comrummAL-^r.

IL )

U. S. Foreign Exchange Operations: Needs and Methods

Introduction

The current international position of the United States c l e a r l y

demonstrates the advantages that would exist if the United States had at its

disposal the r e s o u r c e s and techniques for undertaking foreign exchange

operations a s a permanent feature of public policy. The present later*

national financial structure, characterised by convertibility of the major

n .
tio
c u r r e n c i e s , relatively free short-term capital markets, and the existence
l c
ehas
ol
of large dollar holdings by foreigners (both public and private),
r. C
greatly enhanced the possibility of large recurring movements
, J of capital

r t inof eshort-term
ty
out of and into the Halted States. Such movements
a c i capital,

y MfromSoi t s experience of the

a s the Federal R e s e r v e System has learned
n e al
past y e a r , eaa greatly complicatees r ic of aa appropriate dome stic
C h isto
the execution

monetary policy. Similar problems

Mc ri H have been faced by monetary authori-
a m o u period aad ia e a r l i e r y e a r s . Solutions to
ties abroad, ia both
i l i
l is s
the recent

problems relating
e W toMshifts ia capital flows aad their impact on national
thof payments, together with the relationship of each international
r o m
balances

Fflows to domestic monetary p o l i c i e s are perhaps best approached through

joint actioa by central banks. It i s no accident that individual European

central banks have developed highly sophisticated techniques of operating

in the foreign exchange market, aad have supplemented individual opera-

tions by joiat m e a s u r e s of both a formal aad aa informal, ad hoe, character.

Monetary authorities ia the Plaited States, on the other hand,

have not, aatU recently, operated ia the foreign exchange market, bat have
 • 2 -

maintained the stability (and primacy) of the dollar in the international

currency structure by standing ready to buy gold from* and s e l l it to,

foreign monetary authorities who either mm^4 or acquire dollars for exchange

purposes. There can be little question that the intercon\ ertib lity of gold

and the dollar at a fixed price will have to remain the keystone of the

international currency structure. At the s a m e time, foreign exchange

dealings by the United States monetary authorities, when judiciously

n .
applied, can s e r v e to reduce capital flows, to dampen speculation, to
ti o
l ec
ol
minimize potential rmm^T^m effects, and hence, to minimize the impact on
C
the United States gold stock.
J r .
,
in beetotymaintain confidence
The basic purpose of such operations would
r t
a oci
y lS M
e
in the dollar* Foreign exchange operations would, of c o u r s e , not be a

substitute for other appropriate andsbasicn iactions c a to maintain the integrity

h e tor
c is useful and flexible addition to
Cas aHhighly
Mpolicyri m e a s u r e s . The continuation and expan*
of the dollar* but would server

a m o u
l i s
other monetary and fiscal
il iass have recently bm&n executed respecting the
W M
sion of such operations
e
h could make the United States an important factor in the
Germantmark

r om market and thus help to enhance i t s bargaining position in any

Fexchange

international approach to currency problems. Moreover, the holding of

foreign currencies by the Waited States might strengthen confidence in

such currencies and add to their usefulness in international trade and pay-

ments and hence contribute to an expansion of the movement of goods and

s e r v i c e s among countries.
 • 3 •

I. Federal R e s e r v e Operations for Its Own Account

Previous Experience

The Federal R e s e r v e Bask of Mew York has had a number of

accounts abroad, of which three with nominal sum s remain at present.

The three accounts are with the Bank of England, the Bank of France

and the Bank of Canada. The r e a s o n s for opening the various accounts

.
differ somewhat but maintenance of the accounts over recent y e a r s has

t ion
c
been largely a matter of courtesy.

l le
Co
The account with the Bank of England was opened in 191? and s u b -

J r.
, y
sequently need for a number of transactions involving exchange operations,

i n
investments and the purchase and earmark of gold.
a et account at the
rt ciThe
y MthatSweo might establish a
ne ical for the stabilization of e x -
Bank of France was opened in 1918 in order

s
e tor
h
sight account for possible nee in transactions

c C His
M ri
change rates.

a m o uopened in 1931 in the sum o f $ 1 0 million* In

i s
ill is to Chairman E c c l e s in September 1936 it was
The BIS account was

a letter fromW M
e
Mr. Harrison
h *The deposit was made for the s a m e purpose* essentially,
stated tthat
m
f

r o
F as the c r e d i t s which the Federal R e s e r v e Banks extended to foreign
central banks during 1931. It w a s made in lion of our having to respond

to requests for a s s i s t a n c e on behalf of various smaller European central

banks. w It w a s then msod for the purchases of prime c o m m e r c i a l bills

for our account and finally c l o s e d in 1946.

