138.3 139.5 4 Consumer goods 145.4 147.9 142.6 144.8 145.8 144.1 143.4 142.2 141.3 142.1 5 Equipment 145.2 151.5 139.8 138.4 138.0 137.3 135.2 134.0 134.2 135.9 6 Intermediate 151.9 154.4 143.3 141.9 142.8 144.7 143.7 141.6 141.8 141.9 7 Materials 147.6 151.6 133.7 133.5 133.0 132.8 132.0 130.0 128.4 127.8 Industry groupings 8 Manufacturing 146.7 150.4 137.6 137.7 138.1 138.0 Capacity utilization (percent)12 9 Manufacturing 79.1 78.5 69.8 70.0 70.0 69.8 69.2 68.0 67.4 67.5 10 Industrial materials industries 79.9 68.9 68.5 68.2 67.7 66.6 65.7 65.2 11 Construction contracts (1977 = 100)3 .. 107.0 111.0 111.0 98.0 112.0 117.0 105.0 122.0 131.0 12 Nonagricultural employment, total4.... 137.4 138.5 136.2 136.5 136.1 135.7 135.7 135.1 134.9 134.6 13 Goods-producing, total 110.1 109.3 102.5 102.9 102.3 101.5 101.0 99.7 99.0 98.2 14 Manufacturing, total 104.3 103.7 96.9 97.3 96.7 96.0 95.5 94.2 93.5 93.2 15 Manufacturing, production-worker 99.3 98.0 89.3 89.8 89.2 88.4 87.8 86.2 85.3 85.1 16 Service-producing 152.4 154.4 154.7 154.9 154.6 154.5 154.7 154.4 154.5 154.3 17 Personal income, total 342.9 383.5 408.0 407.3 410.8 411.4 412.3 414.5 417.7 418.7 18 Wages and salary disbursements 317.6 349.9 365.5 366.0 367.6 367.8 367.7 368.0 368.2 369.8 19 Manufacturing 264.3 288.1 285.3 288.4 287.7 286.4 284.5 281.3 280.0 279.5 20 Disposable personal income5 332.9 370.3 396.7 393.4 400.6 400.9 402.0 404.1 407.4 408.0 21 Retail sales® 303.8 330.6 326.0 338.6 341.9 340.3 343.5 347.4 353.4 353.3 Prices7 22 Consumer 246.8 272.4 289.1 290.6 292.2 292.8 293.3 294.1 293.6 292.4 23 Producer finished goods 247.0 269.8 280.6 279.9 281.7 282.3 281.2 284.1 284.9 285.1 1. The industrial production and capacity utilization series have been revised 6. Based on Bureau of Census data published in Survey of Current Business. back to January 1979. 7. Data without seasonal adjustment, as published in Monthly Labor Review. 2. Ratios of indexes of production to indexes of capacity. Based on data from Seasonally adjusted data for changes in the price indexes may be obtained from Federal Reserve, McGraw-Hill Economics Department, and Department of the Bureau of Labor Statistics, U.S. Department of Labor. Commerce. 3. Index of dollar value of total construction contracts, including residential, NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6, nonresidential and heavy engineering, from McGraw-Hill Information Systems and indexes for series mentioned in notes 3 and 7 may also be found in the Survey Company, F. W. Dodge Division. of Current Business. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Figures for industrial production for the last two months are preliminary and Series covers employees only, excluding personnel in the Armed Forces. estimated, respectively. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). 2.11 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1982 1982 1982 SSeerriieess Ql 02 Q3 Q4' Ql Q2 Q3 Q4 Ql Q2 Q3 Q4' Output (1967 = 100) Capacity (percent of 1967 output) Utilization rate (percent) 1 Manufacturing 139.8 138.1 137.7 134.5 195.2 196.4 197.7 198.9 71.6 70.3 69.7 67.6 2 Primary processing 137.1 132.3 132.4 129.3 198.6 199.5 200.4 201.3 69.1 66.3 66.1 64.2 3 Advanced processing 141.6 141.2 140.5 137.3 193.5 194.9 196.2 197.6 73.2 72.5 71.6 69.5 4 Materials 138.7 134.7 132.6 128.7 192.6 193.7 194.6 195.5 72.0 69.6 68.1 65.8 5 Durable goods 130.9 127.1 124.7 117.0 196.4 197.3 198.3 199.2 66.7 64.4 62.9 58.8 6 Metal materials 90.9 77.0 73.0 66.3 142.3 142.4 142.3 142.4 63.9 54.1 51.3 46.6 7 Nondurable goods 161.0 156.8 155.1 157.1 214.6 216.1 217.4 218.9 75.0 72.6 71.3 71.8 8 Textile, paper, and chemical 164.5 160.5 158.4 161.0 225.6 227.3 228.8 230.5 72.9 70.6 69.2 69.9 9 Textile 101.3 101.8 102.0 103.0 142.1 142.4 142.8 143.1 71.3 71.5 71.5 72.0 10 Paper 146.1 142.0 145.9 147.8 163.8 164.6 165.4 166.3 89.2 86.3 88.2 88.9 11 Chemical 200.0 194.0 188.5 192.1 287.3 289.6 291.9 294.3 69.6 67.0 64.6 65.3 12 Energy materials 129.8 125.5 123.8 121.7 156.5 157.0 157.6 158.2 82.9 79.9 78.5 76.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.11 Continued Previous cycle1 Latest cycle2 1982 1982 1983 SSeerriieess High Low High Low Feb. June July Aug. Sept. Oct/ Nov/ Dec/ Jan. Feb. Capacity utilization rate (percent) 13 Manufacturing 88.0 69.0 87.2 74.9 72.2 70.0 70.0 69.8 69.2 68.0 67.4 67.5 68.3 68.5 14 Primary processing 93.8 68.2 90.1 71.0 70.0 65.7 65.7 66.1 66.4 65.0 63.9 63.7 65.0 65.2 15 Advanced processing .... 85.5 69.4 86.2 77.2 73.6 72.3 72.3 71.7 70.7 69.6 69.2 69.6 70.0 70.2 16 Materials 92.6 69.4 88.8 73.8 72.9 68.8 68.5 68.2 67.7 66.6 65.7 65.2 66.6 66.9 17 Durable goods 91.5 63.6 88.4 68.2 67.4 64.0 63.7 63.1 61.9 59.6 58.4 58.2 60.3 60.9 18 Metal materials 98.3 68.6 96.0 59.6 64.7 52.2 50.7 51.2 51.9 48.6 45.5 45.6 51.0 52.4 19 Nondurable goods 94.5 67.2 91.6 77.5 76.5 70.9 70.2 71.0 72.8 72.5 71.9 71.1 71.8 71.7 20 Textile, paper, and chemical 95.1 65.3 92.2 75.3 74.4 68.8 68.0 68.9 70.7 70.3 69.9 69.5 69.9 69.9 21 Textile 92.6 57.9 90.6 80.9 71.9 69.6 69.8 72.3 72.3 73.0 71.6 71.3 70.2 70.7 22 Paper 99.4 72.4 97.7 89.3 90.7 85.3 86.0 88.6 89.8 89.7 90.0 86.9 88.4 88.0 23 Chemical 95.5 64.2 91.3 70.7 71.3 65.0 63.7 63.9' 66.2 65.4 65.1 65.3 65.7 65.7 24 Energy materials 94.6 84.8 88.3 82.7 83.2 79.8 80.0 79.0 76.6 77.6 76.8 76.4 77.2 77.1 1. Monthly high 1973; monthly low 1975. 2. Preliminary; monthly highs December 1978 through January 1980; monthly lows July 1980 through October 1980. 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1982 1983 CCaatteeggoorryy 11998800 11998811 11998822 Aug. Sept. Oct. Nov. Dec. Jan. Feb. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 169,847 172,272 174,451 174,707 174,888 175,069 175,238 175,381 175,543 175,693 2 Labor force (including Armed Forces)1 109,042 110,812 112,383 112,810 113,056 112,940 113,222 113,311 112,737 112,741 3 Civilian labor force 106,940 108,670 110,204 110,614 111100,,885588 111100,,775522 111111,,004422 111111,,112299 111100,,554488 111100,,555533 Employment 4 Nonagricultural industries2 95,938 97,030 96,125 96,254 96,180 95,763 95,670 95,682 95,691 95,670 5 Agriculture 3,364 3,368 3,401 3,429 3,363 3,413 33,,446666 33,,441111 33,,441122 33,,339933 Unemployment 6 Number 7,637 8,273 10,678 10,931 11,315 11,576 11,906 12,036 11,446 11,490 7 Rate (percent of civilian labor force)... 7.1 7.6 9.7 9.9 10.2 10.5 10.7 10.8 10.4 10.4 8 Not in labor force 60,805 61,460 62,061 61,897 61,832 62,129 62,016 62,070 62,806 62,952 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 90,406 91,105 89,619 89,312 89,264 88,877 88,750 88,565 88,895 88,715 10 Manufacturing 20,285 20,173 18,849 18,672 18,572 18,325 18,181 18,131 18,197 18,221 11 Mining 1,020 1,104 1,122 1,086 1,075 1,058 1,046 1,037 1,028 1,015 12 Contract construction 4,399 4,307 3,917 3,899 3,883 3,856 3,854 3,818 3,916 3,782 13 Transportation and public utilities 5,143 5,152 5,057 5,025 5,031 5,007 4,992 4,983 4,959 4,951 14 Trade 20,386 20,736 20,547 20,550 20,492 20,441 20,425 20,316 20,500 20,431 15 Finance 5,168 5,330 5,350 5,360 5,367 5,357 5,363 5,377 5,390 5,401 16 Service 17,901 18,598 19,000 19,048 19,084 19,074 19,135 19,148 19,179 19,177 17 Government 16,249 16,056 15,784 15,672 15,763 15,742 15,754 15,755 15,726 15,737 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1979 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • March 1983 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted 1967 1982 pro- 11998822 GGrroouuppiinngg por- avg. tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec. Index (1967 = 100) MAJOR MARKET 1 Total index 100.00 138.6 142.9 141.7 140.2 139.2 138.7 138.8 138.4 137.3 135.7 134.9 135.2 2 Products 60.71 141.8 144.6 143.7 142.9 142.3 142.1 142.6 142.0 140.8 139.3 139.0 140.0 3 Final products 47.82 141.5 144.1 143.3 142.6 142.2 142.1 142.5 141.2 140.0 138.7 138.3 139.5 4 Consumer goods 27.68 142.6 141.8 141.5 142.1 143.6 144.8 145.8 144.1 143.4 142.2 141.3 142.1 5 Equipment 20.14 139.8 147.3 145.9 143.4 140.4 138.4 138.0 137.3 135.2 134.0 134.2 135.9 6 Intermediate products 12.89 143.3 146.3 145.2 143.7 142.6 141.9 142.8 144.7 143.7 141.6 141.8 141.9 7 Materials 39.29 133.7 140.4 138.5 136.2 134.3 133.5 133.0 132.8 132.0 130.0 128.4 127.8 Consumer goods 8 Durable consumer goods 7.89 129.3 125.9 128.1 130.7 132.6 134.6 137.3 132.9 131.3 126.5 124.6 126.2 9 Automotive products 2.83 129.5 117.5 125.0 129.9 138.9 143.0 149.7 135.5 135.5 123.6 120.7 128.7 10 Autos and utility vehicles 2.03 99.0 82.0 93.6 100.5 111.8 117.1 127.7 107.1 105.8 89.6 86.9 99.0 11 Autos 1.90 86.6 70.5 79.8 87.2 96.1 101.9 114.6 93.3 94.3 79.5 77.7 87.9 12 Auto parts and allied goods .80 206.9 207.8 204.5 204.6 207.6 208.6 205.4 207.6 210.7 210.0 206.6 204.0 13 Home goods 5.06 129.2 130.6 129.9 131.1 129.1 129.9 130.4 131.4 128.9 128.1 126.8 124.9 14 Appliances, A/C, and TV 1.40 102.6 103.5 97.0 102.7 100.5 106.4 102.7 104.5 99.4 106.1 104.8 94.5 15 Appliances and TV 1.33 104.6 104.1 97.4 103.1 101.5 108.8 106.1 108.6 104.1 110.5 108.4 98.6 16 Carpeting and furniture 1.07 149.8 147.8 151.3 151.8 145.9 149.0 151.4 152.5 153.3 151.9 151.4 152.2 17 Miscellaneous home goods 2.59 135.1 138.1 138.9 138.0 137.7 134.9 136.7 137.2 134.9 130.1 128.6 130.1 18 Nondurable consumer goods 19.79 148.0 148.1 146.8 146.6 147.9 148.8 149.1 148.6 148.2 148.5 147.9 148.5 19 Clothing 4.29 108.2 20 Consumer staples 15.50 159.0 159.2 158.1 158.3 159.0 159.9 159.7 159.4 158.8 159.1 158-1 158.8 21 Consumer foods and tobacco 8.33 149.7 151.1 149.6 148.1 149.9 150.9 149.9 149.6 148.6 150.2 149.0 149.9 22 Nonfood staples 7.17 169.7 168.7 168.0 170.0 169.5 170.4 171.2 170.8 170.7 169.5 168.7 169.2 23 Consumer chemical products 2.63 219.9 218.2 217.8 218.3 216.6 219.8 222.3 222.4 221.7 220.0 218.9 220.9 24 Consumer paper products 1.92 127.7 130.2 127.8 128.7 126.7 126.7 128.1 129.4 128.2 125.3 125.1 127.4 25 Consumer energy products 2.62 150.2 147.2 147.6 151.9 153.6 152.8 151.4 149.3 150.6 151.1 150.2 148.0 26 Residential utilities 1.45 170.8 171.6 170.4 174.5 173.7 171.1 167.7 169.7 169.5 169.1 171.5 169.3 Equipment 27 Business 12.63 157.9 171.6 169.0 164.9 159.9 156.7 154.9 153.9 150.5 147.1 146.4 148.3 28 Industrial 6.77 135.0 155.9 151.2 145.9 138.9 134.0 131.3 128.4 123.8 118.3 117.2 118.3 29 Building and mining 1.44 214.2 274.9 256.9 242.2 224.4 209.0 200.4 190.8 182.1 169.3 165.7 172.7 30 Manufacturing 3.85 107.2 116.8 116.3 114.0 109.7 107.5 106.0 104.4 101.6 98.0 97.5 97.0 31 Power 1.47 123.0 141.1 139.0 134.8 131.5 129.9 129.6 130.1 124.7 121.0 121.0 120.7 32 Commercial transit, farm 5.86 184.4 189.9 189.5 186.9 184.1 183.0 182.2 183.3 181.4 180.5 180.2 182.9 33 Commercial 3.26 253.5 256.4 257.8 253.1 247.7 247.5 248.8 253.5 254.0 253.5 254.8 258.6 34 Transit 1.93 103.8 110.4 110.5 110.9 110.9 108.3 106.3 102.0 95.5 93.2 92.3 95.2 35 Farm .67 80.6 95.1 84.9 83.5 85.8 84.1 76.9 75.8 76.1 76.8 70.7 66.8 36 Defense and space 7.51 109.4 106.5 107.0 107.2 107.7 107.6 109.5 109.5 109.5 111.9 113.6 115.0 Intermediate products 37 Construction supplies 6.42 124.3 127.5 125.6 123.6 122.2 123.1 124.1 127.1 125.5 122.5 123.4 122.8 38 Business supplies 6.47 162.2 165.1 164.6 163.7 162.8 160.6 161.4 162.1 161.8 160.5 160.1 160.9 39 Commercial energy products 1.14 181.2 184.1 184.5 183.5 180.3 178.3 179.8 178.1 179.2 180.4 182.4 183.5 Materials 40 Durable goods materials 20.35 125.0 132.4 130.7 128.1 126.6 126.6 126.0 125.1 123.0 118.5 116.4 116.2 41 Durable consumer parts 4.58 95.3 92.2 94.1 94.7 98.9 103.1 103.8 101.0 97.1 91.4 90.0 91.1 42 Equipment parts 5.44 166.8 180.1 177.5 173.9 170.0 168.3 166.1 164.1 158.3 155.4 155.1 155.0 43 Durable materials n.e.c 10.34 116.1 125.1 122.2 118.8 116.1 115.1 114.8 115.4 115.8 111.1 107.7 106.8 44 Basic metal materials 5.57 79.8 94.3 88.6 82.3 79.4 77.4 75.7 76.1 77.7 73.0 69.1 67.9 45 Nondurable goods materials 10.47 157.5 164.2 162.0 160.3 156.6 153.5 152.3 154.5 158.5 158.2 157.3 155.9 46 Textile, paper, and chemical materials 7.62 161.1 167.9 166.6 164.4 160.4 156.7 155.3 157.7 162.2 161.5 161.0 160.4 47 Textile materials 1.85 102.2 102.2 104.5 104.5 101.8 99.1 99.6 103.2 103.3 104.4 102.5 102.1 48 Paper materials 1.62 145.6 148.5 146.7 143.5 141.8 140.7 142.1 146.6 148.9 148.9 149.7 144.8 49 Chemical materials 4.15 193.5 204.9 202.2 199.3 193.9 188.7 185.4 186.5 193.7 192.0 191.6 192.6 50 Containers, nondurable 1.70 161.4 166.7 161.3 159.8 157.2 158.5 158.1 162.8 167.3 164.9 160.8 155.2 51 Nondurable materials n.e.c 1.14 127.9 136.0 132.4 134.2 130.6 124.8 123.4 120.1 121.1 125.5 127.4 127.2 52 Energy materials 8.48 125.2 130.3 128.2 125.8 125.4 125.4 126.0 124.5 121.0 122.6 121.4 121.0 53 Primary energy 4.65 116.0 119.5 119.2 117.3 116.9 116.6 117.2 113.8 111.1 114.4 113.7 114.0 54 Converted fuel materials 3.82 136.3 143.4 139.1 136.1 135.7 136.0 136.7 137.4 133.0 132.6 130.8 129.4 Supplementary groups 55 Home goods and clothing 9.35 119.5 120.1 118.9 118.9 119.5 120.2 121.4 121.3 120.1 119.9 119.6 118.5 56 Energy, total 12.23 135.7 138.9 137.6 136.7 136.5 136.2 136.4 134.8 132.7 134.1 133.3 132.6 57 Products 3.76 159.6 158.4 158.8 161.5 161.7 160.5 160.0 158.0 159.3 160.0 160.0 158.7 58 Materials 8.48 125.2 130.3 128.2 125.8 125.4 125.4 126.0 124.5 121.0 122.6 121.4 121.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Output A49 2.13 Continued 1967 1982 Grouping c S o I d C e p p r o o r - - a 19 v 8 g 2 . tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities 12.05 146.3 155.6 153.1 151.6 148.8 145.2 142.6 141.3 139.7 140.4 140.4 140.3 140.7 139.0 2 Mining 6.36 126.2 142.4 138.1 134.1 128.9 123.5 120.1 116.9 114.7 115.9 116.8 118.7 121.2 116.2 3 Utilities 5.69 168.8 170.4 170.0 171.0 170.9 169.4 167.7 168.5 167.5 167.8 166.7 164.5 162.4 164.5 4 Electric 3.88 190.5 192.5 191.7 193.1 193.4 191.6 189.2 189.9 188.2 188.4 188.3 185.6 182.9 185.9 5 Manufacturing 87.95 137.6 140.9 140.1 138.7 137.9 137.7 138.1 138.0 137.1 135.0 134.0 134.5 136.3 137.1 6 Nondurable 35.97 156.2 157.8 157.3 156.1 155.0 155.3 155.7 156.9 156.7 156.2 155.3 155.8 156.9 156.8 7 Durable 51.98 124.7 129.3 128.2 126.7 126.1 125.5 125.9 124.9 123.5 120.3 119.3 119.8 122.1 123.4 Mining 8 Metal 10 .51 82.3 120.8 109.9 108.8 90.0 71.8 58.1 53.4 55.4 63.1 70.4 74.0 78.1 9 Coal 11.12 .69 142.7 156.0 155.6 146.2 149.2 144.4 140.3 135.8 127.9 143.2 134.1 129.7 144.8 136.6 10 Oil and gas extraction 13 4.40 131.1 146.6 141.4 137.7 132.7 129.1 127.0 123.3 121.0 119.1 120.3 123.3 124.0 117.8 11 Stone and earth minerals 14 .75 112.1 120.5 121.6 119.6 114.6 106.6 103.8 105.7 106.3 108.5 111.9 111.9 112.7 Nondurable manufactures 12 Foods 20 8.75 151.1 151.7 150.8 149.7 150.5 151.0 151.0 150.7 149.0 151.5 152.0 152.4 13 Tobacco products 21 .67 118.0 126.7 126.7 116.1 118.6 123.6 121.4 120.6 113.3 110.6 113.0 109.9 14 Textile mill products 22 2.68 124.6 125.8 126.0 126.3 123.5 123.7 124.3 125.9 126.1 125.9 123.1 122.6 120.0 15 Apparel products 23 3.31 108.7 16 Paper and products 26 3.21 150.8 151.5 150.6 149.8 146.5 146.8 147.0 152.5 154.3 155.0 154.5 151.1 156.1 155.3 17 Printing and publishing 27 4.72 144.2 146.4 145.9 144.2 143.8 142.6 143.9 145.3 144.3 142.0 141.7 144.2 146.0 145.8 18 Chemicals and products 28 7.74 196.1 201.3 200.3 198.6 193.6 193.2 194.1 195.6 196.4 194.1 192.8 196.0 197.2 19 Petroleum products 29 1.79 121.8 119.5 121.3 120.8 122.2 124.3 124.7 121.4 122.6 123.8 120.0 119.0 118.6 115.5 20 Rubber and plastic products 30 2.24 254.7 251.8 253.4 255.1 257.0 258.9 256.8 261.1 262.0 256.3 250.2 249.7 250.6 21 Leather and products 31 .86 60.9 64.0 61.2 60.6 61.1 62.3 62.9 60.8 60.9 59.5 57.7 56.0 59.5 Durable manufactures 22 Ordnance, private and government 19.91 3.64 86.9 83.8 83.8 85.2 86.3 86.5 87.1 86.5 86.9 89.5 91.9 92.5 93.3 93.1 23 Lumber and products 24 1.64 112.6 104.9 103.5 106.2 110.6 112.2 116.9 120.3 119.9 117.2 119.1 121.4 125.0 24 Furniture and fixtures 25 1.37 151.9 148.4 150.2 151.8 151.1 152.5 154.5 156.7 155.7 154.3 152.4 153.0 153.4 25 Clay, glass, stone products 32 2.74 128.2 135.0 131.5 127.0 125.0 126.1 126.9 128.8 130.4 128.1 127.3 125.4 127.8 26 Primary metals 33 6.57 75.2 88.5 83.0 76.4 75.2 72.8 72.9 72.9 73.2 69.6 63.6 62.9 71.2 75.8 27 Iron and steel 331.2 4.21 61.7 78.5 73.0 65.1 62.4 58.0 58.1 57.4 56.4 54.1 47.5 46.7 57.3 28 Fabricated metal products 34 5.93 114.8 121.4 121.1 119.1 115.8 115.0 115.5 114.3 112.3 107.6 107.0 107.3 108.1 108.1 29 Nonelectrical machinery 35 9.15 149.0 160.0 157.3 153.7 150.0 147.4 147.1 147.2 144.9 140.4 139.6 139.0 137.9 136.9 30 Electrical machinery 36 8.05 169.3 172.9 172.6 172.2 170.9 170.8 170.3 169.7 167.0 165.4 165.5 165.3 169.2 169.9 31 Transportation equipment 37 9.27 104.9 102.0 104.4 105.9 110.0 111.6 112.7 107.0 105.3 100.8 100.2 103.7 105.7 110.2 32 Motor vehicles and parts 371 4.50 109.8 98.6 105.6 110.7 119.8 124.0 127.2 116.7 113.5 103.0 101.7 108.8 113.5 123.3 33 Aerospace and miscellaneous transportation equipment... 