FOMC Minutes
Meeting of Federal Open Market Committee
March 18,
1980
Minutes of Actions
A meeting of the Federal Open Market Committee was
held in the offices of the Board of Governors of the Federal
Reserve System in Washington, D.
C.,
on Tuesday, March 18, 1980,
at 9:30 a.m.
PRESENT:
Mr. Volcker, Chairman
Mr. Guffey
Mr. Morris
Mr. Partee
Mr. Rice
Mr. Roos
Mr. Schultz
Mrs. Teeters
Mr. Wallich
Mr. Winn
Messrs. Baughman, Eastburn, Mayo, Timlen, and
Willes, Alternate Members of the Federal
Open Market Committee
Messrs. Balles and Black, Presidents of the
Federal Reserve Banks of San Francisco
and Richmond, respectively
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Altmann, Secretary
Bernard, Assistant Secretary
Petersen, General Counsel
Oltman, Deputy General Counsel
Mannion, Assistant General Counsel
Axilrod, Economist
Holmes, Adviser for Market Operations
Messrs. Balbach, J. Davis, T. Davis,
Eisenmenger, Ettin, Henry, Keir,
Kichline, Truman, and Zeisel, Associate
Economists
Mr. Sternlight, Manager
Operations, System
Mr. Pardee, Manager for
System Open Market
for Domestic
Open Market Account
Foreign Operations,
Account
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Mr. Coyne, Assistant to the Board of
Governors
Messrs. Kalchbrenner and Prell 1/,
Associate Directors, Division of
Research and Statistics, Board of
Governors
Mr. Gemmill, Associate Director, Division
of International Finance, Board of
Governors
Mr. Beck, Senior Economist, Banking
Section, Division of Research and
Statistics, Board of Governors
Ms. Farar, Economist, Open Market
Secretariat, Board of Governors
Mrs. Deck, Staff Assistant, Open Market
Secretariat, Board of Governors
Mr. Forrestal, First Vice President,
Federal Reserve Bank of Atlanta
Messrs. Boehne, Brandt, Burns, Corrigan,
Fousek, Keran, Parthemos, and Scheld,
Senior Vice Presidents, Federal
Reserve Banks of Philadelphia, Atlanta,
Dallas, New York, New York, San
Francisco, Richmond, and Chicago,
respectively
Mr. Danforth, Vice President, Federal
Reserve Bank of Minneapolis
Ms. Clarkin, Securities Trading Officer,
Federal Reserve Bank of New York
In the agenda for this meeting, it was reported that
advices of the election of the following members and alternate
members of the Federal Open Market Committee for the year
commencing March 1, 1980, had been received by the Secretary
and the named individuals had executed their oaths of office.
1/
Entered the meeting prior to the action to ratify System
open market transactions in foreign currencies.
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The elected members and alternate members were as
follows:
Frank E. Morris, President of the Federal Reserve Bank of
Boston, with David P. Eastburn, President of the
Federal Reserve Bank of Philadelphia, as alternate;
Anthony M. Solomon*, President of the Federal Reserve Bank
of New York, with Thomas M. Timlen, First Vice President
of the Federal Reserve Bank of New York, as alternate;
Willis J. Winn, President of the Federal Reserve Bank of
Cleveland, with Robert P. Mayo, President of the Federal
Reserve Bank of Chicago, as alternate;
Lawrence K. Roos, President of the Federal Reserve Bank of
St. Louis, with Ernest T. Baughman, President of the
Federal Reserve Bank of Dallas, as alternate;
Roger Guffey, President of the Federal Reserve Bank of
Kansas City, with Mark H. Willes, President of the
Federal Reserve Bank of Minneapolis, as alternate.
*Election effective April 1, 1980, when he is scheduled to
become President of the Federal Reserve Bank of New York
and to execute the oath of office as member of the Committee.