An account with the Bank of Canada was opened in 1943, almost

entirely as a courtesy m e a s n r o . Other accounts included those with Iran,

 . 4 -

£
gyp t » aad
India which were opened in our name in order that the Treasury

would not be identified with certain transactions. These latter accounts

have been c l o s e d .

Authority

Authorization for the opening of accounts abroad i t contained in

Section 14(e) of the Federal R e s e r v e Act. Such accounts are subject to

.
Regulation N and to other rules prescribed by the Board of Governors a s

io n
ct
M
contained im the Statement of Procedure With Respect to Foreign

l le
Co
Relationships of Federal R e s e r v e Banks. M Under Section 12A of the

J r.
, was ygranted im a
Federal R e s e r v e Act, the investment of funds im the accounts are a l s o

i n
rt ciet
a
subject to decision by the FOMC. Basic authority

y M Soeach Federal R e s e r v e
e al
November 13 1936, resolution which authorized
t

n c cable transfers and Mils

s andriabroad
e
Ch Histopayable in foreign currency to
Bank to "purchase and s e l l at home

of exchange and bankers c

M ri
acceptances

the extent that suchm

a o u and s a l e s a r e deemed n e c e s s a r y or
l i s
purchases
il is with the establishment, maintenance, operation*
advisable im
e W M
connection

i n c r etah

roBmnks in foreign c o u n t r i e s - Since at least 1944, the resolution has

s e , reduction or discontinuance of accounts of Federal R e s e r v e

F
n

been reviewed regularly by the FOMC and, in each instance, the basic

authority has not been rescinded. Finally, it should be noted that n due

from" accounts with foreign banks may be participated among other

Federal R e s e r v e Banks; in the event of such participation, the operating

bank make weekly r&pmtt* to the participating banks.

Previous operation of the accounts has been carefully c i r c u m -

scribed. Thus, in a tetter dated May 8, 1944* from Mr. Sproul to

 - 5 ~

Mr. Peyton (President, Minneapolis R e s e r v e Bank), it was stated that

"The balances of the Bank of England, the Bank of France, and the BIS

w e r e approved by the Beard of Governors a* or near the figures shown;

they could not be increased (except for minor adjustments) without the

prior approval of the Board of Governors. I f In substance, operations

by the Federal R e s e r v e Bank of Mew York are possible with the approval

.
of the Board of Governors, the FOMC, and after participation has been

on
offered to the other Federal R e s e r v e Banks.
c ti
l e
A. Proposal
ol C
J r .
,
One approach would be for the Federal R e s e r v e Bank of New York

r t in orefrom
ty the Treasury
to purchase foreign exchange, either in the market
a oc i
y M S
in connection with the repayment of foreign
l
ne s eas of exchange in the market
official debt or a drawing on

the International Monetary Fund* s P u r c hraic

h e to
would, in view of current pcrC e s s u r e is
M ri H on the dollar, be quite limited;

a m o u developments, however, would make such

l i
favorable balance-of-payments
il in ithe s
s future.
W M
tInhethe c a s e of transactions with the Treasury, the foreign exchange
operations possible

r o m
Fcould be acquired by the R e s e r v e Bank against the credit of dollars to
the T r e a s u r e s account with the Federal R e s e r v e Bank in a manner

similar to the current practice with regard to the acquisition of gold

certificates. The r e s e r v e effects of such operations would be similar

to those involved in purchases of gold certificates and would require

coordination with System open market operations a s d i s c u s s e d below.

Arrangements for the conduct of operations would have to be worked out

 ~ 6~

among the FOMC, the Board of Governors, the Federal R e s e r v e Bank of

Mew Tork # and other participating R e s e r v e Banks. Some mi thm technical

arrangements meed by the System i© the twenties and thirties might well

be adaptable to current needs. In the immediate instance, for example,

the proposed German debt repayment of some $700 million could be made

partially in dollars and partially in Deutsche marks (DM). The portion

received by the Treasury in DM could be sold immediately to the Federal

n .
io
ct
R e s e r v e Bank against dollar credit to the Treasury. This procedure

l le
Co
might s e r v e to m e e t any requirement that the United States r e c e i v e

J r.
dollars in connection with the payment of foreign debt while, at the same

i n, yoperations and
r ciet
time, furnishing foreign exchange r e s o u r c e s for tmarket
a
y M international
S o
l
adding leverage to the conduct of United States financial

s necould
ic athen be need to operate in
policy* The holdings of foreign money
h e tor
the exchange market, or, a s C
c H is warranted, to "buy out s o m e p o r -
occasion ?

