A typical day in the conduct of open market operations

XV. Case study.

Federal Reserve System temporary transactions

Volume in billions of dollars

	1^st year	2^nd year	3^rd year	4^th year
	Num.	Vol.	Num.	Vol.	Num.	Vol.	Num.	Vol.
Repurchase agreements		189.9		508.7		533.3		627.6
Matched sale-purchase transactions		48.3		75.3		28.6		10.9

Study the given below text and pretend to hold a telephone conference of the Manager of the System Open Market Account and the group in New-York, discussing the recent developments in the financial markets, their forecasts for reserves and the latest data on the monetary and credit aggregates. Imagine the decision of the Federal Reserve to undertake a particular operation and explain all possible consequent changes. The group are to prepare questions and answers.

Each weekday morning, two groups of Federal Reserve staff members, one at the Federal Reserve Bank of New York and one at the Board of Governors in Washington, D.C., prepare independent pro­jections of the technical factors affecting reserve availability for the next few days and for several weeks to come. At 11:15 a.m., the Manager of the System Open Market Account and the group in New York are linked in a telephone conference call with members of the senior staff at the Board of Governors and with a Federal Reserve Bank president who is currently a member of the FOMC. Participants in the call discuss staff forecasts for reserves, recent developments in financial markets, and the latest data on the monetary and credit aggregates. They pay special attention to trading conditions in the reserves market, particularly to the level of the federal funds rate in relation to the level expected to be con­sistent with the reserve conditions specified in the policy directive. In light of this information, they determine a program of open market operations. After the call, which usually ends around 11:30 a.m., all FOMC members as well as all nonmember Bank presidents are in­formed of the actions the Federal Reserve intends to take during the day.

When the Federal Re­serve has decided to un­dertake a particular op­eration, members of the staff at the Domestic Trading Desk (the Desk) at the Federal Reserve Bank of New York contact dealers trading in U.S. Treasury and federal agency securities. Approximately three dozen dealers that actively trade in U.S. Treasury and federal agency securities have relationships with the Desk; thus, the Fed­eral Reserve normally encounters no difficulty in promptly com­pleting its large orders. Once the transaction is executed, the re­serve account of each dealer's bank is credited or debited accordingly,and the supply of reserves to the banking system changes.

Дата добавления: 2014-12-29