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Authorized for public release by the FOMC Secretariat on 2/3/2021
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE
WASHINGTON, D.C.
SYSTEM
20551
March 28,
1975
CONFIDENTIAL (FR)
CLASS II FOMC
TO:
Federal Open Market Committee
FROM:
Arthur L.
Broida
For your convenient reference and records, there are
enclosed the following materials:
1.
List of members and officers of the Committee
for the year March 1, 1975-February 29, 1976.
2.
Authorization for Domestic Open Market Operations,
as reaffirmed March 18, 1975.
3.
Authorization for Foreign Currency Operations,
as reaffirmed March 18, 1975.
4.
Foreign Currency Directive, as reaffirmed
March 18, 1975.
Enclosures
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March 28,
1975
Members and Officers of the Federal Open Market Committee
for the year March 1, 1975-February 29, 1976
Members
Alternates
Arthur F. Burns
George W. Mitchell
John E. Sheehan
Jeffry M. Bucher
Robert C. Holland
Henry C. Wallich
Philip E. Coldwell
David P. Eastburn
Alfred Hayes
Robert P. Mayo
Ernest T. Baughman
Bruce K. MacLaury
Robert P. Black
Richard A. Debs
Willis J. Winn
Darryl R. Francis
John J. Balles
Officers
Arthur F. Burns
Alfred Hayes
Arthur L. Broida
Murray Altmann
Normand R. V. Bernard
Thomas J. O'Connell
Edward G. Guy
John Nicoll
J. Charles Partee
Stephen H. Axilrod
Lyle E. Gramley
Robert Solomon
Edward G. Boehne
Ralph C. Bryant
Samuel B. Chase, Jr.
Richard G. Davis
Ralph T. Green
John Kareken
James L. Pierce
John E. Reynolds
Karl O. Scheld
Alan R. Holmes
Peter D. Sternlight
Scott E. Pardee
Chairman
Vice Chairman
Secretary
Deputy Secretary
Assistant Secretary
General Counsel
Deputy General Counsel
Assistant General Counsel
Senior Economist
Economist (Domestic Finance)
Economist (Domestic Business)
Economist (International Finance)
Associate Economist
Associate Economist
Associate Economist
Associate Economist
Associate Economist
Associate Economist
Associate Economist
Associate Economist
Associate Economist
Manager, System Open Market Account
Deputy Manager for Domestic Operations
Deputy Manager for Foreign Operations
Bank to execute transactions for System Open Market Account
Federal Reserve Bank of New York (until the close of day of first
meeting after February 29, 1976.)
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AUTHORIZATION FOR DOMESTIC OPEN MARKET OPERATIONS
(As reaffirmed March 18, 1975)
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 individual 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 takenwith 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) 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 throughout
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 $1 billion;
(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 l(b) above, from nonbank
dealers for the account of the Federal Reserve Bank of New York
under agreements for repurchase of such securities, obligations, or
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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 circumstances,
such as when the New York Reserve Bank is closed, any other Federal
Reserve Bank, to purchase directly from the Treasury 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 accommodation
of the Treasury; provided that the rate charged on such certificates shall be a rate 1/4 of 1 per cent below the discount rate
of the Federal Reserve Bank of New York at the time of such
purchases, and provided further 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 Government securities dealers and to banks
participating in Government securities clearing arrangements conduted through a Federal Reserve Bank, under such instructions as
the Committee may specify from time to time.
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AUTHORIZATION FOR FOREIGN CURRENCY OPERATIONS
(As reaffirmed March 18, 1975)
1.
The Federal Open Market Committee authorizes and directs
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:
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. Stabilization Fund established by Section 10 of the Gold Reserve
Act of 1934, with foreign monetary authorities, and with the Bank for
International Settlements:
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 foreign currencies listed in paragraph A above,
up to the following limits:
(1)
Currencies purchased spot, including currencies
purchased from the Stabilization Fund, and sold forward to the Stabilization Fund, up to $1 billion equivalent;
(2)
Currencies purchased spot or forward, up to the
amounts necessary to fulfill other forward commitments;
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-2(3)
Additional currencies purchased spot or forward, up
to the amount necessary for System operations to exert a market influence
but not exceeding $250 million equivalent; and
(4)
Sterling purchased on a covered or guaranteed basis
in terms of the dollar, under agreement with the Bank of England, up to
$200 million equivalent.
C.
To have outstanding forward commitments undertaken under
paragraph A above to deliver foreign currencies, up to the following limits:
(1)
Commitments to deliver foreign currencies to the
Stabilization Fund, up to the limit specified in paragraph 1B(1) above; and
(2)
Other forward commitments to deliver foreign currencies,
up to $550 million equivalent.
D.
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 amountoutstanding
at that time was first drawn, unless the Committee, because of exceptional
circumstances, specifically authorizes a delay.
2.
The Federal Open Market Committee directs the Federal Reserve
Bank of New York to maintain reciprocal currency arrangements ("swap"
arrangements) for System Open Market Account for periods up to a
maximum of 12 months with the following foreign banks, which are among
thosedesignated by the Board of Governors of the Federal 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:
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Foreign bank
Amount of
arrangement
(millions of
dollars equivalent)
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
3.