M wmmmt^m
ri
a m o u
illi w eirsesto be conducted by the Federal R e s e r v e Bank
tion of the Bundesbank dollar or to m e e t other objectives.
9

W M
If operations
e
th account, some provision would have to be made for protection
on its own

r om changes in the value of the c u r r e n c i e s held, at l e a s t bntil such

Fagainst

time a s rmmmrvmm had been accumulated. This could be provided by an

agreement under which the United States would hold the Federal R e s e r v e

Bank h a r m l e s s against l o s s arising out of devaluation of the foreign

currency; appropriate legislation might be required in this connection.

Federal R e s e r v e Coordination of Open Market Operations

Federal WLm&mwvm operations in foreign exchange would require the

c l o s e s t coordination with open market operations. Indeed, they might

 - ? -

become an integral part of such operations and could, in some c i r c u m -

stances* add desirable flexibility to System policy. On other o c c a s i o n s ,

the r e s e r v e effects of foreign exchange transactions might have to be

offset by other open market operations in order to implement the Federal

Open Market Committee's policy. Such offsetting operations would not

reprmmmmt an undue complication of System open market operations since

in most e a s e s the foreign exchange operations a r e likely to be alternatives

n .
o
ti and
for exchange operations by foreign monetary authorities, the timing
c
size of which have recently complicated the conduct of open o lle opera*
C
market

J r.
tions. System operations in foreign exchange, by permitting
,
inbeneficial
closer

r t i e ty effects on
coordination a s to timing and amounts, could have
M a oc
o v e r - a l l System operations in relation to
e y the lmoneyS market.
n a
To illustrate the effect onerse s e r vreisc, a s s u m e , for example, a
C h isto
German payment of $3®0 million
Mc ri Hin DM equivalent to the Treasury. The
i a m msa rokus by the Treasury to the Federal fteserve
sale of these Deutsche
i l
l is
e
Bank would increaseW Mthe T r e a s u r y ' s balance at the R e s e r v e Bank and
h
perhapst reduce the need for calls upon tax and loam accounts, or n e c e s s i -
r o m
Ftate redeposits in C banks* Expenditures (or redeposits) by the
H n

Treasury would, of course* add r^mmr^m dollars to m e m b e r bank accounts.

Sales by the Federal R e s e r v e Bank of DM in the market for dollars would

directly reduce member bank r e s e r v e balances* Even in a strictly inter-

central bank transaction important effects would be evident. Thus, if

the f e d e r a l R e s e r v e Bank need DM 100 million to buy $25 million from

the Deutsche Bundesbank, simply by utilizing book e n t r i e s for the trans-

action, the account of the Deutsche Bundesbank on the books of the R e s e r v e

 ~ 8 -

Bank would be reduced by $25 million; the Deutsche Bundesbank might

have to e e l ! T r e a s u r y Mile from it* investment account in order to replen~

ish its deposit account with the R e s e r v e Bank. A sale of Treasury b i l l s

in the market would immediately affect bank xmmmxvBB* Clearly, all

operations would require c l o s e and continuing coordination.

Meeting Requirements of S e c r e c y and Anonymity

It i s of fundamental importance that foreign exchange transactions

n .
generally be subject to public analysis only with some delay.
ti
It i s , o
l ec
ol
therefore, n e c e s s a r y that published statements and data be appropriately
C
devised.
J r .
Some thoughts should first be given, however, to the question
,
in ineconnection
r t i ty
a oc country a s well
of immediate publicity if foreign funds a r e acquired with

official debt repayment. In all probability,Mthe paying

e y lS
s i c a the payment. Perhaps,
n announce
a s the United States will immediately
h e tor
however, no mention would need
c C H s made of the fact that some part or
to ibe
M rtake i the form of dollars. On the other
a m o u
i
all of such repayments did not
i l l s
iswarranted, it might be useful to let it be known
W
hand, if circumstances
M
the currency repayment was made and that such funds w e r e avail-
that a local

r omfor use in the exchange market.