372-9 4.77 100.4 105.3 103.2 101.3 100.8 99.9 99.0 97.8 97.6 98.6 98.7 98.9 98.3 97.8 34 Instruments 38 2.11 161.9 164.5 163.0 162.8 163.8 164.8 165.2 165.5 161.9 157.4 155.8 155.2 156.0 156.0 35 Miscellaneous manufactures 39 1.51 137.1 144.5 145.3 144.6 141.7 136.8 134.7 133.9 132.9 129.6 129.5 129.1 131.3 130.8 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total . 507.4 579.6 588.1 586.8 582.1 586.1 584.1 585.8 578.5 575.3 570.0 568.4 572.7 575.5 580.4 37 Final 390.9 451.0 457.1 456.6 453.5 458.3 456.7 457.2 449.2 446.3 442.8 441.3 445.0 445.9 450.4 38 Consumer goods . 277.5 308.0 306.3 306.9 306.7 312.3 313.1 314.9 309.1 309.3 306.6 305.6 307.0 308.3 313.0 39 Equipment 113.4 143.0 150.8 149.7 146.8 146.0 143.5 142.3 140.1 137.0 136.2 135.7 138.0 137.6 137.4 40 Intermediate 116.6 128.6 131.1 130.2 128.6 127.8 127.4 128.7 129.3 129.0 127.2 127.1 127.7 129.5 130.0 1. 1972 dollar value. NOTE. Published groupings include some series and subtotals not shown separately. For description and historical data, see Industrial Production—1976 Revision (Board of Governors of the Federal Reserve System: Washington, D.C.), December 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • March 1983 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1982 1983 IItteemm 11998800 11998811 11998822'' June July Aug. Sept. Oct.' Nov/ Dec/ Jan. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,191 986 985 929 1,062 888 1,003 1,172 1,192 1,305 1,512 2 1-family 710 564 538 516 500 497 561 651 729 736 893 3 2-or-more-family 480 421 448 413 562 391 442 521 463 569 619 4 Started 1,292 1,084 1,061 910' 1,185' 1,046' 1,134' 1,142 1,361 1,263 1,716 1-family 852 705 662 617' 625' 651' 683' 716 868 837 1,110 6 2-or-more-family 440 379 399 293' 560' 395' 451' 426 493 426 606 7 Under construction, end of period1 896 682 720 660 673 670 687 687 711 726 n.a. 8 1-family 515 382 399 384 377 373 379 381 393 408 n.a. 9 2-or-more-family 382 301 321 276 296 296 308 306 317 317 n.a. 10 Completed 1,502 1,266 1,005 939 1,007 1,002 929 1,116 1,058 1,017 n.a. II 1-family 957 818 631 582 693 638 585 684 685 636 n.a. 12 2-or-more-family 545 447 374 357 314 364 344 432 373 381 n.a. 13 Mobile homes shipped 222 241 239 252' 240' 234 222 224 251 243 n.a. Merchant builder activity in l-family units 14 Number sold 545 436 412 369 364' 389' 473 481 544 524 576 15 Number for sale, end of period1 342 278 257 254 250 248 247 245 246 252 259 Price (thousands of dollars)2 Median 16 Units sold 64.7 68.8 69.3 69.3 70.9 70.1 67.7 69.7 73.7 71.6 75.5 17 Units sold 76.4 83.1 83.8 84.9 86.5 86.5 79.6 79.9 88.4 85.6 91.8 EXISTING UNITS (l-family) 18 Number sold 2,881 2,350 1.942 1,980 1,890 1,820 1,840 1,930 2,120 2,260 2,610 Price of units sold (thousands of dollars)2 19 Median 62.1 66.1 67.7 69.4 69.2 68.9 67.3 66.9 67.7 67.8 68.3 20 Average 72.7 78.0 80.4 82.3 82.0 82.0 80.0 79.3 80.4 80.6 80.6 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 230,748 238,198 228,724 231,589 227,638 228,053 228,136 228,779 235,822 234,660 255,494 ?? Private 175,701 185,221 178,567 182,651 178,734 176,644 177,002 177,682 183,777 186,942 200,180 73 Residential 87,261 86,566 74,351 75,251 73,436 72,139 71,451 74,042 78,899 83,272 90,356 24 Nonresidential, total 88,440 98,655 104,216 107,400 105,298 104,505 105,551 103,640 104,878 103,670 109,824 Buildings ?S Industrial 13,839 17,031 16,670 18,424 16,404 16,691 16,587 17,072 15,838 15,257 16,824 76 Commercial 29,940 34,243 37,125 38,048 37,512 36,091 37,129 35,677 37,769 37,516 40,455 77 Other 8,654 9,543 10,421 10,579 10,130 10,499 10,506 10,778 11,100 11,476 12,690 28 Public utilities and other 36,007 37,838 40,000 40,349 41,252 41,224 41,329 40,113 40,171 39,421 39,855 79 Public 55,047 52,977 50,157 48,938 48,904 51,409 51,134 51,097 52,045 47,718 55,314 30 Military 1,880 1,966 2,202 1,901 2,261 2,481 2,674 2,347 2,468 2,485 2,688 31 Highway 13,808 13,304 13,180 13,073 14,119 13,327 13,464 14,314 13,906 12,417 14,709 37 Conservation and development 5,089 5,225 4,983 5,051 5,055 5,036 4,719 4,546 4,718 4,595 5,178 33 Other 34,270 32,482 29,792 28,913 27,469 30,565 30,277 29,890 30,953 28,221 32,739 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (a) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of comparable with data in prior periods because of changes by the Bureau of the existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from originating agency. Permit authoriza- Construction Reports (C-30-76-5), issued by the Bureau in July 1976. tions are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Prices A51 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted From e a 1 r 2 li e m r o nths From 3 months earlier (at annual rate) From 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm JJJaaannn... 1982 1982 1983 111999888333 11998822 11998833 (((111999666777 JJaann.. JJaann.. === 111000000)))''' Mar. June Sept. Dec. Sept. Oct. Nov. Dec. Jan. CONSUMER PRICES2 1 All items 8.4 3.6 1.3 9.8 4.1 .5 .1 .4 .0 -.3 .2 292.6 ? Food 4.6 2.5 5.0 6.2 .6 .8 .2 .2 .0 .0 .1 288.1 3 Energy items 9.1 -.5 -17.7 7.5 8.1 10.2 .5 1.3 .8 .3 -2.5 414.5 4 All items less food and energy 9.3 4.4 4.1 9.6 4.7 -.3 .2 .4 -.1 -.5 .1 280.3 Commodities 5.8 6.1 5.3 9.9 2.4 5.4 .0 .6 .3 .3 .6 237.4 6 Services 12.3 3.0 2.9 11.3 4.6 -4.8 -.1 .1 -.3 -1.0 .1 330.2 PRODUCER PRICES 7 Finished goods 6.5 2.1 .9 4.6 4.2 4.6 .1 .4 .6 .2 -1.0 283.6 8 Consumer foods 2.2 .7 6.8 10.2 -5.2 -2.6 -.4 .0 .0 .1 -.2 258.3 9 Consumer energy 11.1 -3.7 -21.9 -9.2 30.9 7.1 .4 .6 2.0 -.9 -4.2 811.3 10 Other consumer goods 6.6 3.8 3.8 5.7 4.2 6.5 .3 .6 .6 .4 -1.0 237.2 11 Capital equipment 8.5 3.4 3.6 5.2 3.5 3.9 -.1 .2 .3 .5 -.1 285.7 12. Intermediate materials3 6.2 -.3 -2.3 -.5 2.3 1.5 .2 .1 .3 .0 -.4 315.3 13 Excluding energy 5.5 .5 .3 .0 1.0 1.2 .4 .0 .2 .2 -.1 290.8 Crude materials 14 Foods -10.4 -1.2 23.3 15.8 -26.4 1.3 -3.0 -1.0 1.0 .4 1.1 239.6 15 Energy 15.2 1.1 -5.8 1.6 8.7 5.8 .9 1.0 1.7 -1.2 -1.2 810.0 16 Other -8.7 -7.7 -35.7 19.2 2.9 -7.9 .6 -.6 -.9 -.5 -2.9 231.0 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds, rental-equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • March 1983 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1981 1982 AAccccoouunntt 11998800 11998811 11998822 Q4 Ql Q2 Q3 Q4P GROSS NATIONAL PRODUCT 1 Total 2,633.1 2,937.7 3,057.6 3,003.2 2,995.5 3,045.2 3,088.2 3,101.4 By source 2 Personal consumption expenditures 1,667.2 1,843.2 1,971.3 1,884.5 1,919.4 1,947.8 1,986.3 2,031.5 3 Durable goods 214.3 234.6 242.5 229.6 237.9 240.7 240.3 251.2 4 Nondurable goods 670.4 734.5 762.0 746.5 749.1 755.0 768.4 775.3 5 Services 782.5 874.1 966.8 908.3 932.4 952.1 977.6 1,005.0 6 Gross private domestic investment 402.4 471.5 420.5 468.9 414.8 431.5 443.3 392.4 7 Fixed investment 412.4 451.1 443.3 455.7 450.4 447.7 438.6 436.6 8 Nonresidential 309.2 346.1 347.6 360.2 357.0 352.2 344.2 336.9 9 Structures 110.5 129.7 141.4 139.6 141.4 143.6 141.3 139.2 10 Producers' durable equipment 198.6 216.4 206.2 220.6 215.6 208.6 203.0 197.7 11 Residential structures 103.2 105.0 95.8 95.5 93.4 95.5 94.3 99.8 12 Nonfarm 98.3 99.7 90.1 89.4 87.9 89.6 88.7 94.1 13 Change in business inventories -10.0 20.5 -22.8 13.2 -35.6 -16.2 4.7 -44.2 14 Nonfarm -5.7 15.0 -23.1 6.0 -36.0 -15.0 3.7 -45.3 15 Net exports of goods and services 25.2 26.1 18.5 23.5 31.3 34.9 6.9 .8 16 Exports 339.2 367.3 349.2 367.9 359.9 365.8 349.5 321.5 17 Imports 314.0 341.3 330.7 344.4 328.6 330.9 342.5 320.7 18 Government purchases of goods and services 538.4 596.9 647.3 626.3 630.1 630.9 651.7 676.7 19 Federal 197.2 229.0 257.7 250.5 249.7 244.3 259.0 277.9 20 State and local 341.2 368.0 389.6 375.7 380.4 386.6 392.7 398.9 By major type of product 21 Final sales, total 2,643.1 2,917.3 3,080.4 2,989.9 3,031.1 3,061.4 3,083.5 3,145.6 22 Goods 1,141.9 1,289.2 1.280.9 1,298.5 1,269.4 1,283.1 1,295.5 1,275.7 23 Durable 477.3 528.1 493.7 504.9 482.4 505.9 516.9 469.5 24 Nondurable 664.6 761.1 787.3 793.6 787.0 777.2 778.6 806.2 25 Services 1,225.6 1,364.3 1,492.3 1,421.5 1,444.4 1,476.7 1,509.5 1,538.7 26 Structures 265.7 284.2 284.3 283.3 281.7 285.3 283.2 287.0 27 Change in business inventories -10.0 20.5 -22.8 13.2 -35.6 -16.2 4.7 -44.2 28 Durable goods -5.2 8.7 -18.3 -5.6 -30.9 -6.6 10.1 -45.8 29 Nondurable goods -4.8 11.8 -4.6 18.9 -4.8 -9.6 -5.4 1.6 30 MEMO: Total GNP in 1972 dollars 1,474.0 1,502.6 1,476.0 1,490.1 1,470.7 1,478.4 1,481.1 1,473.9 NATIONAL INCOME 31 Total 2,117.1 2,352.5 2,436.6 2,404.5 2,396.9 2,425.2 2,455.6 2,468.7 32 Compensation of employees 1,598.6 1,767.6 1,856.4 1,813.4 1,830.8 1,850.7 1,868.3 1,875.9 33 Wages and salaries 1,356.1 1,494.0 1,560.6 1,531.1 1,541.5 1.556.6 1,570.0 1,574.3 34 Government and government enterprises 260.2 283.1 302.3 292.3 296.3 300.0 303.5 309.2 35 Other 1,095.9 1,210.9 1,258.3 1,238.8 1,245.2 1,256.6 1,266.4 1,265.1 36 Supplement to wages and salaries 242.5 273.6 295.8 282.3 289.3 294.1 298.3 301.6 37 Employer contributions for social insurance 115.3 133.2 142.1 136.5 140.2 141.7 142.8 143.6 38 Other labor income 127.3 140.4 153.8 145.8 149.1 152.5 155.5 157.9 39 Proprietors' income' 116.3 124.7 120.4 124.1 116.4 117.3 118.4 129.3 40 Business and professional' 96.9 100.7 101.3 99.5 98.6 99.9 101.7 104.9 41 Farm' 19.4 24.0 19.1 24.6 17.8 17.4 16.6 24.4 42 Rental income of persons2 32.9 33.9 34.1 33.6 33.9 34.2 34.6 33.9 43 Corporate profits' 181.6 190.6 160.5 183.9 157.1 155.4 166.2 163.3 44 Profits before tax3 242.5 232.1 174.6 216.5 171.6 171.7 180.3 174.8 45 Inventory valuation adjustment -43.0 -24.6 -9.3 -17.1 -4.4 -9.4 -10.3 -12.9 46 Capital consumption adjustment -17.8 -16.8 -4.8 -15.5 -10.1 -6.9 -3.8 1.5 47 Net interest 187.7 235.7 265.2 249.5 258.7 267.5 268.1 266.4 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.49. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

National Income Accounts A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1981 1982 AAccccoouunntt 11998800 11998811 11998822 Q4 QI Q2 Q3 Q4^ PERSONAL INCOME AND SAVING 1 Total personal income 2,160.2 2,404.1 2,570.6 2,494.6 2,510.5 2,552.7 2,592.5 2,626.9 7 Wage and salary disbursements 1,356.1 1,493.9 1,560.6 1,531.2 1,541.6 1,556.6 1,570.0 1,574.3 Commodity-producing industries 468.0 510.8 509.9 517.7 514.3 513.6 510.2 501.5 4 Manufacturing 354.4 386.4 382.6 388.7 385.1 385.6 383.8 375.8 Distributive industries 330.5 361.4 376.0 368.3 371.4 375.4 378.4 378.6 6 Service industries 297.5 338.6 372.5 352.8 359.5 367.6 377.8 385.0 7 Government and government enterprises 260.2 283.1 302.3 292.4 296.5 300.0 303.5 309.2 8 Other labor income 127.3 140.4 153.8 145.8 149.1 152.5 155.5 157.9 9 Proprietors' income1 116.3 124.7 120.4 124.1 116.4 117.3 118.4 129.3 10 Business and professional1 96.9 100.7 101.3 99.5 98.6 99.9 101.7 104.9 11 Farm1 19.4 24.0 19.1 24.6 17.8 17.4 16.6 24.4 17 Rental income of persons2 32.9 33.9 34.1 33.6 33.9 34.2 34.6 33.9 N Dividends 55.9 62.5 67.0 65.2 65.8 66.1 67.2 68.8 14 Personal interest income 256.3 308.5 371.8 351.0 359.7 372.0 378.2 377.2 15 Transfer payments 297.2 336.3 374.7 350.7 354.6 365.2 381.0 397.8 16 Old-age survivors, disability, and health insurance benefits.... 154.2 182.0 204.5 192.8 194.7 197.5 209.2 216.6 17 LESS: Personal contributions for social insurance 88.7 104.9 111.7 107.0 110.6 111.4 112.4 112.5 18 EQUALS: Personal income 2,160.2 2,404.1 2,570.6 2,494.6 2,510.5 2,552.7 2,592.5 2,626.9 19 LESS: Personal tax and nontax payments 336.2 386.7 397.2 393.2 393.4 401.2 394.4 399.7 20 EQUALS: Disposable personal income 1,824.1 2,029.2 2.173.4 2,101.4 2,117.1 2,151.5 2,198.1 2,227.1 21 LESS: Personal outlays 1,717.9 1,898.9 2,030.7 1,942.7 1,977.9 2,007.2 2,046.1 2,091.6 22 EQUALS: Personal saving 106.2 130.2 142.7 158.6 139.1 144.3 152.0 135.5 MEMO: Per capita (1972 dollars) 73 Gross national product 6,474 6,536 6,360 6,458 6,360 6.380 6,376 6,328 24 Personal consumption expenditures 4,087 4,122 4,124 4,088 4,104 4,121 4,117 4,154 25 Disposable personal income 4,472 4,538 4,547 4,559 4,527 4,552 4,555 4,554 26 Saving rate (percent) 5.8 6.4 6.6 7.5 6.6 6.7 6.9 6.1 GROSS SAVING 27 Gross saving 406.3 477.5 414.5 476.3 428.8 441.5 422.4 n.a. 78 Gross private saving 438.3 504.7 530.8 547.7 520.3 529.0 546.1 n.a. 79 Personal saving 106.2 130.2 142.7 158.6 139.1 144.3 152.0 135.5 30 Undistributed corporate profits1 38.9 44.4 31.8 44.3 32.5 30.7 34.8 n.a. 31 Corporate inventory valuation adjustment -43.0 -24.6 -9.3 -17.1 -4.4 -9.4 -10.3 -12.9 Capital consumption allowances 37 Corporate 181.2 206.2 222255..11 216.0 218.9 222233..44 222277..55 223300..44 33 Noncorporate 112.0 123.9 131.3 128.7 129.8 130.5 131.9 132.8 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -33.2 -28.2 -116.4 -72.5 -90.7 -87.5 -123.7 n.a. 36 Federal -61.4 -60.0 -148.2 -101.7 -118.4 -119.6 -156.0 n.a. 37 State and local 28.2 31.7 31.9 29.1 27.7 32.1 32.3 n.a. 38 Capital grants received by the United States, net 1.2 1.1 .0 1.1 .0 .0 .0 .0 39 Gross investment 410.1 475.6 414.6 469.0 421.3 442.3 426.0 368.7 40 Gross private domestic 402.4 471.5 420.5 468.9 414.8 431.5 443.3 392.4 41 Net foreign 7.8 4.1 -5.9 0.1 6.5 10.8 -17.3 -23.7 42 Statistical discrepancy 3.9 -1.9 .2 -7.2 -7.5 .8 3.6 n.a. 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • March 1983 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.' 