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3/21/78

Meeting of Federal Open Market Committee
March 21, 1978
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 21,

1978, beginning at 9:00 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Miller, Chairman
Volcker, Vice Chairman
Baughman
Coldwell
Eastburn
Jackson
Partee
Wallich
Willes
Winn

Messrs. Balles, Black, Kimbrel, and Mayo,
Alternate Members of the Federal Open
Market Committee
Messrs. Guffey, Morris, and Roos, Presidents
of the Federal Reserve Banks of Kansas
City, Boston, and St. Louis, respectively
Mr. Broida, Secretary
Mr. Altmann, Deputy Secretary
Mr. Bernard, Assistant Secretary
Mr. O'Connell, General Counsel
Mr. Axilrod, Economist
Messrs. Burns, J. Davis, Ettin, Keir,
Kichline, Paulus, Truman, and
Zeisel, Associate Economists

3/21/78

- 2 Mr. Holmes, Manager System Open Market
Account
Mr. Pardee, Deputy Manager for Foreign
Operations
Mr. Sternlight, Deputy Manager for
Domestic Operations
Mr. Coyne, Assistant to the Board of
Governors
Mr. Smith,1/ Chief, Financial Markets
Section, Division of International
Finance, Board of Governors
Mrs. Farar, Economist, Open Market
Secretariat, Board of Governors
Mrs. Deck, Staff Assistant, Open Market
Secretariat, Board of Governors
Messrs. Balbach, Boehne, Eisenmenger,
Scheld, and Sims, Senior Vice
Presidents, Federal Reserve Banks
of St. Louis, Philadelphia, Boston,
Chicago, and San Francisco,
respectively
Messrs. Brandt, Broaddus, T. Davis, and
Fousek, Vice Presidents, Federal
Reserve Banks of Atlanta, Richmond,
Kansas City, and New York, respectively
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, 1978, had been received by the
Secretary and the named individuals had executed their oaths
of office.

1/

Left the meeting at the point indicated.

- 3 -

3/21/78

The elected members and alternate members were
as follows:
David P. Eastburn, President of the Federal Reserve Bank of
Philadelphia, with Robert P. Black, President of the
Federal Reserve Bank of Richmond, as alternate;
Paul A. Volcker, 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;
Ernest T. Baughman, President of the Federal Reserve Bank of
Dallas, with Monroe Kimbrel, President of the Federal
Reserve Bank of Atlanta, as alternate;
Mark H. Willes, President of the Federal Reserve Bank of
Minneapolis, with John J. Balles, President of the
Federal Reserve Bank of San Francisco, as alternate.
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, 1979, 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:
G. William Miller
Paul A. Volcker

Chairman
Vice Chairman

- 4 -

3/21/78

Arthur L. Broida
Murray Altmann
Normand R. V. Bernard
Thomas J. O'Connell
Edward G. Guy
Robert E. Mannion
Stephen H. Axilrod

Secretary
Deputy Secretary
Assistant Secretary
General Counsel
Deputy General Counsel
Assistant General Counsel
Economist

Joseph Burns, John M. Davis,
Richard G. Davis, Edward
Ettin, Ira Kaminow, Peter M.
Keir, James L. Kichline,
John Paulus, John E. Reynolds,
Edwin M. Truman, Joseph S.
Associate Economists
Zeisel
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, 1979.
By unanimous vote, Alan R. Holmes, Peter D.
Sternlight, and Scott E. Pardee were selected to serve at
the pleasure of the Committee in the capacities of Manager
of the System Open Market Account, Deputy Manager for
Domestic Operations, and Deputy Manager for Foreign Operations,
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.

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5 -

By unanimous vote, the minutes of actions taken
at the meetings of the Federal Open Market Committee held on
February 28 and March 10, 1978, were approved.
By unanimous vote, System open market transactions
in foreign currencies during the period February 28 through
March 20, 1978, were ratified.
By unanimous vote, paragraph 1B of the Procedural
Instructions was amended, effective immediately, to read as
follows:
B. Any transaction which would result in gross
transactions (excluding swap drawings and repay
ments and purchases and sales of any currencies
incidential to such repayments), in a single
foreign currency exceeding $200 million on any
day or $500 million since the most recent regular
meeting of the Committee.
By unanimous vote, the paragraphs of the Procedural
Instructions not affected by the preceding action were
reaffirmed.

Relecting the amendment to paragraph 1B the

Instructions read as follows:
PROCEDURAL INSTRUCTIONS
In conducting operations pursuant to the
authorization and direction of the Federal Open
Market Committee as set forth in the Authorization
for Foreign Currency Operations and the Foreign
Currency Directive, the Federal Reserve Bank of
New York, through the Manager of the System Open
Market Account, shall be guided by the following
procedural understandings with respect to con
sultations 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.

3/21/78

- 6 -

1. The Manager shall clear with the Subcommittee (or
with the Chairman, if the Chairman believes that con
sultation with the Subcommittee is not feasible in the
time available):
A. Any transaction which would result in a
change in the System's over-all open position
in foreign currencies exceeding $100 million
on any day or $300 million since the most
recent regular meeting of the Committee.
B. Any transaction which would result in gross
transactions (excluding swap drawings and repay
ments and purchases and sales of any currencies
incidential to such repayments), in a single
foreign currency exceeding $200 million on any
day or $500 million since the most recent regular
meeting of the Committee.
C. Any swap drawing proposed by a foreign bank
not exceeding the larger of (i) $200 million or
(ii) 15 per cent of the size of the swap arrange
ment.
2. The Manager 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 Sub
committee is not feasible in the time available):
A. Any transaction which would result in a
change in the System's over-all open position
in foreign currencies exceeding $500 million
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 per cent of the size of the swap
arrangement.
3. The Manager shall also consult with the Sub
committee or the Chairman about proposed swap drawings
by the System, and about any transactions that are
not of a routine character.

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3/21/78

7 -

Pursuant to paragraph 1D of the Authorization for
Foreign Currency Operations, the Committee, by unanimous vote,
expressly authorized an over-all open position in foreign
currencies of $2.25 billion, effective immediately.
Renewal for further periods of 3 months of System
drawings on the German Federal Bank maturing in the period
April 3 through June 30, 1978, and a drawing on the Swiss
National Bank maturing on April 26, 1978, was authorized.
Prior to the following action, Mr. Smith left the
meeting.
By unanimous vote, System open market transactions
in Government securities, agency obligations, and bankers'
acceptances during the period February 28 through March 20,
1978, were ratified.
By unanimous vote, 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 growth in real output of goods
and services has been adversely affected in the
current quarter by unusually severe weather and
the lengthy strike in coal mining but that there
has been little change in the underlying economic
situation.
In February industrial production

3/21/78

- 8 -

recovered much of the decline of the preceding
month, and nonfarm payroll employment increased
considerably further. The unemployment rate
declined from 6.3 to 6.1 per cent. Retail
sales picked up somewhat from the sharply reduced
level of January. The pace of the rise in prices
stepped up in February, reflecting large
increases in farm products and processed foods.
The index of average hourly earnings was unchanged,
after having advanced sharply in January when
higher minimum wages became effective.
The trade-weighted value of the dollar
against major foreign currencies rose sharply
in anticipation of the U.S.- German announce
ments on March 13. Subsequently, the dollar
declined to about the level at the end of
February. The U. S. trade statistics reported
for January showed a continuing large deficit.
M-1 declined and M-2 increased relatively
little in February, apparently in part because
of the economic effects of the coal strike and
the severe weather. Inflows to banks of the
interest-bearing deposits included in M-2 were
about maintained, but the inflows were almost
entirely into large-denomination time deposits
exempt from ceilings on interest rates. In
flows to nonbank thrift institutions remained
slow. Market interest rates have changed
little in recent weeks.
In light of the foregoing developments, it
is the policy of the Federal Open Market
Committee to foster bank reserve and other
financial conditions that will encourage con
tinued economic expansion and help resist
inflationary pressures, while contributing to a
sustainable pattern of international transactions.
At its meeting on February 28, 1978, the
Committee agreed that growth of M-1, M-2, and

3/21/78

- 9 M-3 within ranges of 4 to 6-1/2 per cent,
6-1/2 to 9 per cent, and 7-1/2 to 10 per cent,
respectively, from the fourth quarter of 1977
to the fourth quarter of 1978 appears to be

consistent with these objectives.

These ranges

are subject to reconsideration at any time as
conditions warrant.
The Committee seeks to encourage near
term rates of growth in M-1 and M-2 on a path
believed to be reasonably consistent with the
longer-run ranges for monetary aggregates cited
in the preceding paragraph. Specifically, at
present, it expects the annual growth rates over
the March-April period to be within ranges of 4
to 8 per cent for M-1 and 5-1/2 to 9 per cent
for M-2. In the judgment of the Committee such
growth rates are likely to be associated with a
weekly-average Federal funds rate of about 6-3/4
per cent. If, giving approximately equal weight
to M-1 and M-2, it appears that growth rates over
the 2-month period will deviate significantly
from the midpoints of the indicated ranges, the
operational objective for the Federal funds rate
shall be modified in an orderly fashion within
a range of 6-1/2 to 7 per cent. In the conduct
of day-to-day operations, account shall be taken
of emerging financial market conditions, including
the conditions in foreign exchange markets.
If it appears during the period before the
next meeting that the operating constraints
specified above are proving to be significantly
inconsistent, the Manager is promptly to notify
the Chairman who will then decide whether the
situation calls for supplementary instructions
from the Committee.
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.

-

3/21/78

10 -

Secretary's note:
On March 2, 1978, 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 operations
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.

-

3/21/78

11 -

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.
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 individual
agencies or to allow them to mature without replace
ment; 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;

3/21/78

-

12 -

(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
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 $100 million;
(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
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

3/21/78

-

13 -

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 arrange
ments 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 international 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 comparable 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 agree
ments between its own account and foreign and inter
national accounts maintained at the Bank. Transactions
undertaken with such accounts under the provisions of
this paragraph may provide for a service fee when
appropriate.

3/21/78

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14 -

With Mr. Coldwell dissenting, the Committee
reaffirmed the agreement of January 17, 1977, to "warehouse"
foreign currencies for the Exchange Stabilization Fund.
By unanimous vote, the Authorization for Foreign
Currency Operations shown below was reaffirmed:
AUTHORIZATION FOR FOREIGN CURRENCY OPERATIONS

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, and in conformity
with such procedural
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 trans
actions on the open market at home and
abroad, including transactions with the U. S.
Exchange Stabilization 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 institu
tions:
Austrian shillings
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

3/21/78

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15 -

B. To hold balances of, and to have out
standing 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 over-all 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 over-all open position
in all foreign currencies is defined as the
sum (disregarding signs) of open positions
in each currency. The open position in a
single foreign currency is defined as holdings
of balances in that currency, plus outstanding
contracts for future receipt, minus out
standing contracts for future delivery of
that currency, i.e., as the sum of these
elements with due regard to sign.1/2/

1/

2/

Effective December 28, 1976, the Federal
Open Market Committee authorized the
Federal Reserve Bank of New York to main
tain an over-all open position in foreign
currencies exceeding the figure of $1
billion specified in this paragraph by an
amount equal to the remaining forward
commitment associated with the System's
outstanding 1971 Swiss franc swap drawings.
Earlier in this meeting, the Federal Open
Market Committee authorized the Federal
Reserve Bank of New York to maintain an
over-all open position in foreign currencies
of $2.25 billion (excluding the authoriza
tion relating to outstanding 1971 Swiss
franc swap drawings cited in the preceding
footnote).

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3/21/78

16 -

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 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

Amount of
arrangement
(Millions of
dollars equivalent)
250
1,000
2,000
250
3,000
2,000
4,000
3,000
2,000
360
500
250
300
1,400

Settlements:
Dollars against Swiss francs
Dollars against authorized
European currencies other
than Swiss francs

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.

3/21/78

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17 -

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.
4.
It shall be the normal practice to arrange with
foreign central banks for the coordination of foreign
currency transactions.
In making operating arrange
ments 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 in
sofar as practicable, considering needs for minimum
working balances. Such investments shall be in
accordance with Section 14(e) of the Federal Reserve
Act.
6. All operations undertaken pursuant to the pre
ceding 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
Meetings of the
of the Committee, his alternate).
Subcommittee shall be called at the request of any
member, or at the request of the Manager, for the
purposes of reviewing recent or contemplated opera
tions and of consulting with the Manager on other matters

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3/21/78

18 -

relating to his responsibilities. At the request of
any member of the Subcommittee, questions arising
from such reviews and consultations shall be re
ferred 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;
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 approp
riate 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.
By unanimous vote, the Foreign Currency Directive
shown below was reaffirmed:

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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 con
sistent with the proposed 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 international monetary institutions.

3.

Transactions may also be undertaken:
A.
To adjust System balances in light of
probable future needs for currencies.
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 proposed IMF Article IV.

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20

It was agreed that the next meeting of the Committee
would be held on Tuesday, April 18, 1978, beginning at
9:30 a.m..
The meeting adjourned.

Secretary