Fable

The immediate problem of publication involves the weekly s t a t e -

ment of the Federal Wimmmr^m Bank of New York. At present, foreign

exchange holdings are included in "Other A s s e t s , " a category which

includes in addition to such * due from1* accounts, loans and s e c u r i t i e s

past due three months; a s s e t s acquired account (industrial loan and

c l o s e d banks); reimbursable expenses and other items; accrued interest;

premium on securities; overdrafts; deferred c h a r g e s ; currency and coin

 - 9 ~

exhibits, e t c . Generally, on the weekly statement of the Mew York

WLnmmrvm Bank, "Other A s s e t s " i s a relatively email item ranging between

$30 million and $100 million. (On the consolidated statement for the

System, the item generally ranges between $125 million and $400 million. >

Substantial fluctuations in the item (say, $40 million or m e r e ) might lead

to rather immediate questioning and c l o s e analysis would probably reflect

foreign exchange dealings with perhaps embarrassing promptness. There

n .
should be some way to avoid title adverse result. P o s s i b l y Other tA o
i ssets"
c
l,

l l eof foreign
might be grouped into a broader category so that the net impact
C o
exchange dealings would not he so readily evident. Jr
.
in , y
a
Net operations would a l s o be reflected in et
rt thecistatements of condi-

y M RSe soe r v e Bulletin with a

e al
tion published a s of month*end in the Federal
n
e s ri c and expenses (under the
month delay and in the statement
f

C h isto
on earnings

Mc ri Hexpenses") reported in the February

i t e m s "other income" and "other

a o u year* T h e s e data* however, a r e published

mprevious
i
Bulletin covering the
i
ll is s
e
with some delay W andMpose no problem.
h respect to forward operations, d i s c l o s u r e could be avoided
tWith
r o m
Fif such commitments w e r e c a r r i e d simply a s memorandum accounts and
thus not be made available in any published data; before adopting such a

method, it would be n e c e s s a r y to consider to what extent a contingent

liability should be shown.

Evaluation o l Fed Operations For Its Own Account

A major advantage to be gained by Federal R e s e r v e operations on

i t s own account i s the foreign exchange market a r i s e s from the fact that
 the Federal R e s e r v e Bank cam create dollars while the Treasury i s r e -

stricted to the use of fuads held by it. This does not mean that there

a r e no l i m i t s on what the Federal R e s e r v e could or should do. There

a r e very practical limitations upon such operations, the m o r e important

revolving about the need to m e e t other objectives of open market

policy, current p r e s s u r e s in the exchange market, and/or the willing-

n e s s of central banks to deal directly by providing local currency against

n .
dollars {or "rice v e r s a ) . l a substance, the creation and destructiontiof o
l ec
o l exchange
r . C
Federal R e s e r v e credit would provide vast r e s o u r c e s for foreign

operations and defense of the dollar.

, J
r t n tyR e s e r v e opera-
iFederal
If the decision should 1M made to conduct
a c ie
tions of this kind, there would be a vitalyneed lor
M Sosufficient latitude s o
n e al
e ri c and promptly under such
seffectively
that operations could be conducted
C h isto
rules m&4 regulations a s the
Mc Board
r i H of Governors and the FOMC deemed
a m there
o ula a subsidiary problem of arranging our
l i
il is
appropriate. Finally,
s
e W soMa s to avoid or delay publication of thm details of our
weekly statements
th
om
foreign exchange operations.

F r
 - 11 -

Be Operations a s F i s c a l Agent for the T r e a s u r y

Federal R e s e r v e Sank of New York operations a s fiscal agent of

the Treasury operating through the Stabilisation Fund involve am a r e a in

which considerable experience has already been gained.

G r o s e r e s o u r c e s of the Stabilization Fund amount to about $336

million. The composition of these r e s o u r c e s ami the amount that in

.
practice would be available a r e approximately a s follows:

io n
(In Millions of Dollars)
t
c'Total
"" New York % % ^ ^ ^ ^ /
l le
Dollar* 17©.© t.S
r. Co 171. 5
Gold 94.7 0
J
, y
94. 7
Securities 26.5
i
25. ©
n
rt ciet
SI. 5 » '
Foreign Exefcaage 18.0
M a 0

o
I f . <&>

y S
3©§ • 2 26* 5 31Se ?

ne 335. l
a ?
Total R e s o u r c e s
L e a s Argentine p e s o s currently helde s ic
r 18.
h t o
s 31?.?
C(Argentina,
c H i
Mexico, M Chile)ri
L e s s Stabilization Commitments
m o u 122. §£^

illiaforisFund
s
Met Available R W e s o u r c eM
L e s s Working Balance 25.

the
s 170. 7

r osmof January 31, 1961--little change since that date*

F
A? A

B/ An additional support order of $4$ million i s on hand--advance refunding.