1981 1982 IItteemm ccrreeddiittss oorr ddeebbiittss 11997799 11998800 11998811 Q3 Q4 Ql Q2 Q3P 1 Balance on current account -466 1,520 4,471 751 -927 1,088 2,231 -4,227 ^ -1,834 1,293 742 2,841 -6,471 3 Merchandise trade balance2 -27,346 -25,338 -27,889 -7,845 -9,185 -5,873 -5,695 -12,458 4 Merchandise exports 184,473 224,237 236,254 57,694 57,593 55,780 55,174 52,480 5 Merchandise imports -211,819 -249,575 -264,143 -65,539 -66,778 -61,653 -60,869 -64,938 6 Military transactions, net -2,035 -2,472 -1,541 61 -528 167 247 527 7 Investment income, net3 31,215 29,910 33,037 8,183 8,529 6,861 7,688 7,418 8 Other service transactions, net 3,262 6,203 7,472 2,160 2,127 1,981 1,731 1,939 9 Remittances, pensions, and other transfers -2,011 -2,101 -2,104 -558 -562 -575 -671 -602 10 U.S. government grants (excluding military) -3,549 -4,681 -4,504 -1,250 -1,308 -1,473 -1,069 -1,051 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -3,743 -5,126 -5,137 -1,257 -987 -904 -1,547 -2,418 12 Change in U.S. official reserve assets (increase, -) -1,133 -8,155 -5,175 -4 262 -1,089 -1,132 -794 13 Gold -65 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -1,136 -16 -1,823 -225 -134 -400 -241 -434 15 Reserve position in International Monetary Fund -189 -1,667 -2,491 -647 -358 -547 -814 -459 16 Foreign currencies 257 -6,472 -861 868 754 -142 -77 99 17 Change in U.S. private assets abroad (increase, ~)3 -59,469 -72,746 -98,982 -15,996 -46,952 -29,208 -35,111 -23,152 18 Bank-reported claims -26,213 -46,838 -84.531 -15,254 -42,645 -32,708 -36,923 -21,032 19 Nonbank-reported claims -3,307 -3,146 -331 855 -508 4,112 -304 n.a. 20 U.S. purchase of foreign securities, net -4,726 -3,524 -5,429 -618 -2,843 -531 -441 -3,103 21 U.S. direct investments abroad, net3 -25,222 -19,238 -8,691 -979 -956 -81 2,557 983 22 Change in foreign official assets in the United States (increase, +) -13,697 15,442 4,785 -5,835 8,119 -3,122 1,998 2,102 23 U.S. Treasury securities -22,435 9,708 4,983 -4,635 4,439 -1,344 -2,076 4,880 24 Other U.S. government obligations 463 2,187 1,289 545 -246 -296 258 -101 25 Other U.S. government liabilities4 -73 561 -69 -337 275 -182 387 -509 26 Other U.S. liabilities reported by U.S. banks 7,213 -159 -4,083 -2,382 3,436 -1,516 3,393 -2,160 27 Other foreign official assets5 1,135 3,145 2,665 974 215 216 36 -8 28 Change in foreign private assets in the United States (increase, +)3 52,157 39,042 73,136 22,715 30,988 28,202 27,621 13,952 29 U.S. bank-reported liabilities 32,607 10,743 41,262 16,916 20,476 25,423 22,552 10,224 30 U.S. nonbank-reported liabilities 1,362 6,530 532 1,006 -457 -982 -2,304 n.a. .31 Foreign private purchases of U.S. Treasury securities, net 4,960 2,645 2,932 -446 1,238 1,277 2,095 1,308 32 Foreign purchases of other U.S. securities, net 1,351 5,457 7,109 761 396 1,319 2,497 134 33 Foreign direct investments in the United States, net3 11,877 13,666 21,301 4,478 9,335 1,165 2,781 2,286 34 Allocation of SDRs 1,139 1,152 1,093 0 0 0 0 0 35 Discrepancy 25,212 28,870 25,809 -374 9,497 5,032 5,940 14,537 3366 --22,,114444 22,,447744 -899 557744 --11,,997733 37 Statistical discrepancy in recorded data before seasonal adjustment 25,212 28,870 25,809 1,770 7,023 5,931 5,366 16,510 MEMO; Changes in official assets 38 U.S. official reserve assets (increase, -) -1,133 -8,155 -5,175 -4 262 -1,089 -1,132 -794 39 Foreign official assets in the United States (increase, +) -13,624 14,881 4,854 -5.498 7,844 -2,940 1,611 2,611 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 5,543 12,769 13,314 2,935 2,230 4,988 3,073 164 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 465 631 602 132 64 93 125 137 1. Seasonal factors are no longer calculated for lines 12 through 41. 4. Primarily associated with military sales contracts and other transactions 2. Data are on an international accounts (1A) basis. Differs from the Census arranged with or through foreign official agencies. basis data, shown in table 3.11, for reasons of coverage and timing; military 5. Consists of investments in U.S. corporate stocks and in debt securities of exports are excluded from merchandise data and are included in line 6. private corporations and state and local governments. 3. Includes reinvested earnings of incorporated affiliates. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business (U.S. Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trade and Reserve and Official Assets A55 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted 1982r 1983 IItteemm 11998800 11998811 11998822 July Aug. Sept. Oct. Nov. Dec. Jan. 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 220,626 233,677 212,193 18,060 17,463 17,320 16,671 15,852 16,347 17,393 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 244,871 261,305 243,952 19,849 22,930 20,581 21,006 18,892 19,154 20,021 3 Trade balance -24,245 -27,628 -31,759 -1,790 -5,467 -3,261 -4,335 -3,041 -2,808 -2,628 NOTE. The data through 1981 in this table are reported by the Bureau of Census not covered in Census statistics, and (2) the exclusion of military sales (which are data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of combined with other military transactions and reported separately in the "service export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in account" in table 3.10, line 6). On the import side, additions are made for gold, the Census basis trade data; this adjustment has been made for all data shown in ship purchases, imports of electricity from Canada and other transactions; the table. Beginning with 1982 data, the value of imports are on a customs military payments are excluded and shown separately as indicated above. valuation basis. The Census basis data differ from merchandise trade data shown in table 3.10, SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" U.S. International Transactions Summary, for reasons of coverage and timing. On (U.S. Department of Commerce, Bureau of the Census). the export side, the largest adjustments are: (1) the addition of exports to Canada 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1982 1983 TTyyppee 11997799 11998800 11998811 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Total1 1188,,995566 2266,,775566 3300,,007755 3311,,223333 3311,,886644 3311,,771111 3344,,000066 3333,,995588 3333,,993366 3344,,223333 2 Gold stock, including Exchange Stabilization Fund1 1111,,117722 1111,,116600 1111,,115511 1111,,114488 1111,,114488 1111,,114488 1111,,114488 1111,,114488 1111,,114444 1111,,113399 3 Special drawing rights2 3 2,724 2,610 4,095 4,601 4,809 4,801 4,929 5,250 5,267 5,284 4 Reserve position in International Monetary Fund2 1,253 2,852 5,055 6,433 6,406 6,367 7,185 7,348 8,035 8,594 5 Foreign currencies4 5 3,807 10,134 9,774 9,051 8,630 9,395 10,744 10,212 9,490 9,216 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows: tional accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3,13. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. Beginning November 1978, valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 5. Includes U.S. government securities held under repurchase agreement 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in against receipt of foreign currencies, if any. the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1982 1983 AAsssseettss 11997799 11998800 11998811 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Deposits 429 411 505 347 396 326 386 328 366 352 Assets held in custody 2 U.S. Treasury securities1 95,075 102,417 104,680 104,136 106,117 107,636 107,467 112,544 115,872 116,428 3 Earmarked gold 15,169 14,965 14,804 14,761 14,726 14,706 14,711 14,716 14,717 14,752 1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. NOTE. Excludes deposits and U.S. Treasury securities held for international Treasury securities payable in dollars and in foreign currencies. and regional organizations. Earmarked gold is gold held for foreign and international accounts and is not included in the gold stock of the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • March 1983 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1982 AAsssseett aaccccoouunntt 11997799 11998800 11998811 June' July Aug/ Sept/ Oct. Nov. Dec.P All foreign countries 1 Total, all currencies 364,409 401,135 462,790 459,154 465,633 471,710 471,085 463,601 468,376 468,168 2 Claims on United States 32,302 28,460 63,743 83,604 82,555 88,936 90,267 89,036 90,877 91,672 3 Parent bank 25,929 20,202 43,267 58,614 55,962 60,315 60,872 61,283 62,472 61,696 4 Other 6,373 8,258 20,476 24,990 26,593 28,621 29,395 27,753 28,405 29,976 5 Claims on foreigners 317,330 354,960 378,899 356,657 363,842 362,437 360,462 354,373 357,071 357,056 6 Other branches of parent bank 79,662 77,019 87,821 87,163 89,446 91,593 93,283 90,030 91,891 90,875 7 Banks 123,420 146,448 150,708 137.683 142,763 138,517 135,454 133,365 133,239 133,214 8 Public borrowers 26,097 28,033 28,197 25,291 24,654 24,521 24,333 23,850 23,340 23,979 9 Nonbank foreigners 88,151 103,460 112,173 106.520 106,979 107,806 107,392 107,128 108,601 108,988 10 Other assets 14,777 17,715 20,148 18.893 19,236 20,337 20,356 20,192 20,428 19,440 11 Total payable in U.S. dollars 267,713 291,798 350,678 353,847 359,978 366,148 369,746 361,804 363,483 360,600 12 Claims on United States 31,171 27,191 62,142 82,037 80,912 87,328 88,613 87,316 89,001 89,952 13 Parent bank 25,632 19,896 42,721 58,117 55,283 59,634 60,207 60,538 61,655 61,040 14 Other 5,539 7,295 19,421 23,920 25,629 27,694 28,406 26,778 27,346 28,912 15 Claims on foreigners 229,120 255,391 276,882 260,530 267,267 266,420 268,253 261,896 261,671 258,622 16 Other branches of parent bank 61,525 58,541 69,398 70,386 72,488 74,252 77,470 74,032 74,759 73,274 17 Banks 96,261 117,342 122,055 110,274 115,072 111,712 110,591 107,448 106,606 105,711 18 Public borrowers 21,629 23,491 22,877 19,957 19,306 19,043 18,984 18,659 18,187 18,301 19 Nonbank foreigners 49,705 56,017 62,552 59,913 60,401 61,413 61,208 61,757 62,119 61,336 20 Other assets 7,422 9,216 11,654 11,280 11,799 12.400 12,880 12,592 12,811 12,026 United Kingdom 21 Total, all currencies 130,873 144,717 157,229 158,466 164,106 164,523 167,189 164,582 165,687 161,067 22 Claims on United States 11,117 7,509 11,823 20,744 23,962 27.031 27,534 27,829 28,677 27,354 23 Parent bank 9,338 5,275 7,885 16,768 19,680 22,730 22,970 23,717 24,278 23,017 24 Other 1,779 2,234 3,938 3,976 4,282 4,301 4,564 4,112 4,399 4,337 25 Claims on foreigners 115,123 131,142 138,888 131,860 133.964 130,814 132,746 129,913 130,666 127,694 26 Other branches of parent bank 34,291 34,760 41,367 37,696 37,250 36,937 40,385 37,013 38,319 37,000 27 Banks 51,343 58,741 56,315 54,727 56,428 53,582 52,203 52,568 51,414 50,757 28 Public borrowers 4,919 6,688 7,490 6,595 6,456 6,286 6,086 6,157 6,170 6,240 29 Nonbank foreigners 24,570 30,953 33,716 32,842 33,830 34,009 34,072 34,165 34,763 33,697 30 Other assets 4,633 6,066 6,518 5,862 6,180 6,678 6,909 6,840 6,344 6,019 31 Total payable in U.S. dollars 94,287 99,699 115,188 120,002 125,247 126,344 131,129 127,517 128,863 123,740 32 Claims on United States 10,746 7,116 11,246 20,256 23,421 26,514 26,919 27,255 28.093 26,761 33 Parent bank 9,297 5,229 7,721 16,599 19,451 22,496 22,758 23,478 24,035 22,756 34 Other 1,449 1,887 3,525 3,657 3,970 4,018 4,161 3,777 4,058 4,005 35 Claims on foreigners 81,294 89,723 99,850 95.857 97,699 95.293 99,008 95,269 95,870 92,228 36 Other branches of parent bank 28,928 28,268 35,439 32,567 32,007 31,414 35,703 32,243 33,154 31,648 37 Banks 36,760 42,073 40,703 40.479 42,515 40,321 39,786 39,077 38,310 36,717 38 Public borrowers 3,319 4,911 5,595 4,655 4,513 4,336 4,214 4,251 4,281 4,329 39 Nonbank foreigners 12,287 14,471 18,113 18,156 18,664 19,222 19,305 19,698 20,125 19,534 40 Other assets 2,247 2,860 4,092 3,889 4.127 4,537 5,202 4,993 4,900 4,751 Bahamas and Caymans 41 Total, all currencies 108,977 123,837 149,051 141,878 141,099 144,194 140,614 139,438 140,939 144,271 42 Claims on United States 19,124 17,751 46,546 56,704 52,646 56,087 55,467 55,713 57,106 59,143 43 Parent bank 15,196 12,631 31,643 36,608 31,242 32,822 32,155 32,927 34,015 34.560 44 Other 3,928 5,120 14,903 20,096 21,404 23,265 23,312 22.786 23,091 24,583 45 Claims on foreigners 86,718 101,926 98,002 81,170 84,416 83,835 81,054 79.539 79,155 80,833 46 Other branches of parent bank 9,689 13,342 12,951 15,407 17,538 17,806 17,772 17,955 18,066 18,688 47 Banks 43,189 54,861 55,096 42,747 44,229 43,616 41,333 40,439 40,995 42,116 48 Public borrowers 12,905 12,577 10,010 7,327 7,031 7,036 6,999 6,743 6,310 6,411 49 Nonbank foreigners 20,935 21,146 19,945 15,689 15,618 15,377 14,950 14,402 13,784 13,618 50 Other assets 3,135 4,160 4,503 4,004 4,037 4.272 4,093 4,186 4,678 4,295 51 Total payable in U.S. dollars 102,368 117,654 143,686 136,910 135,619 138,771 136,077 134,607 135,648 138,723 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.14 Continued 1982 LLiiaabbiilliittyy aaccccoouunntt 11997799 11998800 11998811 Juner July Aug/ Sept/ Oct. Nov. Dec.P All foreign countries 52 Total, all currencies 364,409 401,135 462,790 459,154 465,633 471,710 471,085 463,601 468,376 468,168 53 To United States 66.689 91,079 137.712 160,947 164,504 167,661 170,430 169.312 171,756 176,773 54 Parent bank 24,533 39,286 56.289 59,235 60,939 64.419 67,028 64,102 66,254 73,403 55 Other banks in United States 13,968 14,473 19,197 29,534 31,555 32,425 33,763 32,607 31,764 33,400 56 Nonbanks 28,188 37,275 62,226 72,178 72,010 70,817 69,639 72,603 73,738 69,970 57 To foreigners 283,510 295.411 305,630 278,721 281,592 283,954 280,450 274,222 276,293 271,605 58 Other branches of parent bank 77,640 75,773 86,396 84,542 86,776 92,202 93,753 91,658 91,270 91,824 59 Banks 122,922 132,116 124,906 105,206 105,959 103,466 99,966 98,259 98,209 96,633 60 Official institutions 35.668 32,473 25,997 19,914 20,239 20,004 20.527 19,440 21.095 19,603 61 Nonbank foreigners 47,280 55,049 68,331 69,059 68,618 68.282 66,204 64.865 65.719 63,545 62 Other liabilities 14,210 14,690 19,448 19,486 19,537 20,095 20,205 20,067 20.327 19,790 63 Total payable in U.S. dollars 273,857 303,281 364,390 369,380 376,129 381,898 385,440 377,121 379,142 377,910 64 To United States 64,530 88,157 134,645 157,717 161,250 164,403 167,534 166,377 168,285 173,298 65 Parent bank 23,403 37,528 54.437 57,174 58.958 62,369 65,114 62,191 63,963 71,081 66 Other banks in United States 13,771 14,203 18,883 29,198 31,224 32,162 33,508 32.362 31,428 33,035 67 Nonbanks 27,356 36,426 61,325 71,345 71,068 69,872 68,912 71,824 72,894 69,182 68 To foreigners 201.514 206,883 217,602 200,262 203,767 205,709 206.553 199,297 198,944 193,399 69 Other branches of parent bank 60,551 58,172 69,299 68,516 70,429 75,344 78,499 76.237 74,621 74,593 70 Banks 80,691 87,497 79,594 65,821 66,520 63,959 62,535 59,782 58,829 57,311 71 Official institutions 29,048 24,697 20.288 15,373 15,737 15,672 16,607 15.253 16,774 15,044 72 Nonbank foreigners 31,224 36,517 48,421 50,552 51,081 50,734 48.912 48,025 48,720 46,451 73 Other liabilities 7,813 8,241 12,143 11,401 11,112 11,786 11,353 11,447 11,913 11,213 United Kingdom 74 Total, all currencies 130,873 144,717 157,229 158,466 164,106 164,523 167,189 164,582 165,687 161,067 75 To United States 20,986 21,785 38,022 44,086 46,965 49,001 53,919 53,777 54,003 53,954 76 Parent bank 3,104 4.225 5,444 6,323 6,679 8,022 11,336 10,568 10,597 13.091 77 Other banks in United States 7,693 5,716 7,502 9,985 11,215 11,616 13,280 12,567 12,374 12,205 78 Nonbanks 10,189 11,844 25,076 27,778 29,071 29,363 29,303 30.642 31,032 28,658 79 To foreigners 104,032 117,438 112,255 106,665 109.105 107,268 104.967 102,611 103,927 99,567 80 Other branches of parent bank 12,567 15,384 16,545 17,771 18,010 18,666 19,123 18,399 19,372 18,361 81 Banks 47,620 56,262 51,336 46,628 48,541 47,502 45,526 45,601 44,266 44,020 8? Official institutions 24,202 21,412 16,517 11,746 12,076 12,006 12,348 11,379 12,940 11.504 83 Nonbank foreigners 19,643 24,380 27,857 30,520 30,478 29,094 27,970 27,232 27,349 25,682 84 Other liabilities 5,855 5,494 6,952 7,715 8,036 8,254 8,303 8,194 7,757 7,546 85 Total payable in U.S. dollars 95,449 103,440 120,277 125,859 131,199 132,536 137,268 133,591 135,188 130,261 86 To United States 20,552 21,080 37,332 43,323 46,129 48,266 53,262 53,146 53,056 53,029 87 Parent bank 3,054 4,078 5,350 6,212 6,603 7,928 11,223 10,442 10,306 12,814 88 Other banks in United States 7,651 5,626 7,249 9,806 11,048 11,510 13,142 12,472 12,188 12,026 89 Nonbanks 9,847 11,376 24,733 27,305 28.478 28,828 28,897 30,232 30,562 28,189 90 To foreigners 72,397 79,636 79,034 78,794 81,207 79,954 80,025 76,519 77,982 73,477 91 Other branches of parent bank 8,446 10,474 12,048 13,903 14,202 14,514 15,548 14,614 15,310 14,300 9? Banks 29,424 35,388 32,298 30,557 32.364 31.898 31,187 30,404 29.092 28,810 93 Official institutions 20,192 17,024 13,612 9,843 10,200 10,322 11,012 9,806 