By unanimous vote, the following officers of the
Federal Open Market Committee were elected to serve until the
election of their successors at the first meeting of the
Committee after February 28, 1981, with the understanding that
in the event of the discontinuance of their official connection
with the Board of Governors or with a Federal Reserve Bank, as
the case might be, they would cease to have any official
connection with the Federal Open Market Committee:
Paul A. Volcker
Anthony M. Solomon*
Chairman
Vice Chairman
*Effective upon execution of the oath of office as member of
the Committee.
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3/18/80
Murray Altmann
Normand R. V. Bernard
Neal L. Petersen
James H. Oltman
Robert E. Mannion
Stephen H. Axilrod
Alan R. Holmes
Secretary
Assistant Secretary
General Counsel
Deputy General Counsel
Assistant General Counsel
Economist
Adviser for Market Operations
Anatol Balbach, John M. Davis,
Richard G. Davis, Thomas
Davis, Robert Eisenmenger,
Edward Ettin, George Henry,
Peter M. Keir, James L.
Kichline, Edwin M. Truman,
Joseph S. Zeisel
Associate Economists
By unanimous vote, the Federal Reserve Bank of New
York was selected to execute transactions for the System Open
Market Account until the adjournment of the first meeting of
the Federal Open Market Committee after February 28, 1981.
By unanimous vote, Peter D.
Sternlight and Scott E,
Pardee were selected to serve at the pleasure of the Committee
in the capacities of Manager for Domestic Operations, System
Open Market Account, and Manager for Foreign Operations, System
Open Market Account, respectively, on the understanding that
their selection was subject to their being satisfactory to the
Federal Reserve Bank of New York.
Advice was subsequently
Secretary's note:
received that the selections indicated above
were satisfactory to the Federal Reserve
Bank of New York.
By unanimous vote, the minutes of actions taken at
the meeting of the Federal Open Market Committee held on
February 4-5, 1980, were approved.
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3/18/80
By unanimous vote, System open market transactions
in foreign currencies during the period February 4 through
March 17, 1980, were ratified.
Pursuant to paragraph 3 of the Authorization for
Foreign Currency Operations, the Committee, by unanimous vote,
expressly authorized the Federal Reserve Bank of New York, for
System Open Market Account, to enter into contracts to purchase
foreign exchange at specified rates that reflected market rates
of late February and early March and to transfer the foreign
exchange so acquired directly to the Exchange Stabilization
Fund at those same rates.
By unanimous vote, System open market transactions in
Government securities, agency obligations, and bankers acceptances
during the period February 4 through March 17,
1980, were
ratified.
With Mr. Wallich dissenting, the Federal Reserve
Bank of New York was authorized and directed, until otherwise
directed by the Committee, to execute transactions in the
System Account in accordance with the following domestic
policy directive:
The information reviewed at this meeting
suggests that real output of goods and services
continued to grow in the first quarter of 1980
and that the rise in prices accelerated.
In
February retail sales declined moderately, but
the decrease followed an exceptionally large
increase in January.
Industrial production
expanded somewhat in both months, after a
period of little change, and nonfarm payroll
employment continued to rise.
The unemployment
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Private housing starts declined further in
January and were more than one-fifth below
the rate in the third quarter of last year.
The rise in producer prices of finished
goods and in consumer prices was more
rapid in the first month or two of 1980
than in 1979, despite some easing in prices
of foods. Over the first two months of 1980
the rise in the index of average hourly
earnings was somewhat below the rapid pace
recorded in 1979.
The dollar has been in strong demand in
exchange markets since mid-February, largely
in response to rising U. S. interest rates;
by early March the trade-weighted value of
the dollar against major foreign currencies
had returned to about the level reached at
the end of last October, and since then, it
has risen further. Intervention by foreign
monetary authorities to support their
currencies was very heavy in February and the
first half of March. The U. S. foreign trade
deficit rose sharply in January,although the
volume and value of imports of petroleum were
somewhat reduced.
Growth of M-1A and M-1B, which had re
mained moderate in January, accelerated
sharply in February, and growth of M-2 also
quickened. In recent weeks, however, monetary
growth has subsided. Expansion of commercial
bank credit picked up in the first two months
of this year from the reduced pace in the
fourth quarter of 1979. Market interest
rates have risen substantially in recent
weeks. An increase in Federal Reserve discount
rates from 12 to 13 percent was announced
early on February 15, effectively immediately.