250
1,000
2,000
250
3,000
2,000
2,000
3,000
2,000
180
500
250
300
1,400
600
1,250
Currencies to be used for liquidation of System swap com-
mitments 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 and no attempt shall be made to establish rates
that appear to be out of line with underlying market forces.
4.
It shall be the practice to arrange with foreign central
banks for the coordination of foreign currency transactions.
In making
operating arrangements with foreign central banks on System holdings of
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-4foreign 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 understandings
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.
Such
investments shall be in accordance with Section 14(e) of the Federal
Reserve Act.
6.
The Subcommittee named in Section 272.4(c) of the
Committee's rules of procedure is authorized to act on behalf of the
Committee when it
is necessary to enable the Federal Reserve Bank of
New York to engage in foreign currency operations before the Committee
can be consulted.
All actions taken by the Subcommittee under this
paragraph shall be reported promptly to the Committee.
7.
The Chairman (and in his absence the Vice Chairman of the
Committee, and in the absence of both, the Vice Chairman of the Board
of Governors) is authorized:
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-5A.
With the approval of the Committee,
to enter into
any needed agreement or understanding with the Secretary of the Treasury
about the division of responsibility for foreign currency operations
between the System and the Secretary;
B.
To keep the Secretary of the Treasury fully advised
concerning System foreign currency operations, and to consult with the
Secretary on such policy matters as may relate to the Secretary's
responsibilities; and
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 transmit
pertinent information on System foreign currency operations 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.
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FOREIGN CURRENCY DIRECTIVE
(As reaffirmed March 18,
1975)
The basic purposes of System operations in foreign
1.
currencies are:
A.
To help safeguard the value of the dollar in international
exchange markets;
B.
To aid in making the system of international payments more
efficient;
C. To further monetary cooperation with central banks of other
countries having convertible currencies, with the International Monetary
FuNd, and with other international payments institutions;
D. To help insure that market movements in exchange rates,
within the limits stated in the International Monetary Fund Agreement or
established by central bank practices, reflect the interaction of underlying economicforces and thus serve as efficient guides to current
financial decisions, private and public; and
E. To facilitate growth in international
liquidity in accordance
with the needs of an expanding world economy.
2.
Unless otherwise expressly authorized by the Federal Open Market
Committee, System operations in foreign currencies shall be undertaken only
when necessary:
of interTo cushion or moderate fluctuations in the flows
A.
national payments, if such fluctuations (1) are deemed to reflect transitional market unsettlement or other temporary forces and therefore are exand
(2) are deemed to be
pected to be reversed in the foreseeable future;
disequilibrating or otherwise to have potentially destabilizing effects on
U.S. or foreign official reserves or on exhange markets, for example, by
occasioning market anxieties, undesirable speculative activity, or excessive
leads and lags in international payments;
B. To temper and smooth out abrupt changes in spot exchange
rates, and to moderate forward premiums and discounts judged to be disequilibrating. Whenever supply or demand persists in influencing exchange rates in
one direction, System transactions should be modified or curtailed unless
upon review and reasessment of the situation the Committee directs otherwise
C. To aid in avoiding disorderly conditions in exchange markets.
Special factors that might make for exchange market instabilities include
(1) responses to short-run increases in international political tension,
(2) differences in phasing of international economic activity that give rise
to unusually large interest rate differentials between major markets, and
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(3) market rumors of a character likely to stimulate speculative transactions. Whenever exchange market instability threatens to produce disorderly conditions, System transactions may be undertaken if the Manager
reaches a judgment that they may help to reestablish supply and demand
balance at a level more consistent with the prevailing flow of underlying
payments.
In such cases, the Manager shall consult as soon as practicable
with the Committee or, in an emergency, with the members of the Subcommittee
designated for that purpose in paragraph 6 of the Authorization for Foreign
Currency Operations; and
D. To adjust System balances within the limits established in
the Authorization for Foreign Currency Operations in light of probable
future needs for currencies.
3.
System drawings under the swap arrangements are appropriate
when necessary to obtain foreign currencies for the purposes stated in
paragraph 2 above.
4. Unless otherwise expressly authorized by the Committee, transactions in forward exchange, either outright or in conjunction with spot
transactions, may be undertaken only (i) to prevent forward premiums or
discounts from giving rise to disequilibrating movements of short-term
funds; (ii) to minimize speculative disturbances; (iii) to supplement
existing market supplies of forward cover, directly or indirectly, as a
means of encouraging the retention or accumulation of dollar holdings by
private foreign holders; (iv) to allow greater flexibility in covering
System or Treasury commitments, including commitments under swap arrangements, and to facilitate operations of the Stabilization Fund; (v) to
facilitate the use of one currency for the settlement of System or Treasury
commitments denominated in other currencies; and (vi) to provide cover for
System holdings of foreign currencies.
@FedFRASER