11,198 9,668 94 Nonbank foreigners 14,335 16,750 21,076 24,491 24,441 23,220 22,278 21,895 22,382 20,699 95 Other liabilities 2,500 2,724 3,911 3,742 3,863 4,316 3,981 3.926 4,150 3,755 Bahamas and Caymans 96 Total, all currencies 108,977 123,837 149,051 141,878 141,099 144,194 140,614 139,438 140,939 144,271 97 To United States 37,719 59,666 85,704 97,916 98,609 99,270 96,936 96,810 98,475 102,463 98 Parent bank 15,267 28,181 39,396 39,416 41,122 42,971 41,806 40,225 41,900 45,096 99 Other banks in United States 5,204 7,379 10,474 17,410 17,831 17.911 17.927 17,481 16,805 18,508 100 Nonbanks 17,248 24,106 35,834 41,090 39,656 38,388 37,203 39.104 39,770 38,859 101 To foreigners 68,598 61,218 60,012 41,204 39,740 42,039 40,965 39,793 39,603 39,360 10? Other branches of parent bank 20,875 17,040 20,641 15,855 15,018 17,348 17,690 17,421 17,566 17,541 103 Banks 33,631 29,895 23,202 12,702 11.766 11,599 10,910 10,297 10,413 10,122 104 Official institutions 4,866 4,361 3,498 2,471 2,407 2,288 2,091 2,137 1,846 1,956 105 Nonbank foreigners 9,226 9,922 12,671 10,176 10,549 10,804 10,274 9,938 9.778 9.741 106 Other liabilities 2,660 2,953 3,335 2,758 2,750 2,885 2,713 2,835 2,861 2,448 107 Total payable in U.S. dollars 103,460 119,657 145,227 138,640 137,910 140,750 137,717 136,574 137,828 141,048 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • March 1983 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1982 1983 IItteemm 11998800 11998811 July Aug. Sept. Oct. Nov. Dec. Jan.P 1 Total1 164,578 169,702 170,228 169,289 171,094 171,308 168,048 172,721 175,523 By type 2 Liabilities reported by banks in the United States2 30,381 26,572 25,867 26,594 26,440 26,965 25,376 24,831 23,956 3 U.S. Treasury bills and certificates3 56,243 52,389 45,824 44,182 44,450 43,964 42,906 46,658 50,432 U.S. Treasury bonds and notes 4 Marketable 41,455 53,150 63,048 63,415 64,940 65,581 65,801 67,666 67,942 5 Nonmarketable4 14,654 11,791 9,750 9,350 9,350 9,350 8,750 8,750 8,750 6 U.S. securities other than U.S. Treasury securities5 21,845 25,800 25,739 25,748 25,914 25,448 25,215 24,816 24,443 By area 7 Western Europe1 81,592 65,484 58,791 61,120 61,350 60,723 59,355 61,371 62,467 8 Canada 1,562 2,403 1,519 1,771 2,057 2,204 2,044 2,070 2,520 9 Latin America and Caribbean 5,688 6,954 7,522 6,802 6,385 7,181 5,884 6,028 7,142 10 Asia 70,784 91,790 97,112 94,883 95,822 95,187 94,091 95,996 95,602 11 Africa 4,123 1,829 1,485 1,326 1,303 1,452 1,371 1,350 1,716 12 Other countries6 829 1,242 3,799 3,387 4,177 4,561 5,303 5,906 6,076 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored 2. Principally demand deposits, time deposits, bankers acceptances, commer- agencies, and U.S. corporate stocks and bonds. cial paper, negotiable time certificates of deposit, and borrowings under repur- 6. Includes countries in Oceania and Eastern Europe. chase agreements. 3. Includes nonmarketable certificates of indebtedness (including those pay- NOTE. Based on Treasury Department data and on data reported to the able in foreign currencies through 1974) and Treasury bills issued to official Treasury Department by banks (including Federal Reserve Banks) and securities institutions of foreign countries. dealers in the United States. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies. 3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies Millions of dollars, end of period 1982 IItteemm 11997799 11998800 11998811 Mar. June Sept. Dec.'' 1 Banks' own liabilities 1,918 3,748 3,767 4,290 4,783 4,973 4,751 2 Banks' own claims 2,419 4,206 5,224 5,574 6,401 6,772 7,689 3 Deposits 994 2,507 3,398 3,532 3,526 3,429 4,241 4 Other claims 1,425 1,699 1,826 2,042 2,875 3,343 3,448 5 Claims of banks' domestic customers' 580 962 971 944 921 506 676 1. Assets owned by customers of the reporting bank located in the United NOTE. Data on claims exclude foreign currencies held by U.S. monetary States that represent claims on foreigners held by reporting banks for the accounts authorities, of their domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1982 1983 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11997799 11998800 11998811AA July Aug. Sept. Oct. Nov. Dec. Jan.? 1 All foreigners 187,521 205,297 243,279 285,114 293,122 298,515 297,617 303,015' 305,378 304,651 2 Banks' own liabilities 117,196 124,791 162,974 209,172 217,564 220,427 218,741 226,307' 225,437 219,243 3 Demand deposits 23,303 23,462 19,628 17,071 15,840 15,418 17,064 17,216' 16,076 16,204 4 Time deposits' 13,623 15,076 28,903 59,603 62,208 62,332 62,236 62,976' 67,050 64,263 5 Other2 16,453 17,583 17,398 20,292 24,211 23,520 22,842 24,382 23,736 23,074 6 Own foreign offices3 63,817 68,670 97,044 112,206 115,305 119,158 116,600 121,733' 118,574 115,702 7 Banks' custody liabilities4 70,325 80,506 80,305 75,941 75,558 78,089 78,876 76,708 79,941 85,409 8 U.S. Treasury bills and certificates5 48,573 57,595 55,316 51,211 49,646 51,572 53,374 52,138 55,614 62,137 9 Other negotiable and readily transferable instruments6 19,396 20,079 19,019 20,722 22,134 22,437 21,787 20,965 20,609 19,342 10 Other 2,356 2,832 5,970 4,009 3,778 4,080 3,715 3,605 3,718 3,930 11 Nonmonetary international and regional organizations7 2,356 2,344 2,721 4,082 5,073 5,050 6,036 6,465 4,597 6,611 12 Banks' own liabilities 714 444 638 2,246 3,093 2,752 2,337 3,387 1,584 1,787 13 Demand deposits 260 146 262 343 265 194 261 257 106 284 14 Time deposits' 151 85 58 633 453 734 431 969 1,339 1,333 15 Other2 303 212 318 1,271 2,376 1,825 1,645 2,161 139 170 16 Banks' custody liabilities4 1,643 1,900 2,083 1,835 1,980 2,298 3,699 3,078 3,013 4,824 17 U.S. Treasury bills and certificates 102 254 541 487 328 676 2,160 1,774 1,621 3,603 18 Other negotiable and readily transferable instruments6 1,538 1,646 1,542 1,349 1,652 1,621 1,539 1,304 1,392 1,221 19 Other 2 0 0 0 0 0 0 0 0 0 20 Official institutions8 78,206 86,624 79,037 71,690 70,776 70,891 70,930 68,282 71,490 74,388 21 Banks' own liabilities 18,292 17,826 16,813 16,279 16,323 16,646 16,898 16,676 16,484 16,534 22 Demand deposits 4,671 3,771 2,564 2,788 1,994 2,526 2,138 2,127 1,981 2,188 23 Time deposits' 3,050 3,612 4,197 6,497 5,859 5,312 6,132 5,524 5,477 4,889 24 Other2 10,571 10,443 10,052 6,994 8,470 8,809 8,629 9,025 9,027 9,458 25 Banks' custody liabilities4 59,914 68,798 62,224 55,411 54,453 54,245 54,031 51,607 55,006 57,854 26 U.S. Treasury bills and certificates5 47,666 56,243 52,389 45,824 44,182 44,450 43,964 42,906 46,658 50,432 27 Other negotiable and readily transferable instruments6 12,196 12,501 9,787 9,552 10,234 9,755 10,033 8,672 8,319 7,386 28 Other 52 54 47 36 37 39 34 28 28 35 29 Banks9 88,316 96,415 135,558 171,474 177,557 181,452 179,672 185,792' 185,135 178,169 30 Banks' own liabilities 83,299 90,456 123,839 157,802 163,348 165,627 164,054 169,525' 168,718 161,346 31 Unaffiliated foreign banks 19,482 21,786 26,795 45,596 48,043 46,469 47,454 47,792' 50,144 45,644 32 Demand deposits 13,285 14,188 11,614 9,384 8,765 8,138 9,887 9,739 8,733 8,286 33 Time deposits' 1,667 1,703 8,695 25,006 26,698 26,503 26,099 26,22C 28,256 25,505 34 Other2 4,530 5,895 6,486 11,206 12,580 11,828 11,468 11,833 13,154 11,854 35 Own foreign offices3 63,817 68,670 97,044 112,206 115,305 119,158 116,600 121,733' 118,574 115,702 36 Banks' custody liabilities4 5,017 5,959 11,718 13,671 14,209 15,825 15,618 16,267 16,417 16,822 37 U.S. Treasury bills and certificates 422 623 1,687 3,872 3,970 4,897 5,634 5,792 5,809 6,292 38 Other negotiable and readily transferable instruments6 2,415 2,748 4,421 6,661 7,102 7,916 7,181 7,782 7,827 7,698 39 Other 2,179 2,588 5,611 3,138 3,138 3,012 2,803 2,693 2,782 2,833 40 Other foreigners 18,642 19,914 25,964 37,868 39,716 41,123 40,980 42,476' 44,155 45,484 41 Banks' own liabilities 14,891 16,065 21,684 32,845 34,800 35,401 35,452 36,719 38,651 39,575 42 Demand deposits 5,087 5,356 5,189 4,556 4,816 4,560 4,778 5,093 5,257 5,447 43 Time deposits 8,755 9,676 15,953 27,467 29,199 29,783 29,574 30,263 31,977 32,536 44 Other2 1,048 1,033 543 822 785 1,059 1,100 1,363 1,416 1,592 45 Banks' custody liabilities4 3,751 3,849 4,279 5,023 4,916 5,721 5,528 5,756 5,505 5,908 46 U.S. Treasury bills and certificates 382 474 699 1,028 1,167 1,548 1,615 1,666 1,525 1,810 47 Other negotiable and readily transferable instruments6 3,247 3,185 3,268 3,160 3,147 3,146 3,035 3,207 3,071 3,037 48 Other 123 190 312 835 603 1,028 878 884 908 1,062 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,984 10,745 10,747 13,029 13,921 13,533 13,999 13,408 14,296 13,362 1. Excludes negotiable time certificates of deposit, which are included in 6. Principally bankers acceptances, commercial paper, and negotiable time "Other negotiable and readily transferable instruments." certificates of deposit. 2. Includes borrowing under repurchase agreements. 7. Principally the International Bank for Reconstruction and Development, and 3. U.S. banks: includes amounts due to own foreign branches and foreign the Inter-American and Asian Development Banks. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 8. Foreign central banks and foreign central governments, and the Bank for regulatory agencies. Agencies, branches, and majority-owned subsidiaries of International Settlements. foreign banks: principally amounts due to head office or parent foreign bank, and 9. Excludes central banks, which are included in "Official institutions." foreign branches, agencies or wholly owned subsidiaries of head office or parent • Liabilities and claims of banks in the United States were increased, foreign bank. beginning in December 1981, by the shift from foreign branches to international 4. Financial claims on residents of the United States, other than long-term banking facilities in the United States of liabilities to, and claims on, foreign securities, held by or through reporting banks. residents. 5. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official institutions of foreign countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • March 1983 3.17 Continued 1982 1983 AArreeaa aanndd ccoouunnttrryy 11997799 11998800 11998811AA July Aug. Sept. Oct. Nov. Dec. Jan.P 1 Total 187,521 205,297 243,279 285,114 293,122 298,515 297,617 303,015' 305,378 304,651 2 Foreign countries 185,164 202,953 240,558 281,032 288,049 293,466 291,581 296,550' 300,780 298,040 3 Europe 90,952 90,897 91,019 107,158 112,017 114,263 114,895 117,245' 117,909 118,782 4 Austria 413 523 587 501 531 537 508 441 512 . 482 5 Belgium-Luxembourg 2,375 4,019 4,117 2,967 3,218 3,259 2,782 2,499' 2,517 2,256 6 Denmark 1,092 497 333 452 446 149 166 221 509 996 / Finland 398 455 296 162 224 328 478 572 805 475 8 France 10,433 12,125 8,486 8,642 8,145 7,720 7,358 7,065 8,112 8,497 9 Germany 12,935 9,973 7,665 5,624 5,397 5,331 5,360 6,093 5,405 5,806 10 Greece 635 670 463 506 559 471 516 496 537 589 11 Italy 7,782 7,572 7,290 5,760 6,703 6,714 5,541 4,779 5,674 4,938 12 Netherlands 2,337 2,441 2,823 2,789 2,838 2,899 3,102 3,100 3,362 3,770 13 Norway 1,267 1,344 1,457 1,333 1,634 1,773 2,026 2,197 1,567 1,476 14 Portugal 557 374 354 365 453 386 356 453 388 398 15 Spain 1,259 1,500 916 1,133 1,223 1,106 1,315 1,301 1,405 1,316 16 Sweden 2,005 1,737 1,545 1,385 1,278 1,324 2,000 1,615 1,380 1,315 17 Switzerland 17,954 16,689 18,720 23,847 25,014 26,519 26,736 27,994 28,999 29,160 18 Turkey 120 242 518 222 287 301 317 255 296 190 19 United Kingdom 24,700 22,680 28,287 44,970 46,881 48,478 48,809 50,276' 48,383 50,334 20 Yugoslavia 266 681 375 320 317 307 390 470 499 470 21 Other Western Europe' 4,070 6,939 6,245 5,739 6,381 6,294 6,484 6,889 6,936 5,846 22 U.S.S.R 52 68 49 41 47 47 111 45 50 57 23 Other Eastern Europe2 302 370 493 397 440 322 541 486 573 413 24 Canada 7,379 10,031 10,250 11,168 12,194 11,623 12,163 11,719' 12,217 11,079 25 Latin America and Caribbean 49,686 53,170 84,685 103,810 106,882 109,110 106,616 110,345' 112,907 110,324 26 Argentina 1,582 2,132 2,445 2,154 2,713 3,359 3,482 3,432 3,577 4,833 2/ Bahamas 15,255 16,381 34,400 39,388 41,502 42,164 41,100 44,324' 44,009 42,631 28 Bermuda 430 670 765 1,302 1,289 1,519 1,507 1,596 1,571 1,999 29 Brazil 1,005 1,216 1,568 1,823 1,865 1,752 2,020 1,865 2,078 1,923 30 British West Indies 11,138 12,766 17,794 22,039 22,871 23,294 23,071 24,302 26,200 24,602 31 Chile 468 460 664 1,442 1,170 1,293 1,438 1,444 1,626 1,341 32 Colombia 2,617 3,077 2,993 2,699 2,636 2,516 2,407 22,,442266 2,598 2,384 33 Cuba 13 6 9 7 9 7 7 88 9 10 34 Ecuador 425 371 434 527 478 524 556 519 453 472 35 Guatemala 414 367 479 613 616 639 636 639 670 682 36 Jamaica 76 97 87 139 136 121 118 108 126 115 3/ Mexico 4,185 4,547 7,163 9,643 9,259 8,468 8,031 8,135 7,967 7,925 38 Netherlands Antilles 499 413 3,182 3,601 3,759 3,713 3,677 3,518 3,597 3,756 39 Panama 4,483 4,718 4,847 4,884 4,656 6,172 4,688 4,795' 4,698 4,919 40 Peru 383 403 694 931 984 974 1,031 959 1,147 1,052 41 Uruguay 202 254 367 609 665 721 844 651 759 751 42 Venezuela 4,192 3,170 4,245 9,140 9,219 8,625 8,796 8,315 8,382 7,623 43 Other Latin America and Caribbean 2,318 2,123 2,548 2,869 3,056 3,249 3,207 3,309' 3,440 3,306 44 33,005 42,420 50,005 52,118 50,854 51,115 49,800 48,597 48,530 48,194 45 Mainland 49 49 158 261 245 254 216 214 203 220 46 Taiwan 1,393 1,662 2,082 2,371 2,323 2,490 2,568 2,786 2,716 3,139 47 Hong Kong 1,672 2,548 3,950 4,918 4,551 4,945 4,957 4,847 4,428 4,542 48 India 527 416 385 551 655 407 449 507 433 514 49 Indonesia 504 730 640 722 593 436 748 534 849 1,156 50 Israel 707 883 592 476 486 583 622 705 606 608 51 Japan 8,907 16,281 20,750 19,861 19,291 18,895 16,860 15,680 15,987 15,836 52 Korea 993 1,528 2,013 1,934 1,712 1,905 1,886 1,791 1,692 1,473 53 Philippines 795 919 874 660 728 712 736 768 770 680 54 Thailand 277 464 534 450 369 310 365 349 629 482 55 Middle-East oil-exporting countries3 15,300 14,453 13,174 14,252 14,106 14,026 14,050 14,396 13,433 12,332 56 Other Asia 1,879 2,487 4,854 5,662 5,795 6,152 6,344 6,020 6,784 7,210 57 Africa 3,239 5,187 3,180 2,692 2,586 2,783 3,369 3,192 3,070 3,346 58 Egypt 475 485 360 430 405 385 242 373 398 500 59 Morocco 33 33 32 52 47 63 54 66 75 51 60 South Africa 184 288 420 339 341 344 279 564 277 276 61 Zaire 110 57 26 25 25 20 23 22 23 '25 62 Oil-exporting countries4 1,635 3,540 1,395 1,025 908 1,074 1,669 1,250 1,280 1,618 63 Other Africa 804 783 946 821 860 897 1,103 918 1,017 877 64 Other countries 904 1,247 1,419 4,085 3,516 4,572 4,738 5,452 6,147 6,314 65 Australia 684 950 1,223 3,831 3,317 4,355 4,530 5,224 5,904 6,080 66 All other 220 297 196 254 199 216 207 228 243 235 67 Nonmonetary international and regional organizations 2,356 2,344 2,721 4,082 5,073 5,050 6,036 6,465 4,597 6,611 68 International 1,238 1,157 1,661 3,064 3,936 3,934 5,141 5,522 3,705 5,769 69 Latin American regional 806 890 710 606 776 719 573 533 517 527 70 Other regional5 313 296 350 412 362 397 322 410 375 316 1. Includes the Bank for International Settlements. Beginning April 1978, also 5. Asian, African, Middle Eastern, and European regional organizations, includes Eastern European countries not listed in line 23. except the Bank for International Settlements, which is included in "Other 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Western Europe." Democratic Republic, Hungary, Poland, and Romania. • Liabilities and claims of banks in the United States were increased, beginning 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and in December 1981, by the shift from foreign branches to international banking United Arab Emirates (Trucial States). facilities in the United States of liabilities to, and claims on, foreign residents. 4. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1982 1983 AArreeaa aanndd ccoouunnttrryy 11997799 11998800 11998811 •• July Aug. Sept. Oct. Nov. Dec. Jan p 1 Total 133,943 172,592 251,047 323,295 328,621 339,367 334,138 336,566' 352,867 356,390 2 Foreign countries 133,906 172,514 250,991 323,250 328,515 339,323 334,082 336,509' 352,799 356,317 3 Europe 28,388 32,108 49,058 67,491 70,807 76,481 78,346 79,213' 83,712 83,423 4 Austria 284 236 121 189 186 146 173 197 216 234 5 Belgium-Luxembourg 1,339 1,621 2,843 4,092 4,421 4,804 4,962 5,404' 5,113 4,751 6 Denmark 147 127 187 303 323 358 396 406 554 609 7 Finland 202 460 546 699 776 806 813 904 990 984 8 France 3,322 2,958 4,124 5,860 5,960 5,815 6,218 6,638' 6,864 7,179 9 Germany 1,179 948 936 1,730 1,565 1,609 1,522 1,766 1,849 1,404 10 Greece 154 256 333 294 270 283 335 373 452 576 11 Italy 1,631 3,364 5,240 6,292 6,569 6,733 7,346 7,718 7,510 7,553 17 Netherlands 514 575 682 1,118 1,085 1,099 1,285 1,122 1,394 1,470 13 Norway 276 227 384 538 482 575 544 650 569 629 14 Portugal 330 331 529 990 970 998 1,018 924 943 843 15 Spain 1,051 993 2,100 3,304 3,520 3,469 3,558 3,633 3,730 3,662 16 Sweden 542 783 1,205 1,510 1,693 2,398 2,799 2,804 3,030 3,057 17 Switzerland 1,165 1,446 2,213 1,610 1,589 1,859 1,636 1,516 1,674 1,624 18 Turkey 149 145 424 646 600 605 603 598 560 527 19 United Kingdom 13,795 14,917 23,655 34,702 37,181 41,370 41,652 40,862' 44,462 44,535 20 Yugoslavia 611 853 1,224 1,266 1,220 1,196 1,248 1,261 1,418 1,382 21 Other Western Europe1 175 179 209 280 286 325 266 380 368 384 22 U.S.S.R 268 281 377 274 296 246 242 227 263 238 23 Other Eastern Europe2 1,254 1,410 1,725 1,793 1,814 1,787 1,728 1,832 1,751 1,783 24 Canada 4,143 4,810 9,164 13,049 12,083 11,852 12,977 12,526' 14,203 14,774 25 Latin America and Caribbean 67,993 92,992 138,121 178,323 181,708 186,355 179,981 180,868' 186,818 191,188 26 Argentina 4,389 5,689 7,522 10,971 10,936 10,964 11,019 10,816 10,959 11,231 27 Bahamas 18,918 29,419 43,437 52,503 54,706 55,340 51,692 52,204' 55,971 57,511 28 Bermuda 496 218 346 388 385 429 602 957 609 578 29 Brazil 7,713 10,496 16,918 21,560 22.146 23,081 22,970 22,978' 23,174 22,977 30 British West Indies 9,818 15,663 21,920 28,136 28,519 29,982 28,223 27,323' 28,913 32,469 31 Chile 1,441 1,951 3,690 5,228 5,367 5,394 5,276 5,091 5,570 5,260 37, Colombia 1,614 1,752 2,018 2,607 2,650 2,826 2,838 2,895 3,185 3,225 33 Cuba 4 3 3 8 3 3 3 3 3 15 34 Ecuador 1,025 1,190 1,531 2,027 2,048 2,127 2,057 2,101 2,053 2,027 35 Guatemala3 134 137 124 121 116 119 111 140 124 137 36 Jamaica3 47 36 62 578 508 387 151 218 181 206 37 Mexico 9,099 12,595 22,408 29,742 29,347 29,596 29,371 29,508 29,447 29,422 38 Netherlands Antilles 248 821 1,076 1,032 778 825 688 731' 809 858 39 Panama 6,041 4,974 6,779 9,147 9,842 10,583 9,983 10,575' 10,122 9,970 40 Peru 652 890 1,218 2,064 2,062 2,252 2,244 2,259 2,332 2,299 41 Uruguay 105 137 157 413 457 550 572 609' 681 712 47 Venezuela 4,657 5,438 7,069 9,692 9,800 9,867 9,925 10,250 10,684 10,202 43 Other Latin America and Caribbean 1,593 1,583 1,844 2,105 2,039 2,032 2,257 2,211 2,000 2,089 44 30,730 39,078 49,770 57,388 57,229 57,335 55,678 56,67K 60,630 59,103 China 45 Mainland 35 195 107 139 127 126 139 194 210 204 46 Taiwan 1,821 2,469 2,461 1,977 1,891 1,949 2,020 2,255 2,285 2,223 47 Hong Kong 1,804 2,247 4,126 6,124 6,447 6,723 5,976 6,201' 7,705 7,089 48 India 92 142 123 266 235 275 254 258 222 230 49 Indonesia 131 245 346 294 297 292 315 314 342 370 50 Israel 990 1,172 1,562 1,637 1,534 1,623 1,748 1,895 2,043 1,835 51 Japan 16,911 21,361 26,757 30,026 29,491 28,496 26,722 25,952' 27,199 26,796 57 Korea 3,793 5,697 7,324 7,046 6,967 7,365 7,790 8,536 9,389 9,052 53 Philippines 737 989 1,817 2,605 2,611 2,508 2,560 2,467 2,555 2,444 54 Thailand 933 876 564 415 388 409 442 501 644 649 55 Middle East oil-exporting countries4 1,548 1,432 1,575 2,493 2,633 2,591 2,848 3,176 3,088 3,429 56 Other Asia 1,934 2,252 3,009 4,366 4,607 4,978 4,865 4,923' 4,948 4,781 57 Africa 1,797 2,377 3,503 4,971 4,811 5,176 5,017 5,274 5,350 5,600 58 Egypt 114 151 238 378 399 386 365 349 322 310 59 Morocco 103 223 284 314 368 376 367 384 347 342 60 South Africa 445 370 1,011 1,620 1,574 1,775 1,744 1,832 2,013 2,061 61 Zaire 144 94 112 81 58 59 61 58 57 57 62 Oil-exporting countries5 391 805 657 848 761 842 762 903 803 914 63 Other 600 734 1,201 1,730 1,651 1,738 1,718 1,747 1,807 1,916 64 Other countries 855 1,150 1,376 2,028 1,878 2,125 2,083 1,957 2,087 2,229 65 Australia 673 859 1,203 1,700 1,534 1,792 1,713 1,528 1,714 1,715 66 All other 182 290 172 328 344 332 370 429 373 514 67 Nonmonetary international and regional organizations6 36 78 56 45 106 44 56 57 68 73 1. Includes the Bank for International Settlements. Beginning April 1978, also 5. Comprises Algeria, Gabon, Libya, and Nigeria. includes Eastern European countries not listed in line 23. 6. Excludes the Bank for International Settlements, which is included in 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German "Other Western Europe." Democratic Republic, Hungary, Poland, and Romania. NOTE. Data for period prior to April 1978 include claims of banks' domestic 3. Included in "Other Latin America and Caribbean" through March 1978. customers on foreigners. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and • Liabilities and claims of banks in the United States were increased, United Arab Emirates (Trucial States). beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • March 1983 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1982 1983 TTyyppee ooff ccllaaiimm 11997799 11998800 11998811AA July Aug. Sept/ Oct. Nov/ Dec. Jan.P 1 Total 111111155555554444444,,,,,,,000000033333330000000 111111199999998888888,,,,,,,666666699999998888888 222222288888886666666,,,,,,,444444411111115555555 333333377777776666666,,,,,,,999999922222223333333 333333399999992222222,,,,,,,444444488888887777777 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 111111133333333333333,,,,,,,999999944444443333333 111111177777772222222,,,,,,,555555599999992222222 222222255555551111111,,,,,,,000000044444447777777 323,295 328,621 333333333333339999999,,,,,,,333333366666667777777 334,138 336,566 333333355555552222222,,,,,,,888888866666667777777 356,390 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 11111115555555,,,,,,,999999933333337777777 22222220000000,,,,,,,888888888888882222222 33333331111111,,,,,,,333333311111116666666 40,612 41,758 44444442222222,,,,,,,666666688888882222222 42,459 42,280 44444444444444,,,,,,,555555544444444444444 44,553 44 OOwwnn ffoorreeiiggnn ooffffiicceess'' 44444447777777,,,,,,,444444422222228888888 66666665555555,,,,,,,000000088888884444444 99999996666666,,,,,,,666666644444447777777 114,412 118,642 111111122222225555555,,,,,,,777777766666661111111 116,870 118,060 111111122222226666666,,,,,,,555555544444444444444 133,130 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 44444440000000,,,,,,,999999922222227777777 55555550000000,,,,,,,111111166666668888888 77777774444444,,,,,,,000000088888886666666 108,572 109,143 111111111111111111111,,,,,,,444444499999999999999 114,301 115,223 111111111111119999999,,,,,,,222222299999990000000 115,711 66 DDeeppoossiittss 6666666,,,,,,,222222277777774444444 8888888,,,,,,,222222255555554444444 22222222222222,,,,,,,999999977777779999999 40,276 40,929 44444440000000,,,,,,,777777700000005555555 42,024 41,113 44444442222222,,,,,,,888888855555555555555 41,662 77 OOtthheerr 33333334444444,,,,,,,666666655555554444444 44444441111111,,,,,,,999999911111114444444 55555551111111,,,,,,,111111100000007777777 68,296 68,214 77777770000000,,,,,,,777777799999994444444 72,278 74,109 77777776666666,,,,,,,444444433333334444444 74,049 88 AAllll ootthheerr ffoorreeiiggnneerrss 22222229999999,,,,,,,666666655555550000000 33333336666666,,,,,,,444444455555559999999 44444448888888,,,,,,,999999999999998888888 59,699 59,078 55555559999999,,,,,,,444444422222224444444 60,508 61,003 66666662222222,,,,,,,444444488888889999999 62,997 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 22222220000000,,,,,,,000000088888888888888 22222226666666,,,,,,,111111100000006666666 33333335555555,,,,,,,333333366666668888888 33333337777777,,,,,,,555555555555556666666 33333339999999,,,,,,,666666622222220000000 999999955555555555555 888888888888885555555 1111111,,,,,,,333333377777778888888 1111111,,,,,,,333333388888889999999 1111111,,,,,,,999999933333336666666 11 Negotiable and readily transferable 11111113333333,,,,,,,111111100000000000000 11111115555555,,,,,,,555555577777774444444 22222225555555,,,,,,,777777755555552222222 22222229999999,,,,,,,000000044444447777777 33333330000000,,,,,,,666666622222227777777 12 Outstanding collections and other 6666666,,,,,,,000000033333332222222 9999999,,,,,,,666666644444448888888 8888888,,,,,,,222222233333338888888 7777777,,,,,,,111111122222220000000 7777777,,,,,,,000000055555557777777 13 MEMO: Customer liability on 11111118888888,,,,,,,000000022222221111111 22222222222222,,,,,,,777777711111114444444 22222229999999,,,,,,,555555511111117777777 33333335555555,,,,,,,222222277777773333333 33333338888888,,,,,,,444444400000001111111 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 ... 22,333 24,511 39,831 45,301 43,911 43,649 45,453 46,805 40,831 n.a. 1. U.S. banks: includes amounts due from own foreign branches and foreign 4. Includes demand and time deposits and negotiable and nonnegotiable subsidiaries consolidated in "Consolidated Report of Condition" filed with bank certificates of deposit denominated in U.S. dollars issued by banks abroad. For regulatory agencies. Agencies, branches, and majority-owned subsidiaries of description of changes in data reported by nonbanks, see July 1979 BULLETIN, p. foreign banks: principally amounts due from head office or parent foreign bank, 550. and foreign branches, agencies, or wholly owned subsidiaries of head office or • Liabilities and claims of banks in the United States were increased, parent foreign bank. beginning in December 1981, by the shift from foreign branches to international 2. Assets owned by customers of the reporting bank located in the United banking facilities in the United States of liabilities to, and claims on, foreign States that represent claims on foreigners held by reporting banks for the account residents. of their domestic customers. NOTE. Beginning April 1978, data for banks' own claims are given on a monthly 3. Principally negotiable time certificates of deposit and bankers acceptances. basis, but the data for claims of banks' own domestic customers are available on a quarterly basis only. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1981 1982 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11997799 11998800 Dec. A Mar. June Sept. Dec.P 1 86,181 106,748 153,839 174,506 200,493 213,028 227,158 By borrower 2 Maturity of 1 year or less' 65,152 82,555 115,818 133,035 151,622 161,257 173,228 3 Foreign public borrowers 7,233 9,974 15,099 16,573 19,397 20,115 21,032 4 All other foreigners 57,919 72,581 100,718 116,463 132,225 141,143 152,1% 5 Maturity of over 1 year' 21,030 24,193 38,022 41,470 48,871 51,770 53,930 6 Foreign public borrowers 8,371 10,152 15,662 16,831 20,082 21,903 22,830 7 All other foreigners 12,659 14,041 22,360 24,639 28,789 29,867 31,099 By area Maturity of 1 year or less1 8 Europe 15,235 18,715 27,903 34,284 39,053 44,828 48,971 9 Canada 1,777 2,723 4,634 5,805 6,582 7,021 7,537 10 Latin America and Caribbean 24,928 32,034 48,473 58,244 67,975 71,597 74,404 11 21,641 26,686 31,408 30,564 33,537 33,028 37,435 12 Africa 1,077 1,757 2,457 2,890 3,259 3,621 3,660 13 All other2 493 640 943 1,249 1,217 1,163 1,221 Maturity of over 1 year' 14 Europe 4,160 5,118 8,092 8,333 9,243 10,507 11,488 15 Canada 1,317 1,448 1,774 1,858 2,340 1,957 1,923 16 Latin America and Caribbean 12,814 15,075 25,088 27,666 32,897 33,985 35,115 17 1,911 1,865 1,902 2,245 2,474 3,359 3,173 18 Africa 655 507 899 1,056 1,295 1,328 1,491 19 All other2 173 179 267 312 622 635 740 1. Remaining time to maturity. • Liabilities and claims of banks in the United States were increased, 2. Includes nonmonetary international and regional organizations. beginning in December 1981, by the shift from foreign branches to international banking facilities in the United States of liabilities to, and claims on, foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks' Billions of dollars, end of period 1980 1981 1982 AArreeaa oorr ccoouunnttrryy 1199778822 11997799 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec.P 1 Total 266.2 303.9 352.0 372.1 382.9 399.8 414.4 417.6 432.0 433.6 435.1 2 G 10 countries and Switzerland 124.7 138.4 162.1 168.5 168.3 172.2 175.2 173.7 175.0 173.4 177.2 3 Belgium-Luxembourg 9.0 11.1 13.0 13.6 13.8 14.1 13.3 13.2 14.1 13.5 13.0 4 France 12.2 11.7 14.1 14.5 14.7 16.0 15.3 15.9 16.4 15.7 16.6 5 Germany 11.3 12.2 12.1 13.3 12.1 12.7 12.9 12.5 12.7 12.2 12.6 6 Italy 6.7 6.4 8.2 7.7 8.4 8.6 9.6 9.0 9.0 9.7 10.3 7 Netherlands 4.4 4.8 4.4 4.6 4.2 3.7 4.0 4.0 4.1 3.8 3.6 8 Sweden 2.1 2.4 2.9 3.2 3.1 3.4 3.7 4.0 4.0 4.7 5.0 9 Switzerland 5.3 4.7 5.0 5.1 5.2 5.1 5.5 5.3 5.1 5.0 5.0 10 United Kingdom 47.3 56.4 67.4 68.5 67.0 68.8 69.9 69.7 68.5 69.0 70.9 11 Canada 6.0 6.3 8.4 8.9 10.8 11.8 10.9 11.6 11.3 10.8 10.9 12 Japan 20.6 22.4 26.5 29.1 28.9 28.0 30.1 28.4 29.9 28.9 29.0 13 Other developed countries 19.4 19.9 21.6 23.5 24.8 26.4 28.4 30.6 32.1 32.6 33.6 14 Austria 1.7 2.0 1.9 1.8 2.1 2.2 1.9 2.1 2.1 2.0 1.9 15 Denmark 2.0 2.2 2.3 2.4 2.3 2.5 2.3 2.5 2.6 2.5 2.4 16 Finland 1.2 1.2 1.4 1.4 1.3 1.4 1.7 1.6 1.6 1.8 2.3 17 Greece 2.3 2.4 2.8 2.7 3.0 2.9 2.8 2.8 2.6 2.5 2.9 18 Norway 2.1 2.3 2.6 2.8 2.8 3.0 3.1 3.2 3.2 3.4 3.3 19 Portugal .6 .7 .6 .6 .8 1.0 1.1 1.2 1.5 1.6 1.5 20 Spain 3.5 3.5 4.4 5.5 5.7 5.8 6.7 7.2 7.3 7.7 7.5 21 Turkey 1.5 1.4 1.5 1.5 1.4 1.5 1.4 1.6 1.5 1.5 1.4 22 Other Western Europe 1.3 1.4 1.7 1.8 1.8 1.9 2.1 2.2 2.2 2.1 2.3 23 South Africa 2.0 1.3 1.1 1.5 1.9 2.5 2.8 3.3 3.5 3.6 3.7 24 Australia 1.4 1.3 1.3 1.5 1.7 1.9 2.5 3.0 4.0 4.0 4.3 25 OPEC countries3 22.7 22.9 22.7 21.7 22.2 23.5 24.5 25.1 26.1 27.0 27.2 26 Ecuador 1.6 1.7 2.1 2.0 2.0 2.1 2.2 2.3 2.4 2.3 2.2 27 Venezuela 7.2 8.7 9.1 8.3 8.8 9.2 9.7 9.7 9.8 10.1 10.6 28 Indonesia 2.0 1.9 1.8 2.1 2.1 2.5 2.5 2.7 2.7 2.9 3.2 29 Middle East countries 9.5 8.0 6.9 6.7 6.8 7.1 7.5 8.2 8.7 9.0 8.5 30 African countries 2.5 2.6 2.8 2.6 2.6 2.6 2.5 2.2 2.5 2.7 2.7 31 Non-OPEC developing countries 52.6 63.0 77.4 82.2 84.8 90.2 96.2 97.5 103.6 103.8 106.9 Latin America 32 Argentina 3.0 5.0 7.9 9.5 8.5 9.3 9.4 9.9 9.7 9.2 8.9 33 Brazil 14.9 15.2 16.2 17.0 17.5 17.7 19.1 19.7 21.3 22.4 22.8 34 Chile 1.6 2.5 3.7 4.0 4.8 5.5 5.8 6.0 6.4 6.2 6.3 35 Colombia 1.4 2.2 2.6 2.4 2.5 2.5 2.6 2.3 2.6 2.8 3.0 36 Mexico 10.8 12.0 15.9 17.0 18.2 20.0 21.6 22.9 25.1 24.8 24.4 37 Peru 1.7 1.5 1.8 1.8 1.7 1.8 2.0 1.9 2.4 2.6 2.6 38 Other Latin America 3.6 3.7 3.9 4.7 3.8 4.2 4.1 4.1 4.0 4.3 4.2 Asia China 39 Mainland .0 .1 i .2 .2 .2 .2 .2 .3 .2 .3 40 Taiwan 2.9 3.4 4.2 4.4 4.6 5.1 5.1 5.1 5.0 4.9 5.2 41 India .2 .2 .3 .3 .3 .3 .3 .5 .5 .5 .6 42 Israel 1.0 1.3 1.5 1.3 1.8 1.5 2.1 1.7 2.2 1.9 2.3 43 Korea (South) 3.9 5.4 7.1 7.7 8.8 8.6 9.4 8.6 8.9 9.3 10.8 44 Malaysia .6 1.0 1.1 1.2 1.4 1.4 1.7 1.7 1.9 1.8 2.1 45 Philippines 2.8 4.2 5.1 4.8 5.1 5.6 6.0 5.9 6.3 6.0 6.2 46 Thailand 1.2 1.5 1.6 1.6 1.5 1.4 1.5 1.4 1.3 1.3 1.6 47 Other Asia .2 .5 .6 .5 .7 .8 1.0 1.2 1.1 1.3 1.1 Africa 48 Egypt .4 .6 .8 .8 .7 1.0 1.1 1.3 1.3 1.3 1.2 49 Morocco .6 .6 .7 .6 .5 .7 .7 .7 .7 .8 .7 50 Zaire .2 .2 .2 .2 .2 .2 .2 .2 .2 .1 .1 51 Other Africa4 1.4 1.7 2.1 2.2 2.1 2.2 2.3 2.3 2.3 2.2 2.5 52 Eastern Europe 6.9 7.3 7.4 7.7 7.7 7.7 7.8 7.2 6.7 6.3 6.2 53 U.S.S.R 1.3 .7 .4 .4 .5 .4 .6 .4 .4 .3 .3 54 Yugoslavia 1.5 1.8 2.3 2.4 2.5 2.5 2.5 2.5 2.4 2.2 2.2 55 Other 4.1 4.8 4.6 4.8 4.8 4.7 4.7 4.3 3.9 3.8 3.7 56 Offshore banking centers 31.0 40.4 47.0 53.7 59.3 61.7 63.5 65.2 70.7 70.3 66.6 57 Bahamas 10.4 13.7 13.7 15.5 17.9 21.3 18.9 19.8 23.1 20.1 18.0 58 Bermuda .7 .8 .6 .7 .7 .8 .7 .7 .7 .8 .9 59 Cayman Islands and other British West Indies 7.4 9.4 10.6 11.9 12.6 12.1 12.4 12.0 12.2 13.3 12.8 60 Netherlands Antilles .8 1.2 2.1 2.3 2.4 2.2 3.2 3.2 3.0 3.3 3.3 61 Panama5 3.0 4.3 5.4 6.5 6.9 6.7 7.6 7.1 7.3 8.0 7.5 62 Lebanon .1 .2 .2 .2 .2 .2 .2 .2 .2 .1 .1 63 Hong Kong 4.2 6.0 8.1 8.4 10.3 10.3 11.8 12.9 14.3 14.9 14.8 64 Singapore 3.9 4.5 5.9 7.3 8.1 8.0 8.7 9.3 9.8 9.8 9.1 65 Others6 .5 .4 .3 .9 .3 .1 .1 .1 .1 .0 .0 66 Miscellaneous and unallocated7 9.1 11.7 14.0 14.9 15.7 18.2 18.8 18.3 18.2 20.1 17.6 1. The banking offices covered by these data are the U.S. offices and foreign the U.S. offices also include customer claims and foreign currency claims branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. (amounting in June 1978 to $10 billion). Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. In addition to the Organization of Petroleum Exporting Countries shown (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are individually, this group includes other members of OPEC (Algeria, Gabon, Iran, adjusted to exclude the claims on foreign branches held by a U.S. office or another Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as foreign branch of the same banking institution. The data in this table combine well as Bahrain and Oman (not formally members of OPEC). foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims 4. Excludes Liberia. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 5. Includes Canal Zone beginning December 1979. foreign banks and those constituting claims on own foreign branches). However, 6. Foreign branch claims only. see also footnote 2. 7. Includes New Zealand, Liberia, and international and regional organiza- 2. Beginning with data for June 1978, the claims of the U.S. offices in this table tions. include only banks' own claims payable in dollars. For earlier dates the claims of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • March 1983 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1981 1982 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997799 11998800 11998811 Sept. Dec. Mar. June Sept.? 1 Total 17,418 22,212 22,460 23,593 22,460 22,366 20,843 21,269 2 Payable in dollars 14,323 18,481 18,749 20,374 18,749 19,605 18,102 18,378 3 Payable in foreign currencies 3,095 3,731 3,711 3,219 3,711 2.761 2,740 2,892 By type 4 Financial liabilities 7,507 11,316 12,103 13,072 12,103 12,585 10,017 10,537 5 Payable in dollars 5,223 8,528 9,444 10,688 9,444 10,622 8,056 8,456 6 Payable in foreign currencies 2,284 2,788 2,660 2,384 2,660 1,963 1,961 2,081 7 Commercial liabilities 9,910 10,896 10.357 10,520 10,357 9,782 10,826 10,732 8 Trade payables 4,591 4,993 4,720 4,430 4,720 4,022 4,967 4,526 9 Advance receipts and other liabilities 5,320 5,903 5,637 6,091 5,637 5,760 5,859 6,206 10 Payable in dollars 9.100 9,953 9,305 9,686 9,305 8,983 10,047 9,921 11 Payable in foreign currencies 811 943 1,052 835 1,052 798 779 811 By area or country Financial liabilities 12 Europe 4,649 6,467 6,808 7,957 6,808 7,874 5,947 6,407 13 Belgium-Luxembourg 322 465 460 495 460 596 518 494 14 France 175 327 709 929 709 924 581 664 15 Germany 497 582 491 430 491 503 439 446 16 Netherlands 829 681 748 664 748 755 517 763 17 Switzerland 170 354 715 465 715 707 661 670 18 United Kingdom 2,477 3,923 3,559 4,800 3,559 4,282 3,084 3,240 19 Canada 532 964 958 977 958 914 758 702 20 Latin America and Caribbean 1,514 3,136 3,353 3,293 3.353 3,327 2,794 2,782 21 Bahamas 404 964 1,279 1,019 1,279 1,095 1,003 933 22 Bermuda 81 1 7 6 7 6 7 14 23 Brazil 18 23 22 20 22 27 24 28 24 British West Indies 516 1,452 1,241 1,398 1,241 1,469 1,044 990 25 Mexico 121 99 102 107 102 67 83 85 26 Venezuela 72 81 98 90 98 97 100 104 27 804 723 957 814 957 455 502 631 28 Japan 726 644 792 696 792 293 340 424 29 Middle East oil-exporting countries2 31 38 75 51 75 63 66 67 30 Africa 4 11 3 3 3 2 3 3 31 Oil-exporting countries3 1 1 0 1 0 0 0 0 32 All other4 4 15 24 29 24 12 11 13 Commercial liabilities 33 Europe 3,709 4,402 3,771 3,963 3,771 3,422 3,661 3,862 34 Belgium-Luxembourg 137 90 71 79 71 50 47 50 35 France 467 582 573 575 573 504 657 759 36 Germany 545 679 545 590 545 473 457 431 37 Netherlands 227 219 221 239 221 232 247 281 38 Switzerland 316 499 424 569 424 400 412 358 39 United Kingdom 1,080 1,209 880 925 880 824 849 904 40 Canada 924 888 897 853 897 884 1,116 1,188 41 Latin America and Caribbean 1,325 1,300 1,037 1,134 1,037 804 1,399 1,219 42 Bahamas 69 8 2 3 2 22 20 6 43 Bermuda 32 75 67 113 67 71 102 48 44 Brazil 203 111 67 61 67 83 62 128 45 British West Indies 21 35 2 11 2 27 1 3 46 Mexico 257 367 340 392 340 210 727 484 47 Venezuela 301 319 276 273 276 194 219 269 48 2,991 3,034 3,285 3,221 3,285 3,404 3,286 3,201 49 Japan 583 802 1,094 775 1,094 1,090 1,060 1,133 50 Middle East oil-exporting countries2 1,014 890 910 881 910 998 954 821 51 Africa 728 817 703 757 703 664 733 668 52 Oil-exporting countries3 384 517 344 355 344 247 340 248 53 All other4 233 456 664 593 664 604 630 595 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A65 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States' Millions of dollars, end of period 1981 1982 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11997799 11998800 11998811 Sept. Dec. Mar. June Sept.P 1 Total 31,305 34,535 35,674 34,392 35,674 30,189 30,234 29,294 2 Payable in dollars 28,108 31,591 32,091 31,389 32,091 27,554 27,735 26,612 3 Payable in foreign currencies 3,197 2,944 3,584 3,003 3,584 2,635 2,500 2,682 By type 4 Financial claims 18,404 19,816 20,756 19,399 20,756 17.752 18,215 17,580 5 Deposits 12,852 14,180 14,657 13,771 14,657 12,656 13,428 12,498 6 Payable in dollars 11,936 13,405 14,043 13,045 14,043 12,199 13,054 12,096 7 Payable in foreign currencies 916 775 614 727 614 457 374 402 8 Other financialc laims 5,552 5,636 6,098 5,627 6.098 5,0% 4,787 5,082 9 Payable in dollars 3,726 3,953 3,644 3,932 3,644 3,439 3,219 3.395 10 Payable in foreign currencies 1,826 1,683 2,454 1,695 2,454 1,657 1,568 1.687 11 Commercial claims 12,901 14,720 14,919 14,994 14,919 12,437 12,019 11,714 12 Trade receivables 12,185 13,960 13,954 14,057 13,954 11,477 10,960 10,709 13 Advance payments and other claims 716 759 965 937 965 960 1.058 1,005 14 Payable in dollars 12,447 14,233 14,403 14,412 14,403 11,917 11,461 11,121 15 Payable in foreign currencies 454 487 516 582 516 520 557 593 By area or country Financial claims 16 Europe 6,191 6,094 4,533 4,819 4,533 4,511 4,486 4,693 17 Belgium-Luxembourg 32 145 43 26 43 16 13 16 18 France 177 312 315 348 315 422 313 305 19 Germany 409 230 224 314 224 197 148 174 20 Netherlands 53 51 50 68 50 79 56 52 21 Switzerland 73 59 67 80 67 53 63 60 22 United Kingdom 5,111 4,982 3,505 3,659 3,505 3,502 3,620 3,714 23 Canada 4,997 5,064 6,624 6,033 6,624 4,931 4,395 4,318 24 Latin America and Caribbean 6,312 7,811 8,615 7,762 8,615 7,432 8,312 7,529 25 Bahamas 2,773 3,477 3,925 3,284 3,925 3,537 3,845 3,301 26 Bermuda 30 135 18 15 18 27 42 19 77 Brazil 163 96 30 66 30 49 76 76 28 British West Indies 2,011 2,755 3,503 3,315 3,503 2,797 3,504 3,136 29 Mexico 157 208 313 283 313 281 274 268 30 Venezuela 143 137 148 143 148 130 134 133 31 601 607 759 500 759 680 800 830 32 Japan 199 189 363 111 363 267 327 252 33 Middle East oil-exporting countries2 16 20 37 29 37 36 33 30 34 Africa 258 208 173 169 173 164 156 165 35 Oil-exporting countries3 49 26 46 41 46 43 41 50 36 All other4 44 32 51 116 51 34 66 44 Commercial claims 37 Europe 4,922 5,544 5,359 5,378 5,359 4,381 4,241 4,164 38 Belgium-Luxembourg 202 233 234 220 234 246 209 178 39 France 727 1,129 776 767 776 698 634 646 40 Germany 593 599 557 582 557 452 391 408 41 Netherlands 298 318 303 308 303 227 296 277 42 Switzerland 272 354 427 404 427 354 383 258 43 United Kingdom 901 929 969 1.034 969 1,062 893 1,036 44 Canada 859 914 967 1,017 967 943 707 665 45 Latin America and Caribbean 2,879 3,766 3,468 3,729 3,468 2,907 2,763 2,772 46 Bahamas 21 21 12 18 12 80 30 19 47 Bermuda 197 108 223 241 223 212 226 154 48 Brazil 645 861 668 726 668 417 419 481 49 British West Indies 16 34 12 13 12 23 14 7 50 Mexico 708 1,102 1,022 985 1,022 762 748 869 51 Venezuela 343 410 424 456 424 396 381 373 52 3,451 3,522 3,914 3,700 3,914 3,155 3,297 3,027 53 Japan 1,177 1,052 1,244 1,129 1,244 1,160 1,211 866 54 Middle East oil-exporting countries2 765 825 901 829 901 757 793 775 55 Africa 551 653 750 717 750 587 597 638 56 Oil-exporting countries3 130 153 152 154 152 143 132 148 57 All other4 240 321 461 453 461 463 413 448 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • March 1983 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1983 1982 1983 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998811 11998822 Jan. July Aug. Sept. Oct. Nov. Dec. Jan.? U.S. corporate securities STOCKS 1 Foreign purchases 40,686 41,846 5,148 2,708 3,183 4,292 5,967 5,581 5,784 5,148 2 Foreign sales 34,856 37,950 4,366 2,697 2,650 4,399 5,675 5,245 4,868 4,366 3 Net purchases, or sales (-) 5,830 3,896 782 11 532 -107 292 336 915 782 4 Foreign countries 5,803 3,811 772 5 530 -110 282 325 890 772 5 Europe 3,662 2,541 586 302 272 -268 175 69 616 586 6 France 900 -143 47 0 -7 -43 -30 -8 43 47 7 Germany -22 333 84 20 -12 -43 47 26 138 84 8 Netherlands 42 -60 2 0 12 -62 -102 -24 25 2 9 Switzerland 288 -529 212 -34 -53 -144 -118 -208 226 212 10 United Kingdom 2,235 3,073 184 309 366 73 435 317 187 184 11 Canada 783 222 90 -36 73 115 5 72 154 90 12 Latin America and Caribbean -30 304 5 -69 121 -82 142 54 39 5 13 Middle East1 1,140 368 -57 -137 101 134 -98 9 -153 -57 14 Other Asia 287 244 125 -57 -43 -16 22 112 210 125 15 Africa 7 2 6 1 1 0 0 2 3 6 16 Other countries -46 131 18 0 5 6 35 7 22 18 17 Nonmonetary international and regional organizations 27 85 10 6 2 3 10 11 25 10 BONDS2 18 Foreign purchases 17,290 21,431 1,933 1,743 1,513 2,088 2,778 2,099 2,099 1,933 19 Foreign sales 12,247 20,340 2,279 1,634 1,760 2,230 2,939 2,280 2,457 2,279 20 Net purchases, or sales (-) 5,043 1,091 -346 109 -247 -142 -162 -181 -358 -346 21 Foreign countries 4,976 1,118 -344 74 -111 -106 -202 -190 -348 -344 22 Europe 1,356 1,736 -190 189 -27 -279 429 -236 -158 -190 23 France 11 296 -21 5 -18 25 -16 24 146 -21 24 Germany 848 2,122 -96 258 106 86 190 11 43 -96 25 Netherlands 70 29 16 -3 0 -10 -2 -4 -1 16 26 Switzerland 108 161 28 -22 32 -24 -4 -13 44 28 27 United Kingdom 181 -1,085 -105 -63 -109 -380 240 -327 -461 -105 28 Canada -12 25 11 1 4 2 -152 10 -2 11 29 Latin America and Caribbean 132 160 23 18 18 19 -15 28 -6 23 30 Middle East1 3,465 -769 -211 -68 -78 193 -435 -20 -177 -211 31 Other Asia 44 -23 23 -66 -31 -47 -30 28 -5 23 32 Africa -1 -19 0 0 0 0 0 0 0 0 33 Other countries -7 7 0 0 2 5 0 0 -1 0 34 Nonmonetary international and regional organizations 66 -28 -2 35 -136 -36 41 10 -10 -2 Foreign securities 35 Stocks, net purchases, or sales ( —) -188 -1,334 -292 44 11 -160 -308 -740 -272 -292 36 Foreign purchases 9,281 7,151 1,031 452 532 545 706 772 927 1,031 37 Foreign sales 9,469 8,485 1,323 409 520 705 1,014 1,512 1,199 1,323 38 Bonds, net purchases, or sales (-) -5,449 -6,610 22 -698 -1,353 -1,157 -1,331 -463 -417 22 39 Foreign purchases 17,553 29,959 2,881 2,293 3,279 3,064 3,058 2,948 2,962 2,881 40 Foreign sales 23,003 36,569 2,859 2,991 4,632 4,222 4,389 3,411 3,379 2,859 41 Net purchases, or sales (—), of stocks and bonds .... -5,637 -7,944 -270 -655 -1,342 -1,317 -1,639 -1,204 -689 -270 42 Foreign countries -4,625 -6,756 -244 -662 -1,144 -810 -1,247 -1,173 -736 -244 43 Europe -707 -2,489 -307 -26 -128 -271 -517 -572 -555 -307 44 Canada -3,697 -2,376 -21 -344 -678 -299 -181 -12 -29 -21 45 Latin America and Caribbean 69 336 258 3 49 -65 -268 -62 29 258 46 Asia -322 -1,853 -164 -303 -433 241 -283 -536 -195 -164 47 Africa -55 -9 -9 3 17 1 0 4 4 -9 48 Other countries 87 -364 -2 6 29 -416 3 5 10 -2 49 Nonmonetary international and regional organizations -1,012 -1,188 -26 7 -198 -507 -392 -31 47 -26 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, 2. Includes state and local government securities, and securities of U.S. Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). government agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Investment Transactions and Discount Rates A67 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1983 1982 1983 CCoouunnttrryy oorr aarreeaa 11998811 11998822 JJaann.. July Aug. Sept. Oct. Nov. Dec. Jan.f Holdings (end of period)1 1 Estimated total2 70,201 85,346 79,873 80,694 82,345 84,047 84,844 85,346 85,780 2 Foreign countries2 64,530 80,546 75,348 76,722 78,339 79,132 79,402 80,546 80,968 3 Europe2 23,976 29,214 26,447 27,722 28,805 29,023 29,388 29.214 29,829 4 Belgium-Luxembourg 543 447 155 576 551 834 448 447 716 5 Germany2 11,861 14,841 13,535 13,959 14,520 14,493 14,704 14,841 15,151 6 Netherlands 1,955 2,702 2,137 2,302 2,333 2,315 2,420 2,702 2,787 7 Sweden 643 667 650 644 635 655 687 667 678 8 Switzerland2 846 1,540 1,016 1,100 1,233 1,266 1,532 1,540 1,013 9 United Kingdom 6,709 6,554 6,927 7,129 7,362 7,242 7,104 6,554 6,737 10 Other Western Europe 1,419 2,464 2,028 2,012 2,171 2,218 2,493 2,464 2,747 11 Eastern Europe 0 0 0 0 0 0 0 0 0 12 Canada 514 602 446 353 428 482 552 602 649 13 Latin America and Caribbean 736 1,076 848 1,166 1,204 1,086 1,231 1,076 1,062 14 Venezuela 286 188 229 222 221 204 172 188 190 15 Other Latin America and Caribbean 319 656 402 611 771 657 759 656 715 16 Netherlands Antilles 131 232 217 333 211 225 300 232 156 17 Asia 38,671 49,521 47,179 47,165 47,682 48,302 48,093 49,521 49,292 18 Japan 10,780 11,568 11,289 11,247 11,395 11,381 11,299 11,568 11,645 19 Africa 631 78 405 305 180 180 78 78 78 20 All other 2 54 23 12 41 60 61 54 59 21 Nonmonetary international and regional organizations 5,671 4,800 4,525 3,972 4,006 4,915 5,442 4,800 4,812 22 International 5,638 4,439 4,419 3,882 3,811 4,670 5,192 4,439 4,418 23 Latin American regional 1 6 -4 -4 -4 -4 -4 6 6 Transactions (net purchases, or sales (-) during period) 24 Total2 12,652 15,144 434 1,669 822 1,651 1,703 797 502 434 25 Foreign countries2 11,568 16,016 423 2,338 1,374 1,618 792 270 1,144 423 26 Official institutions 11,694 14,516 276 2,792 367 1,525 641 220 1,866 276 27 Other foreign2 -127 1,499 147 -454 1,007 93 152 51 -722 147 28 Nonmonetary international and regional organizations 1,085 -870 11 -669 -553 33 910 526 -642 11 MEMO: Oil-exporting countries 29 Middle East3 11,156 7,537 93 1,313 257 176 209 -320 303 93 30 Africa4 -289 -552 0 0 -100 -125 0 -100 0 0 1. Estimated official and private holdings of marketable U.S. Treasury securi- 2. Beginning December 1978, includes U.S. Treasury notes publicly issued to ties with an original maturity of more than 1 year. Data are based on a benchmark private foreign residents denominated in foreign currencies. survey of holdings as of Jan. 31, 1971, and monthly transactions reports. Excludes 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and nonmarketable U.S. Treasury bonds and notes held by official institutions of United Arab Emirates (Trucial States). foreign countries. 4. Comprises Algeria, Gabon, Libya, and Nigeria. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on Feb. 28, 1983 Rate on Feb. 28, 1983 Rate on Feb. 28, 1983 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 4.75 Dec. 1982 France1 12.5 Feb. 1983 Norway 9.0 Nov. 1979 Belgium . 11.5 Nov. 1982 Germany, Fed. Rep. of 5.0 Dec. 1982 Switzerland 4.5 Dec. 1982 Brazil. .. 49.0 Mar. 1981 Italy 18.0 Aug. 1981 United Kingdom2 Canada.. 