On March 14 the President announced a
broad program of fiscal, energy, credit, and
other measures designed to moderate and
reduce inflationary forces in a manner that
can also lay the groundwork for a return to
stable economic growth. Consistent with that
objective and with the continuing intent of
the Federal Reserve System to restrain growth
in money and credit during 1980, the Board
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of Governors took the following actions to rein
force the effectiveness of the measures announced
in October 1979:
1.
A special credit restraint
program;
2.
A special deposit requirement for
all lenders on increases in certain types of
consumer credit;
3.
An increase in the mar
ginal reserve requirement on managed liabilities
of large member banks;
4.
A special deposit
requirement on increases in managed liabilities
of large nonmember banks;
5.
A special deposit
requirement on increases in total assets of
money market mutual funds;
6.
A surcharge of
3 percentage points on frequent borrowings of
large member banks from Federal Reserve Banks.
Taking account of past and prospective
economic developments, the Federal Open Market
Committee seeks to foster monetary and financial
conditions that will resist inflationary
pressures while encouraging moderate economic
expansion and contributing to a sustainable
pattern of international transactions.
At
its meeting on February 4-5, 1980, the Com
mittee agreed that these objectives would be
furthered by growth of M-1A, M-1B, M-2, and
M-3 from the fourth quarter of 1979 to the
fourth quarter of 1980 within ranges of 3-1/2
to 6, 4 to 6-1/2, 6 to 9, and 6-1/2 to 9-1/2
percent respectively.
The associated range
for bank credit was 6 to 9 percent.
In the short run, the Committee seeks
expansion of reserve aggregates consistent
with growth over the first half of 1980 at an
annual rate of 4-1/2 percent for M-1A and 5
percent for M-1B, or somewhat less, provided
that in the period before the next regular
meeting the weekly average federal funds rate
remains within a range of 13 to 20 percent.
The Committee believes that, consistent with
this short-run policy, M-2 should grow at an
annual rate of about 7-3/4 percent over the
first half and expansion of bank credit should
slow in the months ahead to a pace compatible
with growth over the year as a whole within
the range agreed upon.
If it appears during the period before the
next meeting that the constraint on the federal
funds rate is inconsistent with the objective for
the expansion of reserves, the Manager for Domestic
Operations is promptly to notify the Chairman who
will then decide whether the situation calls for
supplementary instructions from the Committee.
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3/18/80
Consideration was then given to the continuing
authorizations of the Committee, in accordance with the
customary practice of reviewing such matters at the first
regular meeting in March of every year.
Secretary's note: On March 5, 1980, certain
continuing authorizations of the Committee
listed below, had been distributed by the
Secretary with the advice that, in accordance
with procedures approved by the Committee,
they were being called to the Committee's
attention before the March organization
meeting to give members an opportunity to
raise any questions they had concerning them.
Members were asked to so indicate if they wished
to have any of the authorizations in question
placed on the agenda for consideration at this
meeting, and no such requests were received.
The authorizations in question were as follows:
1.
Procedures for allocation of securities in
the System Open Market Account.
2.
List of Treasury Department officials to
whom weekly reports on open market opera
tions may be sent.
3.
Authority for the Chairman to appoint a
Federal Reserve Bank as agent to operate
the System Account in case the New York
Bank is unable to function.
4.
Resolutions providing for continued opera
tion of the Committee and for certain
actions by the Reserve Banks during an
emergency.
5.
Resolution relating to examinations of the
System Open Market Account.
6.
Guidelines for the conduct of System opera
tions in Federal agency issues.
7.
Regulation relating to Open Market Opera
tions of Federal Reserve Banks.
8.
Rules of Organization, Rules Regarding
Availability of Information, and Rules of
Procedure.
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By unanimous vote, the Authorization for Domestic
Open Market Operations shown below was reaffirmed:
AUTHORIZATION FOR DOMESTIC OPEN MARKET OPERATIONS
1.
The Federal Open Market Committee authorizes and directs
the Federal Reserve Bank of New York, to the extent necessary
to carry out the most recent domestic policy directive adopted
at a meeting of the Committee:
(a)
To buy or sell U. S. Government securities,
including securities of the Federal Financing Bank, and
securities that are direct obligations of, or fully
guaranteed as to principal and interest by, any agency
of the United States in the open market, from or to
securities dealers and foreign and international accounts
maintained at the Federal Reserve Bank of New York, on
a cash, regular, or deferred delivery basis, for the
System Open Market Account at market prices, and, for such
Account, to exchange maturing U. S. Government and
Federal agency securities with the Treasury or the in
dividual agencies or to allow them to mature without
replacement; provided that the aggregate amount of U. S.
Government and Federal agency securities held in such
Account (including forward commitments) at the close of
business on the day of a meeting of the Committee at which
action is taken with respect to a domestic policy directive
shall not be increased or decreased by more than $3.0
billion during the period commencing with the opening of
business on the day following such meeting and ending
with the close of business on the day of the next such
meeting;
(b)
When appropriate, to buy or sell in the open
market, from or to acceptance dealers and foreign accounts
maintained at the Federal Reserve Bank of New York, on a
cash, regular, or deferred delivery basis, for the account
of the Federal Reserve Bank of New York at market discount
rates, prime bankers acceptances with maturities of up
to nine months at the time of acceptance that (1) arise
out of the current shipment of goods between countries
or within the United States, or (2) arise out of the
storage within the United States of goods under contract
of sale or expected to move into the channels of trade
within a reasonable time and that are secured through
out their life by a warehouse receipt or similar document
conveying title to the underlying goods; provided that
the aggregate amount of bankers acceptances held at any
one time shall not exceed $100 million;
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(c) To buy U. S. Government securities, obligations
that are direct obligations of, or fully guaranteed as
to principal and interest by, any agency of the United
States, and prime bankers acceptances of the types
authorized for purchase under 1(b) above, from dealers
for the account of the Federal Reserve Bank of New York
under agreements for repurchase of such securities,
obligations, or acceptances in 15 calendar days or less,
at rates that, unless otherwise expressly authorized by
the Committee, shall be determined by competitive bidding,
after applying reasonable limitations on the volume of
agreements with individual dealers; provided that in the
event Government securities or agency issues covered by
any such agreement are not repurchased by the dealer
pursuant to the agreement or a renewal thereof, they
shall be sold in the market or transferred to the System
Open Market Account; and provided further that in the
event bankers acceptances covered by any such agreement
are not repurchased by the seller, they shall continue
to be held by the Federal Reserve Bank or shall be sold
in the open market.
2.
The Federal Open Market Committee authorizes and directs
the Federal Reserve Bank of New York (or, under special circum
stances, such as when the New York Reserve Bank is closed, any
other Federal Reserve Bank) (a) to lend to the Treasury such
amounts of securities held in the System Open Market Account
as may be necessary from time to time for the temporary accommo
dation of the Treasury, under such conditions as the Committee
may specify; and (b) to purchase directly from the Treasury for
renewable periods not to exceed thirty days, when authorized
by the Board of Governors of the Federal Reserve System pursuant
to an affirmative vote of not less than five members, for its
own account (with discretion, in cases where it seems desirable,
to issue participations to one or more Federal Reserve Banks)
such amounts of special short-term certificates of indebtedness
as may be necessary from time to time for the temporary accommo
dation of the Treasury, provided that the rate charged on such
certificates shall be a rate 1/4 of 1 percent below the discount
rate of the Federal Reserve Bank of New York at the time of such
purchases and provided that the total amount of such certificates
held at any one time by the Federal Reserve Banks shall not
exceed $2 billion.
3.