C/ Argentina can draw am additional $32 million, thus making total drawings
~ $50 million. Mexico and Chile cam draw $75 million mmA $15 million,
respectively.

The above r e s o u r c e s provide s o m e latitude for operation, although

exchange purchases in the market face at present the obstacle of current

p r e s s u r e on the dollar. Stabilisation Fund operations a r e provided for

 * 12 -

under Section 10 of the Gold R e s e r v e Act which grants wide-ranging authority

to the Secretary of the Treasury, with the approval of the President. Use

of the Stabilisation Fund, however, would ha limited to current rmmmutcm*

since it appears that permanent additions to f or reductions in, a s s e t s of

the Fund would require Congressional approval and appropriation. There

would, for example* s e e m to ha considerable obstacles toward enlarging

the Stabilisation Fund by turning over to it, directly, official debt repayments

n .
from abroad.
ti
If, however, prepayments--particularly in local c u r r e n c i e s - -
o
l ec
ol
are contemplated, such prepayments might ha sufficiently attractive s o that

Congress would approve allocation of those xmm&mxmmmtothe Stabilisation Fund.

r . C
Within the r e s o u r c e s , the holdings of (and n , J
t i
r cie t y
operations ia> foreign

M a o
y S
c u r r e n c i e s could he readily handled. Operations could be either in the spot

ne haicsomel
a real advantage in favor
or forward market, although there would
s r
of forward transactions since C heoperations
i s t o
c
such tend to afford maximum u s e

of the Stabilisation Fund'sM

H
r e s o urri c e s . Insofar a s forward contracts involved
i a m sou
l
il with iforeign
s
W M
parallel operations central banks it would be sufficient for the
v

Fund to hold e
th partial r e s e r v e adequate to c o v e r any possible l o s s in the event
a

r om Thus, for example, if the Bundesbank w e r e to fail to honor its

F
of default.

contracts with an under present arrangements* it would ha n e c e s s a r y far the

Fund actually to buy spot marks far delivery to meet the contract at maturity.

The Fund would have to have dollars to pay for tike spot m a r k s hat it would

immediately r e c e i v e dollars when it delivered the spot m a r k s to the purchaser

under its forward contract. The possibility of l o s s would l i e in the difference

between the original contract price and the spot rata on the day the purchase

would have to ha made. If the foreign central bank ware not under a parallel
 • 13 *

commitment t then a partial reserve would need to be held to cover possible

lotaes in buying apot currencies for shorter forward currencies) to meet

contractual obligations. If parallel contracts were held, a reserve equal

to 19 per cent of total obligations would seem desirable, subject to the

proriso that the reserve would be adequate to cover total obligations under-

taken lor any given day. If no parallel contract was involved, a rmwmrvm

somewhat larger than 1® per cent would probably lie needed. Use of Fund
n .
ti
resources would then actually be expounded by »ome multiple of the amounto
l ec
ol
currently available. Thus, under parallel contracts, the $179 million noted
C
J r .
aa available in the table above might cover forward contracts of up to, say,
,
in ety
$1 billion*
a r t i
M c
o on occasion.
y l S
Spot operations would undoubtedly be necessary

s nethe i*******
c a by the dollar equivalent.
e tor
Obviously such purchases would deplete
h
Operations accordingly wouldcbe
H is to Hie amounts actually available
C restricted
M ri
a m o u
i
in the Fund no noted above.
l s
il is Fund Resources
W M
Supplementing Stabilisation
e
th foreign exchange resources might bo made available from a
Added

r om on the International Monetary Fund or foreign debt repayments if such

F
drawing

receipts were deposited in a special account of the Treasury which might be

called the "Special Foreign Exchange Account, H with transactions being channeled

through the Stabilisation Fund and with the Federal Reserve Bank of New York

acting an agent. Such a procedure might be feasible if—as seems likely--the

resources of the Stabilisation Fund could not readily bo supplemented by

direct allocation*
 • 14 ~

Meeting Requirementsof Secrecy and Anonymity

Insofar as Treasury statements are concerned, details of tike

Stabilisation Fund are published «{uarterly with a delay of five months or

so. Published figures are fe* cnd-of-quartcr. Operations during the

period are also shown on a net basis in the detailed statements of income and

expense contained la the Treasury Bulletin* Thus, there Mem* to be sufficient

publication delay from the Treasury aide to meet requirements. With respect

n .
to Stabilisation Fund assets in the form of securities or foreign exchange,
ti o
l ec
ol
information in available only from the above sources with the noted delay;

r . C
these assets do not appear in data published by tibia Bank or the Board.
, J however, do r e -
Cur rest statements by this Bank and the Board,
r t in ety
flect Stabilisation Fund holdings of dollars and a i assets are
gold. cDollar
y M S o
l
ne icstatement
a
s
f
included in "Other Deposits" on our weekly and tike System s con-
h ecategory
t o r includes a range o£ other items
solidated statement. The over-all
c C His
M ri accounts, Regulation K reserves, deposit
m
each as nonmember bank clearing
a o u
l i
il IBRJD i s
s IDA, XFC IMF, QHN No. 1, etc. There i» some
W M
accounts of the IADB, f #

th e
nominal variation in tibia amount over weekly periods, but if net transactions

r om exchange were of a substantial nature (eay, $§£ million or more),

in foreign
F
fairly clone analysis of foreign exchange operations could be gained from

these figures. Again, some regrouping of categories or use of special accounts

would be necessary.

Hold holding s of the Stabilisation Fund may he obtained with about a

one-month delay from the Federal Reserve Bulletin, which shows tike total

gold stock and so-called Treasury stock. Moreover, a gold sale or purchase
 ~ 15 ~

would be reflected in earmarked gold, bat again with about a month to a eix-

week delay (the February Federal Reserve Bulletin shews data for January

31, 1941).

Published data may be illustrated as follows, bearing in mind that

figures would be net, and hence any individual transaction might be offset.

For illustration, assume that the Stabilisation Fund purchases DM SO million

in the market with dollars currently in the account.

n .
ti o
1. Effect on Fund's foreign exchange account: would not appear 1st

l ec
ol
Federal Reserve Bank or System data but would be reflected in the quarterly

r . C
J
data of the Treasury, with a six to eight-month delay.
,
indeposits"
y on our weekly
r t t
M

e
2. Fund's dollar account: the item Other
a ocalso i would be reflected
M
y lS
statement would show a decline, and the transaction

in the Treasury's quarterly report, sbut

e a
n withicdelay.
h e tor
3. Reserve accounts:C would
c H isshow an increase In member bank
M ri Bank weekly statement.
a m
reserves on the Federal Reserve
o u
l i s
il theisonly real problem related to the foreign exchange
W M
Essentially,
e
position tolhthe Fund would tie in our weekly statement which would show a

r omImpact on the Fund*s dollar holdings, a s reflected in the item 'Other

F
direct

Deposits* H In order to minimise immediate analysis ol operations over the

short-run, it would be desirable to include a wider range of items in these

categories. However, operations could under present conditions be masked

to some extent by careful supervision of the account and a selective nee of

"swaps."
 * 16 *

III. Conclusion

The approaches discussed above to foreign exchange dealings are

suggested possibilities. Whatever the technique used, the United States

will run some risk of changes in currency values. To have effective pro-

tection of the dollar, such risks--minimised by careful management--

would seem a relatively small price to pay* Once a basic choice is made

as between operations lor the account of the Federal Reserve Banks and
n .
io
ct
operations by the Reserve Bank for the Treasury a s fiscal agent* detailed

l le
Co
investigation of coordinating techniques and the requirements of secrecy

J r.
can be made. It may bo that fiscal agency operations offer some advantages
n, distinct
r ti
i e ty benefits
a oc
in the way of speed and simplicity. However, Aero are
M
y lS
to be gained from Federal Reserve operations for its own account. Foreign
ne a
exchange operations by central banks
e o ic
s are rconsidered a normal part of their

Cbo
activities* and there is muchcto
h said
i stfor utilising resources that are not
M r i H
a m o ucash position.
illi iss
directly limited by a required

e W M
th
r om5, 1941
F
April