9.43 Feb. 1983 Japan 5.5 Dec. 1981 Venezuela Sept. 1982 Denmark 10.0 Nov. 1980 Netherlands 4.5 Jan. 1983 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government commerdiscounts Treasury bills for 7 to 10 days. cial banks or brokers. For countries with more than one rate applicable to such 2. Minimum lending rate suspended as of Aug. 20, 1981. discounts or advances, the rate shown is the one at which it is understood the central bank transacts the largest proportion of its credit operations. NOTE. Rates shown are mainly those at which the central bank either discounts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • March 1983 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1982 1983 CCoouunnttrryy,, oorr ttyyppee 11998800 11998811 11998822 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Eurodollars 14.00 16.79 12.24 11.57 11.74 10.43 9.77 9.47 8.97 9.14 2 United Kingdom 16.59 13.86 12.21 11.08 10.84 9.74 9.30 10.55 11.04 11.29 3 Canada 13.12 18.84 14.38 14.76 13.57 12.14 11.08 10.56 9.87 9.69 4 Germany 9.45 12.05 8.81 8.94 8.13 7.55 7.24 6.54 5.78 5.79 5 Switzerland 5.79 9.15 5.04 4.07 3.97 3.66 3.76 3.71 2.78 2.95 6 Netherlands 10.60 11.52 8.26 8.66 7.85 7.09 6.36 5.66 4.97 4.82 7 France 12.18 15.28 14.61 14.43 14.09 13.51 12.98 12.70 12.55 12.88 8 Italy 17.50 19.98 19.99 19.52 18.56 18.57 19.05 19.20 18.95 19.04 9 Belgium 14.06 15.28 14.10 14.00 13.06 12.75 12.50 12.25 12.25 12.25 10 Japan 11.45 7.58 6.84 7.14 7.19 6.97 6.98 6.96 6.47 6.64 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1982 1983 CCoouunnttrryy//ccuurrrreennccyy 11998800 11998811 11998822 Sept. Oct. Nov. Dec. Jan. Feb. 1 Argentina/peso n.a. n.a. 20985.00 25961.90 29487.50 39200.00 43883.91 48916.66 50239.47 ? Australia/dollar1 114.00 114.95 101.65 95.820 94.35 94.27 96.82 98.26 96.62 3 Austria/schilling 12.945 15.948 17.060 17.597 17.797 17.947 16.994 16.783 17.076 4 Belgium/franc 29.237 37.194 45.780 48.300 49.103 49.600 47.493 46.888 47.739 5 Brazil/cruzeiro n.a. 92.374 179.22 201.73 215.34 228.51 244.63 262.30 309.01 6 Canada/dollar 1.1693 1.1990 1.2344 1.2348 1.2301 1.2262 1.2385 1.2287 1.2277 7 Chile/peso n.a. n.a. 51.118 62.643 66.770 69.050 72.630 74.257 76.863 8 China, P.R./yuan n.a. 1.7031 1.8978 1.9567 1.9887 2.0002 1.9445 1.9238 1.9653 9 Colombia/peso n.a. n.a. 64.071 65.921 66.856 68.168 69.526 70.762 71.751 10 Denmark/krone 5.6345 7.1350 8.3443 8.8038 8.9192 8.9595 8.5275 8.4171 8.5811 11 Finland/markka 3.7206 4.3128 4.8086 4.8014 5.3480 5.5263 5.3425 5.3120 5.3907 1? France/franc 4.2250 5.4396 6.5793 7.0649 7.1557 7.2152 6.8548 6.7725 6.8855 13 Germany/deutsche mark 1.8175 2.2631 2.428 2.5055 2.5320 2.5543 2.4193 2.3893 2.4280 14 Greece/drachma n.a. n.a. 66.872 70.946 71.948 72.889 70.788 80.761 83.621 15 Hong Kong/dollar n.a. 5.5678 6.0697 6.1253 6.6038 6.6724 6.5417 6.5252 6.6060 16 India/rupee 7.8866 8.6807 9.4846 9.6495 9.7005 9.7968 9.6926 9.7938 9.9184 17 Indonesia/rupiah n.a. n.a. 660.43 662.75 670.31 680.92 687.95 694.62 700.01 18 Iran/rial n.a. 79.324 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 19 Ireland/pound1 205.77 161.32 142.05 136.53 134.35 132.91 137.69 139.16 136.81 20 Israel/shekel n.a. n.a. 24.407 28.922 29.860 31.344 32.966 34.863 36.986 71 Italy/lira 856.20 1138.60 1354.00 1411.19 1439.94 1468.84 1398.74 1374.71 1399.78 ?? Japan/yen 226.63 220.63 249.06 263.29 271.61 264.09 241.94 232.73 236.12 73 Malaysia/ringgit 2.1767 2.3048 2.3395 2.3610 2.3688 2.3647 2.3529 2.2822 2.2757 74 Mexico/peso 22.968 24.547 72.990 101.86 108.83 130.61 147.35 150.75 157.81 25 Netherlands/guilder 1.9875 2.4998 2.6719 2.7444 2.7608 2.7861 2.6698 2.6310 2.6779 26 New Zealand/dollar1 97.34 86.848 75.101 72.419 71.431 71.092 72.569 72.921 71.895 77 Norway/krone 4.9381 5.7430 6.4567 6.8999 7.1735 7.2397 7.0346 7.0447 7.1171 78 Peru/sol n.a. n.a. 694.59 772.08 819.14 878.66 942.47 1019.54 1087.43 79 Philippines/peso n.a. 7.8113 8.5324 8.6521 8.7760 8.8733 9.0546 9.2632 9.4488 30 Portugal/escudo 50.082 61.739 80.101 87.702 89.652 91.911 92.685 94.548 93.771 31 Singapore/dollar n.a. 2.1053 2.1406 2.1671 2.1984 2.2123 2.1522 2.0768 2.0758 3? South Africa/rand1 128.54 114.77 92.297 86.830 86.20 87.77 92.03 93.82 91.04 33 South Korea/won n.a. n.a. 731.93 743.61 743.65 745.60 746.36 749.80 752.19 34 Spain/peseta 71.758 92.396 110.09 113.049 115.20 119.09 126.125 126.844 129.886 35 Sri Lanka/rupee 16.167 18.967 20.756 20.918 20.898 21.009 21.166 21.378 22.355 36 Sweden/krona 4.2309 5.0659 6.2838 6.2313 7.1543 7.5095 7.3555 7.3227 7.4385 37 Switzerland/franc 1.6772 1.9674 2.0327 2.1418 2.1736 2.1931 2.0588 1.9679 2.0180 38 Thailand/baht n.a. 21.731 23.014 23.000 23.000 23.000 23.000 23.000 22.999 39 United Kingdom/pound1 232.58 202.43 174.80 171.20 169.62 163.21 161.60 157.56 153.29 40 Venezuela/bolivar n.a. 4.2781 4.2981 4.3006 4.2976 4.2996 4.2971 4.2973 4.3101 MEMO: United States/dollar2 87.39 102.94 116.57 120.93 123.16 124.27 119.22 117.73 119.70 1. Value in U.S. cents. description and back data, see "Index of the Weighted-Average Exchange Value 2. Index of weighted-average exchange value of U.S. dollar against currencies of the U.S. Dollar: Revision" on page 700 of the August 1978 BULLETIN. of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76 global trade of each of the 10 countries. Series revised as of August 1978. For NOTE. Averages of certified noon buying rates in New York for cable tranfers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 when SMSAs Standard metropolitan statistical areas the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1982 A76 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Commercial bank assets and liabilities, December 31, 1981 April 1982 A72 Commercial bank assets and liabilities, March 31, 1982 July 1982 A70 Commercial bank assets and liabilities, June 30, 1982 October 1982 A70 Commercial bank assets and liabilities, September 30, 1982 January 1983 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1981 April 1982 A78 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1982 July 1982 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1982 October 1982 A76 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1982 January 1983 A76 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH PRESTON MARTIN, Vice Chairman J. CHARLES PARTEE OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY AND FINANCIAL POLICY JOSEPH R. COYNE, Assistant to the Board DONALD J. WINN, Assistant to the Board STEPHEN H. AXILROD, Staff Director FRANK O'BRIEN, JR., Deputy Assistant to the Board EDWARD C. ETTIN, Deputy Staff Director ANTHONY F. COLE, Special Assistant to the Board MURRAY ALTMANN, Assistant to the Board WILLIAM R. JONES, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board WILLIAM R. MALONI, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION JAMES L. KICHLINE, Director MICHAEL BRADFIELD, General Counsel JOSEPH S. ZEISEL, Deputy Director J. VIRGIL MATTINGLY, JR., Associate General Counsel MICHAEL J. PRELL, Senior Associate Director GILBERT T. SCHWARTZ, Associate General Counsel JARED J. ENZLER, Associate Director RICHARD M. ASHTON, Assistant General Counsel DONALD L. KOHN, Associate Director NANCY P. JACKLIN, Assistant General Counsel ELEANOR J. STOCKWELL, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel DAVID E. LINDSEY, Deputy Associate Director FREDERICK M. STRUBLE, Deputy Associate Director HELMUT F. WENDEL, Deputy Associate Director MARTHA BETHEA, Assistant Director OFFICE OF THE SECRETARY JOE M. CLEAVER, Assistant Director ROBERT M. FISHER, Assistant Director WILLIAM W. WILES, Secretary SUSAN J. LEPPER, Assistant Director BARBARA R. LOWREY, Associate Secretary THOMAS D. SIMPSON, Assistant Director JAMES MCAFEE, Associate Secretary LAWRENCE SLIFMAN, Assistant Director STEPHEN P. TAYLOR, Assistant Director PETER A. TINSLEY, Assistant Director DIVISION OF CONSUMER LEVON H. GARABEDIAN, Assistant Director (Administration) AND COMMUNITY AFFAIRS DIVISION OF INTERNATIONAL FINANCE GRIFFITH L. GARWOOD, Director JERAULD C. KLUCKMAN, Associate Director GLENN E. LONEY, Assistant Director EDWIN M. TRUMAN, Director ROBERT F. GEMMILL, Senior Associate Director DOLORES S. SMITH, Assistant Director CHARLES J. SIEGMAN, Senior Associate Director LARRY J. PROMISEL, Associate Director DALE W. HENDERSON, Deputy Associate Director DIVISION OF BANKING SAMUEL PIZER, Staff Adviser SUPERVISION AND REGULATION MICHAEL P. DOOLEY, Assistant Director RALPH W. SMITH, JR., Assistant Director JOHN E. RYAN, Director WILLIAM TAYLOR, Deputy Director FREDERICK R. DAHL, Associate Director DON E. KLINE, Associate Director JACK M. EGERTSON, Assistant Director ROBERT A. JACOBSEN, Assistant Director ROBERT S. PLOTKIN, Assistant Director THOMAS A. SIDMAN, Assistant Director SIDNEY M. SUSSAN, Assistant Director SAMUEL H. TALLEY, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff NANCY H. TEETERS LYLE E. GRAMLEY EMMETT J. RICE OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES EDWARD T. MULRENIN, Assistant Staff Director THEODORE E. ALLISON, Staff Director JOSEPH W. DANIELS, SR., Director of Equal Employment Opportunity DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF DATA PROCESSING CLYDE H. FARNSWORTH, JR., Director CHARLES L. HAMPTON, Director LORIN S. MEEDER, Associate Director BRUCE M. BEARDSLEY, Deputy Director DAVID L. ROBINSON, Associate Director GLENN L. CUMMINS, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director NEAL H. HILLERMAN, Assistant Director WALTER ALTHAUSEN, Assistant Director ELIZABETH A. JOHNSON, Assistant Director CHARLES W. BENNETT, Assistant Director WILLIAM C. SCHNEIDER, JR., Assistant Director ANNE M. DEBEER, Assistant Director ROBERT J. ZEMEL, Assistant Director JACK DENNIS, JR., Assistant Director RICHARD B. GREEN, Assistant Director EARL G. HAMILTON, Assistant Director DIVISION OF PERSONNEL ELLIOTT C. MCENTEE, Assistant Director DAVID L. SHANNON, Director JOHN R. WEIS, Assistant Director CHARLES W. WOOD, Assistant Director OFFICE OF THE CONTROLLER GEORGE E. LIVINGSTON, Controller BRENT L. BOWEN, Assistant Controller DIVISION OF SUPPORT SERVICES DONALD E. ANDERSON, Director ROBERT E. FRAZIER, Associate Director WALTER W. KREIMANN, Associate Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin • March 1983 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman ANTHONY M. SOLOMON, Vice Chairman JOHN J. BALLES LYLE E. GRAMLEY J. CHARLES PARTEE ROBERT P. BLACK KAREN N. HORN EMMETT J. RICE WILLIAM F. FORD PRESTON MARTIN NANCY H. TEETERS HENRY C. WALLICH STEPHEN H. AXILROD, Staff Director EDWARD C. ETTIN, Associate Economist NORMAND R. V. BERNARD, Assistant Secretary MICHAEL W. KERAN, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary DONALD L. KOCH, Associate Economist MICHAEL BRADFIELD, General Counsel JAMES PARTHEMOS, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL J. PRELL, Associate Economist JAMES L. KICHLINE, Economist CHARLES J. SIEGMAN, Associate Economist JOHN M. DAVIS, Associate Economist EDWIN M. TRUMAN, Associate Economist RICHARD G. DAVIS, Associate Economist JOSEPH S. ZEISEL, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL RONALD TERRY, Eighth District, President WILLIAM S. EDGERLY, First District, Vice President LEWIS T. PRESTON, Second District ROGER E. ANDERSON, Seventh District JOHN H. WALTHER, Third District E. PETER GILLETTE, JR., Ninth District JOHN G. MCCOY, Fourth District N. BERNE HART, Tenth District VINCENT C. BURKE, JR., Fifth District T. C. FROST, JR., Eleventh District PHILIP F. SEARLE, Sixth District JOSEPH J. PINOLA, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary CONSUMER ADVISORY COUNCIL SUSAN PIERSON DE WITT, Chicago, Illinois, Chairman WILLIAM J. O'CONNOR, Buffalo, New York, Vice Chairman ARTHUR F. BOUTON, Little Rock, Arkansas KENNETH V. LARKIN, San Francisco, California JAMES G. BOYLE, Austin, Texas TIMOTHY D. MARRINAN, Minneapolis, Minnesota GERALD R. CHRISTENSEN, Salt Lake City, Utah STANLEY L. MULARZ, Chicago, Illinois THOMAS L. CLARK, New York, New York WILLARD P. OGBURN, Boston, Massachusetts JEAN A. CROCKETT, Philadelphia, Pennsylvania ELVA QUIJANO, San Antonio, Texas JOSEPH N. CUGINI, Westerly, Rhode Island JANET J. RATHE, Portland, Oregon MEREDITH FERNSTROM, New York, New York JANET M. SCACCIOTTI, Providence, Rhode Island ALLEN J. FISHBEIN, Washington, D.C. GLENDA G. SLOANE, Washington, D.C. E. C. A. FORSBERG, SR., Atlanta, Georgia HENRY J. SOMMER, Philadelphia, Pennsylvania LUTHER R. GATLING, New York, New York NANCY Z. SPILLMAN, LOS Angeles, California RICHARD F. HALLIBURTON, Kansas City, Missouri WINNIE F. TAYLOR, Gainesville, Florida CHARLES C. HOLT, Austin, Texas MICHAEL M. VAN BUSKIRK, Columbus, Ohio GEORGE S. IRVIN, Denver, Colorado CLINTON WARNE, Cleveland, Ohio HARRY N. JACKSON, Minneapolis, Minnesota FREDERICK T. WEIMER, Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Robert P. Henderson Frank E. Morris Thomas I. Atkins James A. Mcintosh NEW YORK* 10045 John Brademas Anthony M. Solomon Gertrude G. Michelson Thomas M. Timlen Buffalo 14240 M. Jane Dickman John T. Keane PHILADELPHIA 19105 Robert M. Landis, Esq. Edward G. Boehne Nevius M. Curtis Richard L. Smoot CLEVELAND* 44101 J.L. Jackson Karen N. Horn William H. Knoell William H. Hendricks Cincinnati 45201 Clifford R. Meyer Robert E. Showalter Pittsburgh 15230 Milton G. Hulme, Jr. Harold J. Swart RICHMOND* 23219 Steven Muller Robert P. Black William S. Lee, III Jimmie R. Monhollon Baltimore 21203 Edward H. Covell Robert D. McTeer, Jr. Charlotte 28230 Dr. Henry Ponder Stuart P. Fishburne Culpeper Communications and Records Center 22701 Albert D. Tinkelenberg ATLANTA 30301 William A. Fickling, Jr. William F. Ford John H. Weitnauer, Jr. Robert P. Forrestal Birmingham 35283 Samuel R. Hill, Jr. Fred R. Hen- Jacksonville 32231 Joan W. Stein Charles D. East Miami 33152 Eugene E. Cohen Patrick K. Barron Nashville 37203 Robert C.H. Mathews, Jr. Jeffrey J. Wells New Orleans 70161 Roosevelt Steptoe James D. Hawkins CHICAGO* 60690 John Sagan Silas Keehn Stanton R. Cook Daniel M. Doyle Detroit 48231 Russell G. Mawby William C. Conrad ST. LOUIS 63166 W.L. Hadley Griffin Theodore H. Roberts Mary P. Holt Donald W. Moriarty, Jr. Little Rock 72203 Richard V. Warner John F. Breen Louisville 40232 William C. Ballard, Jr. Donald L. Henry Memphis 38101 G. Rives Neblett Randall C. Sumner MINNEAPOLIS 55480 William G. Phillips E. Gerald Corrigan John B. Davis, Jr. Thomas E. Gainor Helena 59601 Jean J. Etchart Robert F. McNellis KANSAS CITY 64198 Paul H. Henson Roger Guffey Doris M. Drury Henry R. Czerwinski Denver 80217 James E. Nielson Wayne W. Martin Oklahoma City 73125 Christine H. Anthony William G. Evans Omaha 68102 Robert G. Lueder Robert D. Hamilton DALLAS 75222 Gerald D. Hines Robert H. Boykin John V. James William H. Wallace El Paso 79999 Chester J. Kesey Joel L. Koonce, Jr. Houston 77252 Paul N. Howell J.Z. Rowe San Antonio 78295 Carlos Zuniga Thomas H. Robertson SAN FRANCISCO 94120 Caroline L. Ahmanson John J. Balles Alan C. Furth John B. Williams Los Angeles 90051 Bruce M. Schwaegler Richard C. Dunn Portland 97208 John C. Hampton Angelo S. Carella Salt Lake City 84125 Wendell J. Ashton A. Grant Holman Seattle 98124 John W. Ellis Gerald R. Kelly * Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, payable to the order of the Board of Governors of the Federal Room MS-138, Board of Governors of the Federal Reserve Reserve System. Remittance from foreign residents should System, Washington, D.C. 20551. When a charge is indicat- be drawn on a U.S. bank. Stamps and coupons are not ed, remittance should accompany request and be made accepted. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- each. PART 2, 1971. 153 pp. and PART 3, 1973. 131 pp. TIONS. 1974. 