In order to insure the effective conduct of open market
operations, the Federal Open Market Committee authorizes and
directs the Federal Reserve Banks to lend U. S. Government
securities held in the System Open Market Account to
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Government securities dealers and to banks participating
in Government securities clearing arrangements conducted
through a Federal Reserve Bank, under such instructions as
the Committee may specify from time to time.
4.
In order to ensure the effective conduct of open market
operations, while assisting in the provision of short-term
investments for foreign and international accounts maintained
at the Federal Reserve Bank of New York, the Federal Open
Market Committee authorizes and directs the Federal Reserve
Bank of New York, (a) for System Open Market Account, to
sell U. S. Government securities to such foreign and inter
national accounts on the bases set forth in paragraph 1(a)
under agreements providing for the resale by such accounts
of those securities within 15 calendar days on terms com
parable to those available on such transactions in the
market; and (b) for New York Bank account, when appropriate,
to undertake with dealers, subject to the conditions imposed
on purchases and sales of securities in paragraph 1(c),
repurchase agreements in U. S. Government and agency securities,
and to arrange corresponding sale and repurchase agreements
between its own account and foreign and international accounts
maintained at the Bank. Transactions undertaken with such
accounts under the provisions of this paragraph may provide
for a service fee when appropriate.
By unanimous vote, the Authorization for Foreign
Currency Operations shown below was reaffirmed with an amendment
to paragraph 6 substituting the title "Manager for Foreign
Operations" for "Manager" the first time the latter appeared.
AUTHORIZATION FOR FOREIGN CURRENCY OPERATIONS
The Federal Open Market Committee authorizes and directs
1.
the Federal Reserve Bank of New York, for System Open Market
Account, to the extent necessary to carry out the Committee's
foreign currency directive and express authorizations by the
Committee pursuant thereto, and in conformity with such pro
cedural instructions as the Committee may issue from time to
time:
A. To purchase and sell the following foreign
currencies in the form of cable transfers through
spot or forward transactions on the open market at
home and abroad, including transactions with the
U. S. Treasury, with the U. S. Exchange Stabiliza
tion Fund established by Section 10 of the Gold
Reserve Act of 1934, with foreign monetary
authorities, with the Bank for International
Settlements, and with other international
financial institutions:
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Austrian schillings
Belgian francs
Canadian dollars
Danish kroner
Pounds sterling
.French francs
German marks
Italian lire
Japanese yen
Mexican pesos
Netherlands guilders
Norwegian kroner
Swedish kronor
Swiss francs
B.
To hold balances of, and to have outstanding
forward contracts to receive or to deliver, the
foreign currencies listed in paragraph A above.
C.
To draw foreign currencies and to permit
foreign banks to draw dollars under the
reciprocal currency arrangements listed in
paragraph 2 below, provided that drawings by
either party to any such arrangement shall
be fully liquidated within 12 months after
any amount outstanding at that time was
first drawn, unless the Committee, because
of exceptional circumstances, specifically
authorizes a delay.
D.
To maintain an overall open position
in all foreign currencies not exceeding
$1.0 billion, unless a larger position is
expressly authorized by the Committee.
For
this purpose, the overall open position in
all foreign currencies is defined as the
sum (disregarding signs) of net positions
in individual currencies.
The net position
in a single foreign currency is defined as
holdings of balances in that currency,
plus outstanding contracts for future
receipt, minus outstanding contracts for
future delivery of that currency, i.e., as
the sum of these elements with due regard
to sign.1/
2.
The Federal Open Market Committee directs the Federal
Reserve Bank of New York to maintain reciprocal currency
arrangements ("swap" arrangements) for the System Open
Market Account for periods up to a maximum of 12 months
with the following foreign banks,.. which are among those
designated by the Board of Governors of the Federal
1/
On December 19, 1978, the Committee authorized an overall
open position in foreign currencies of $8.0 billion.
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Reserve System under Section 214.5 of Regulation N,
Relations with Foreign Banks and Bankers, and with the
approval of the Committee to renew such arrangements
on maturity:
Foreign bank
Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
German Federal Bank
Bank of Italy
Bank of Japan
Bank of Mexico
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
Bank for International
Settlements:
Dollars against Swiss francs
Dollars against authorized
European currencies other
than Swiss francs
Amount of
arrangement
(Millions of
dollars equivalent)
250
1,000
2,000
250
3,000
2,000
6,000
3,000
5,000
700
500
250
300
4,000
600
1,250
Any changes in the terms of existing swap arrangements, and
the proposed terms of any new arrangements that may be
authorized, shall be referred for review and approval to the
Committee.
3.
Currencies to be used for liquidation of System swap
commitments may be purchased from the foreign central
bank drawn on, at the same exchange rate as that employed
in the drawing to be liquidated. Apart from any such
purchases at the rate of the drawing, all transactions
in foreign currencies undertaken under paragraph 1(a)
above shall, unless otherwise expressly authorized by
the Committee, be at prevailing market rates.
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4. It shall be the normal practice to arrange with foreign
central banks for the coordination of foreign currency trans
actions.
In making operating arrangements with foreign
central banks on System holdings of foreign currencies, the
Federal Reserve Bank of New York shall not commit itself
to maintain any specific balance, unless authorized by the
Federal Open Market Committee. Any agreements or under
standings concerning the administration of the accounts
maintained by the Federal Reserve Bank of New York with
the foreign banks designated by the Board of Governors
under Section 214.5 of Regulation N shall be referred for
review and approval to the Committee.
5. Foreign currency holdings shall be invested insofar as
practicable, considering needs for minimum working balances.
When appropriate in connection with arrangements to provide
investment facilities for foreign currency holdings, U. S.
Government securities may be purchased from foreign central
banks under agreements for repurchase of such securities
within 30 calendar days.
6. All operations undertaken pursuant to the preceding
paragraphs shall be reported daily to the Foreign Currency
Subcommittee. The Foreign Currency Subcommittee consists
of the Chairman and Vice Chairman of the Committee, the
Vice Chairman of the Board of Governors, and such other
member of the Board as the Chairman may designate (or in the
absence of members of the Board serving on the Subcommittee,
other Board Members designated by the Chairman as alternates,
and in the absence of the Vice Chairman of the Committee, his
alternate).
Meetings of the Subcommittee shall be called at
the request of any member, or at the request of the Manager
for Foreign Operations for the purposes of reviewing recent or
contemplated operations and of consulting with the Manager on
other matters relating to his responsibilities. At the request
of any member of the Subcommittee, questions arising from such
reviews and consultations shall be referred for determination
to the Federal Open Market Committee.
7.
The Chairman is authorized:
A. With the approval of the Committee, to
enter into any needed agreement or under
standing with the Secretary of the Treasury
about the division of responsibility for
foreign currency operations between the
System and the Treasury;
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B.
To keep the Secretary of the Treasury fully
advised concerning System foreign currency
operations, and to consult with the Secretary on
policy matters relating to foreign currency
operations;
C.
From time to time, to transmit appropriate
reports and information to the National Advisory
Council on International Monetary and Financial
Policies.
8.
Staff officers of the Committee are authorized to trans
mit pertinent information on System foreign currency opera
tions to appropriate officials of the Treasury Department.
9.
All Federal Reserve Banks shall participate in the
foreign currency operations for System Account in accordance
with paragraph 3 G(1) of the Board of Governors' Statement
of Procedure with Respect to Foreign Relationships of
Federal Reserve Banks dated January 1, 1944.
By unanimous vote, the Foreign Currency Directive
shown below was reaffirmed:
FOREIGN CURRENCY DIRECTIVE
1.
System operations in foreign currencies shall generally
be directed at countering disorderly market conditions,
provided that market exchange rates for the U. S. dollar
reflect actions and behavior consistent with the IMF Article
IV, Section 1.
2.
To achieve this end the System shall:
A.
Undertake spot and forward purchases
and sales of foreign exchange.
B.
Maintain reciprocal currency ("swap")
arrangements with selected foreign central
banks and with the Bank for International
Settlements.
C.
Cooperate in other respects with central
banks of other countries and with inter
national monetary institutions.
3.
Transactions may also be undertaken:
A.
To adjust System balances in light of
probable future needs for currencies.
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B. To provide means for meeting System
and Treasury commitments in particular
currencies, and to facilitate operations
of the Exchange Stabilization Fund.
C. For such other purposes as may be
expressly authorized by the Committee.
4.
System foreign currency operations shall be conducted:
A. In close and continuous consultation and
cooperation with the United States Treasury;
B. In cooperation, as appropriate, with
foreign monetary authorities; and
C. In a manner consistent with the obligations
of the United States in the International
Monetary Fund regarding exchange arrangements
under the IMF Article IV.
By unanimous vote, the Procedural Instructions with
respect to Foreign Currency Operations shown below were reaffirmed.
PROCEDURAL INSTRUCTIONS WITH RESPECT TO
FOREIGN CURRENCY OPERATIONS
In conducting operations pursuant to the authoriza
of the Federal Open Market Committee as
and
direction
tion
in
the
Authorization
for Foreign Currency Operations
set forth
and the Foreign Currency Directive, the Federal Reserve Bank
of New York, through the Manager for Foreign Operations, System
Open Market Account, shall be guided by the following procedural
understandings with respect to consultations and clearance with
the Committee, the Foreign Currency Subcommittee, and the
Chairman of the Committee. All operations undertaken pursuant
to such clearances shall be reported promptly to the Committee.
1.
The Manager for Foreign Operations shall clear with the
Subcommittee (or with the Chairman, if the Chairman believes
that consultation with the Subcommittee is not feasible in the
time available):
A. Any operation that would result in a change
in the System's overall open position in foreign
currencies exceeding $300 million on any day or
$600 million since the most recent regular meeting
of the Committee.
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B.
Any operation that would result in a change
on any day in the System's net position in a
single foreign currency exceeding $150 million,
or $300 million when the operation is associated
with repayment of swap drawings.
C.
Any operation which might generate a substantial
volume of trading in a particular currency by the
System, even though the change in the System's net
position in that currency might be less than the
limits specified in 1B.
D.
Any swap drawing proposed by a foreign bank not
exceeding the larger of (i) $200 million or (ii) 15
percent of the size of the swap arrangement.
2.
The Manager for Foreign Operations shall clear with the
Committee (or with the Subcommittee, if the Subcommittee
believes that consultation with the full Committee is not
feasible in the time available, or with the Chairman, if the
Chairman believes that consultation with the Subcommittee is
not feasible in the time available);
Any operation that would result in a change in
A.
the System's overall open position in foreign
currencies exceeding $1.5 billion since the most
recent regular meeting of the Committee.
B.
Any swap drawing proposed by a foreign bank
exceeding the larger of (i) $200 million or (ii)
15 percent of the size of the swap arrangement.
The Manager for Foreign Operations shall also consult with
3.
the Subcommittee or the Chairman about proposed swap drawings
by the System, and about any operations that are not of a
routine character.
It was agreed that the authorization for the lending
of Government securities from the System Open Market Account,
contained in paragraph 3 of the Authorization for Domestic
Open Market Operations, should be retained at this time,
subject to annual review.
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By unanimous vote the Committee reaffirmed, subject
to annual review, its agreement that the Federal Reserve
would be prepared to warehouse up to $5 billion of eligible
foreign currencies for the U. S. Treasury or the Exchange
Stabilization Fund of the U. S. Treasury and agreed to
eliminate the 12-month limitation previously imposed on the
period such currencies could be warehoused.
It was agreed that the next meeting of the Committee
would be held on Tuesday, April 22, 1980, beginning at 9:30 a.m.
The meeting adjourned.
Secretary
Cite this document
Federal Reserve (1980, March 17). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19800318
@misc{wtfs_fomc_minutes_19800318,
author = {Federal Reserve},
title = {FOMC Minutes},
year = {1980},
month = {Mar},
howpublished = {Fomc Minutes, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/fomc_minutes_19800318},
note = {Retrieved via When the Fed Speaks corpus}
}