125 pp. Each volume $1.00; 10 or more to one address, $.85 ANNUAL REPORT. each. FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or OPEN MARKET POLICIES AND OPERATING PROCEDURES— $2.00 each in the United States, its possessions, Canada, STAFF STUDIES. 1971. 218 pp. $2.00 each; 10 or more to and Mexico; 10 or more of same issue to one address, one address, $1.75 each. $18.00 per year or $1.75 each. Elsewhere, $24.00 per REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHAyear or $2.50 each. NISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Vol. 3. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint 1972. 220 pp. Each volume $3.00; 10 or more to one of Part I only) 1976. 682 pp. $5.00. address, $2.50 each. BANKING AND MONETARY STATISTICS, 1941-1970. 1976. THE ECONOMETRICS OF PRICE DETERMINATION CONFER- 1,168 pp. $15.00. ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 ANNUAL STATISTICAL DIGEST pp. Cloth ed. $5.00 each; 10 or more to one address, 1971-75. 1976. 339 pp. $5.00 per copy. $4.50 each. Paper ed. $4.00 each; 10 or more to one 1972-76. 1977. 377 pp. $10.00 per copy. address, $3.60 each. 1973-77. 1978. 361 pp. $12.00 per copy. FEDERAL RESERVE STAFF STUDY: WAYS TO MODERATE 1974-78. 1980. 305 pp. $10.00 per copy. FLUCTUATIONS IN HOUSING CONSTRUCTION. 1972. 487 1970-79. 1981. 587 pp. $20.00 per copy. pp. $4.00 each; 10 or more to one address, $3.60 each. 1980. 1981. 241 pp. $10.00 per copy. LENDING FUNCTIONS OF THE FEDERAL RESERVE BANKS. 1981. 1982. 239 pp. $6.50 per copy. 1973. 271 pp. $3.50 each; 10 or more to one address, FEDERAL RESERVE CHART BOOK. Issued four times a year in $3.00 each. February, May, August, and November. Subscription IMPROVING THE MONETARY AGGREGATES: REPORT OF THE includes one issue of Historical Chart Book. $7.00 per ADVISORY COMMITTEE ON MONETARY STATISTICS. year or $2.00 each in the United States, its possessions, 1976. 43 pp. $1.00 each; 10 or more to one address, $.85 Canada, and Mexico. Elsewhere, $10.00 per year or each. $3.00 each. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- Regulation Z) Vol. I (Regular Transactions). 1969. 100 tion to Federal Reserve Chart Book includes one issue. pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each $1.25 each in the United States, its possessions, Canada, volume $1.00; 10 or more of same volume to one and Mexico; 10 or more to one address, $1.00 each. address, $.85 each. Elsewhere, $1.50 each. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in address, $1.50 each. the United States, its possessions, Canada, and Mexico; THE BANK HOLDING COMPANY MOVEMENT TO 1978: A 10 or more of same issue to one address, $13.50 per COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to year or $.35 each. Elsewhere, $20.00 per year or $.50 one address, $2.25 each. each. IMPROVING THE MONETARY AGGREGATES: STAFF PAPERS. THE FEDERAL RESERVE ACT, as amended through December 1978. 170 pp. $4.00 each; 10 or more to one address, 1976, with an appendix containing provisions of certain $3.75 each. other statutes affecting the Federal Reserve System. 307 1977 CONSUMER CREDIT SURVEY. 1978. 119 pp. $2.00 each. pp. $2.50. FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- each; 10 or more to one address, $1.50 each. ERAL RESERVE SYSTEM. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; BANK CREDIT-CARD AND CHECK-CREDIT PLANS. 1968. 102 10 or more to one address, $1.25 each. pp. $1.00 each; 10 or more to one address, $.85 each. PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. REPORT OF THE JOINT TREASURY-FEDERAL RESERVE STUDY $13.50 each. OF THE U.S. GOVERNMENT SECURITIES MARKET. 1969. NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- 48 pp. $.25 each; 10 or more to one address, $.20 each. SERVE STAFF STUDY, 1981. JOINT TREASURY-FEDERAL RESERVE STUDY OF THE GOV- SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: ERNMENT SECURITIES MARKET; STAFF STUDIES—PART REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL 1. 1970. 86 pp. $.50 each; 10 or more to one address, $.40 ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 STAFF STUDIES: Summaries Only Printed in the FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated at least monthly. (Requests must be prepaid.) Bulletin Consumer and Community Affairs Handbook. $60.00 per Studies and papers on economic and financial subjects year. that are of general interest. Requests to obtain single copies Monetary Policy and Reserve Requirements Handbook. of the full text or to be added to the mailing list for the series $60.00 per year. may be sent to Publications Services. Securities Credit Transactions Handbook. $60.00 per year. Federal Reserve Regulatory Service. 3 vols. (Contains all BELOW THE BOTTOM LINE: THE USE OF CONTINGENCIES three Handbooks plus substantial additional material.) AND COMMITMENTS BY COMMERCIAL BANKS, by Benja- $175.00 per year. min Wolkowitz and others. Jan. 1982. 186 pp. Rates for subscribers outside the United States are as MULTIBANK HOLDING COMPANIES: RECENT EVIDENCE ON follows and include additional air mail costs: COMPETITION AND PERFORMANCE IN BANKING MAR- Federal Reserve Regulatory Service, $225.00 per year. KETS, by Timothy J. Curry and John T. Rose. Jan. 1982. Each Handbook, $75.00 per year. 9 pp. WELCOME TO THE FEDERAL RESERVE, December 1982. COSTS, SCALE ECONOMIES, COMPETITION, AND PRODUCT PROCESSING BANK HOLDING COMPANY AND MERGER APPLI- MIX IN THE U.S. PAYMENTS MECHANISM, by David B. CATIONS Humphrey. Apr. 1982. 18 pp. SUSTAINABLE RECOVERY: SETTING THE STAGE, November DIVISIA MONETARY AGGREGATES: COMPILATION, DATA, 1982. AND HISTORICAL BEHAVIOR, by William A. Barnett and REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT ANNUAL Paul A. Spindt. May 1982. 82 pp. HUMAN RELATIONS AWARD DINNER, December 1982. THE COMMUNITY REINVESTMENT ACT AND CREDIT ALLO- CATION, by Glenn Canner. June 1982. 8 pp. INTEREST RATES AND TERMS ON CONSTRUCTION LOANS AT COMMERCIAL BANKS, by David F. Seiders. July 1982. CONSUMER EDUCATION PAMPHLETS 14 pp. Short pamphlets suitable for classroom use. Multiple STRUCTURE-PERFORMANCE STUDIES IN BANKING: AN UPcopies available without charge. DATED SUMMARY AND EVALUATION, by Stephen A. Rhoades. Aug. 1982. 15 pp. Alice in Debitland FOREIGN SUBSIDIARIES OF U.S. BANKING ORGANIZATIONS, Consumer Handbook to Credit Protection Laws by James V. Houpt and Michael G. Martinson. Oct. The Equal Credit Opportunity Act and . . . Age 1982. 18 pp. The Equal Credit Opportunity Act and . . . Credit Rights in Housing REDLINING: RESEARCH AND FEDERAL LEGISLATIVE RE- SPONSE, by Glenn B. Canner. Oct. 1982. 20 pp. The Equal Credit Opportunity Act and . . . Doctors, Law- BANK CAPITAL TRENDS AND FINANCING, by Samuel H. yers, Small Retailers, and Others Who May Provide Talley. Feb. 1983. 19 pp. Incidental Credit The Equal Credit Opportunity Act and . . . Women Fair Credit Billing Federal Reserve Glossary REPRINTS Guide to Federal Reserve Regulations Most of the articles reprinted do not exceed 12 pages. How to File A Consumer Credit Complaint If You Borrow To Buy Stock Perspectives on Personal Saving. 8/80. If You Use A Credit Card The Impact of Rising Oil Prices on the Major Foreign Series on the Structure of the Federal Reserve System Industrial Countries. 10/80. The Board of Governors of the Federal Reserve System Federal Reserve and the Payments System: Upgrading Elec- The Federal Open Market Committee tronic Capabilities for the 1980s. 2/81. Federal Reserve Bank Board of Directors Survey of Finance Companies, 1980. 5/81. Federal Reserve Banks Bank Lending in Developing Countries. 9/81. Monetary Control Act of 1980 U.S. International Transactions in 1981. 4/82. Organization and Advisory Committees The Commercial Paper Market since the Mid-Seventies. 6/82. Truth in Leasing Applying the Theory of Probable Future Competition. 9/82. U.S. Currency International Banking Facilities. 10/82. What Truth in Lending Means to You Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A3 through A68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers, 11, 26, 28 Demand deposits—Continued Agricultural loans, commercial banks, 19, 20, 21, 27 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 25 Banks, by classes, 18, 19-22 Turnover, 15 Domestic finance companies, 39 Depository institutions Federal Reserve Banks, 12 Reserve requirements, 8 Foreign banks, U.S. branches and agencies, 23 Reserves and related items, 3, 4, 5, 13 Nonfinancial corporations, 38 Deposits (See also specific types) Savings institutions, 30 Banks, by classes, 3, 18, 19-22, 30 Automobiles Federal Reserve Banks, 4, 12 Consumer installment credit, 42, 43 Turnover, 15 Production, 48, 49 Discount rates at Reserve Banks and at foreign central banks (See Interest rates) BANKERS balances, 18, 19-21 Discounts and advances by Reserve Banks (See {See also Foreigners) Loans) Banks for Cooperatives, 35 Dividends, corporate, 37 Bonds (See also U.S. government securities) New issues, 36 EMPLOYMENT, 46, 47 Rates 3 Eurodollars, 28 Branch banks, 16, 22-23, 56 Business activity, nonfinancial, 46 Business expenditures on new plant and equipment, 38 FARM mortgage loans, 41 Business loans (See Commercial and industrial loans) Federal agency obligations, 4, 11, 12, 13, 34 Federal credit agencies, 35 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation and types and Banks, by classes, 18 ownership of gross debt, 33 Federal Reserve Banks, 12 Receipts and outlays, 31, 32 Central banks, 67 Treasury financing of surplus, or deficit, 31 Certificates of deposit, 22, 28 Treasury operating balance, 31 Commercial and industrial loans Federal Financing Bank, 31, 35 Commercial banks, 16, 18, 23, 27 Federal funds, 3, 6, 19, 20, 21, 28, 31 Weekly reporting banks, 19-23, 24 Federal Home Loan Banks, 35 Commercial banks Federal Home Loan Mortgage Corporation, 35, 40, 41 Assets and liabilities, 18, 19-22 Federal Housing Administration, 35, 40, 41 Business loans, 27 Federal Intermediate Credit Banks, 35 Commercial and industrial loans, 16, 18, 23, 24, 27 Federal Land Banks, 35, 41 Consumer loans held, by type, 42, 43 Federal National Mortgage Association, 35, 40, 41 Loans sold outright, 22 Federal Reserve Banks Nondeposit funds, 17 Condition statement, 12 Number, by classes, 18 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 41 U.S. government securities held, 4, 12, 13, 33 Time and savings deposits, 3 Federal Reserve credit, 4, 5, 12, 13 Commercial paper, 3, 26, 28, 39 Federal Reserve notes, 12 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 35 Construction, 46, 50 Finance companies Consumer installment credit, 42, 43 Assets and liabilities, 39 Consumer prices, 46, 51 Business credit, 39 Consumption expenditures, 52, 53 Loans, 19, 20, 21, 42, 43 Corporations Paper, 26, 28 Profits and their distribution, 37 Financial institutions Security issues, 36, 66 Loans to, 19, 20, 21 Cost of living (See Consumer prices) Selected assets and liabilities, 30 Credit unions, 30, 42, 43 Float, 4 (See also Thrift institutions) Flow of funds, 44, 45 Currency and coin, 5, 18 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 4, 14 agencies, 23 Customer credit, stock market, 29 Foreign currency operations, 12 Foreign deposits in U.S. banks, 4, 12, 19, 20, 21 DEBITS to deposit accounts, 15 Foreign exchange rates, 68 Debt (See specific types of debt or securities) Foreign trade, 55 Demand deposits Foreigners Adjusted, commercial banks, 15 Claims on, 56, 58, 61, 62, 63, 65 Banks, by classes, 18, 19-22 Liabilities to, 22, 55, 56-60, 64, 66, 67 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 GOLD REAL estate loans Certificate account, 12 Banks, by classes, 19-21, 41 Stock, 4, 55 Rates, terms, yields, and activity, 3, 40 Government National Mortgage Association, 35, 40, 41 Savings institutions, 28 Gross national product, 52, 53 Type of holder and property mortgaged, 41 Repurchase agreements and federal funds, 6, 19, 20, 21 HOUSING, new and existing units, 50 Reserve requirements, 8 Reserves INCOME, personal and national, 46, 52, 53 Commercial banks, 18 Industrial production, 46, 48 Depository institutions, 3, 4, 5, 13 Installment loans, 42, 43 Federal Reserve Banks, 12 Insurance companies, 30, 33, 41 U.S. reserve assets, 55 Interbank loans and deposits, 18 Residential mortgage loans, 40 Interest rates Retail credit and retail sales, 42, 43, 46 Bonds, 3 Business loans of banks, 27 SAVING Federal Reserve Banks, 3, 7 Flow of funds, 44, 45 Foreign central banks and foreign countries, 67 National income accounts, 53 Money and capital markets, 3, 28 Savings and loan associations, 9, 30, 41, 42, 43, 44 Mortgages, 3, 40 (See also Thrift institutions) Prime rate, commercial banks, 27 Savings deposits (See Time and savings deposits) Time and savings deposits, 9 Securities (See specific types) International banking facilities, 17 Federal and federally sponsored credit agencies, 35 International capital transactions of United States, 54-67 Foreign transactions, 66 International organizations, 58, 59-61, 64-67 New issues, 36 Inventories, 52 Prices, 29 Investment companies, issues and assets, 37 Special drawing rights, 4, 12, 54, 55 Investments (See also specific types) State and local governments Banks, by classes, 18, 30 Deposits, 19, 20, 21 Commercial banks, 3, 16, 18, 19-21 Holdings of U.S. government securities, 33 Federal Reserve Banks, 12, 13 New security issues, 36 Savings institutions, 30, 41 Ownership of securities issued by, 19, 20, 21, 30 Rates on securities, 3 LABOR force, 47 Stock market, 29 Life insurance companies (See Insurance companies) Stocks (See also Securities) Loans (See also specific types) New issues, 36 Banks, by classes, 18, 19-22 Prices, 29 Commercial banks, 3, 16, 18, 19-22, 23, 27 Federal Reserve Banks, 3, 4, 5, 7, 12, 13 TAX receipts, federal, 32 Insured or guaranteed by United States, 40, 41 Thrift institutions, 3 (See also Credit unions, Savings institutions, 30, 41 Mutual savings banks, and Savings and loan associations) MANUFACTURING Time and savings deposits, 3, 9, 15, 18, 19-22 Capacity utilization, 46 Trade, foreign, 55 Production, 46, 49 Treasury currency, Treasury cash, 4 Margin requirements, 29 Treasury deposits, 4, 12, 31 Member banks (See also Depository institutions) Treasury operating balance, 31 Federal funds and repurchase agreements, 6 Reserve requirements, 8 Mining production, 49 UNEMPLOYMENT, 47 Mobile home shipments, 50 U.S. government balances Monetary and credit aggregates, 3, 13 Commercial bank holdings, 19, 20, 21 Money and capital market rates (See Interest Treasury deposits at Reserve Banks, 4, 12, 31 rates) U.S. government securities Money stock measures and components, 3, 14 Bank holdings, 18, 19-21, 33 Mortgages (See Real estate loans) Dealer transactions, positions, and financing, 34 Mutual funds (See Investment companies) Federal Reserve Bank holdings, 4, 12, 13, 33 Mutual savings banks, 9, 19-21, 30, 33, 41, 42, 43 Foreign and international holdings and transactions, 12, (See also Thrift institutions) 33, 67 Open market transactions, 11 NATIONAL defense outlays, 32 Outstanding, by type and ownership, 33 National income, 52 Ownership of securities issued by, 30 Rates, 3, 28 OPEN market transactions, 11 U.S. international transactions, 54-67 Utilities, production, 49 PERSONAL income, 53 Prices VETERANS Administration, 40, 41 Consumer and producer, 46, 51 Stock market, 29 WEEKLY reporting banks, 19-24 Prime rate, commercial banks, 27 Wholesale (producer) prices, 46, 51 Producer prices, 46, 51 Production, 46, 48 Profits, corporate, 37 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories 811111 • ' T S MN o B B B B BL, i i t l l l i l l l ll a WM'MsBmmmB HAWAII a 21 _ ,, - . VV w LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis