Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. (CONFIDENTIAL FR) June 25, 1971. MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM CONFIDENTIAL (FR) June 25, 1971. MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Recent data indicate that growth rates of the monetary aggregates in June and the second quarter have not changed much from the staff projections presented in the Blue Book three weeks ago, although figures for June are complete only through mid-month. Growth Rates in Key Monetary Aggregates 1/ (Per cent annual rates of changes) Specified at Previous FOMC Meeting June 2nd Quarter M June Currently Estimated 2nd Quarter 1 9.5 12.0 9.5 11.5 M2 12.5 13.5 12.5 13.0 9.0 7.5 7.5 7.0 Adjusted Proxy 1/ Tables 7 and 7A in the back of the Blue Book show the reconciliation among the various monetary aggregates. The small downward revisions in second-quarter growth rates for M1 and M2 reflect both a slight revision of data for May and some deceleration in these aggregates relative to Blue Book path in June. Data for the week of June 23, when most of this deceleration seems to occur, however, are still partially estimated. The bank credit proxy, which shows the largest downward revision, has been running substantially below Blue Book path throughout June. Recent Paths of the Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Bluebook Path Adjusted Credit Proxy Bluebook M2 M1 Bluebook Actual Path Actual Path Actual Month May June Week ending: June 2 June 9 June 16 June 23 226.1 223.9 225. 7pe/ 452.4 447.2 451. 8pe / 346.7 343.8 346.0 pe 225.7 224.3 226.1 227.6 225.6 224.1 226.1 2 2 6.6 pe/ 450.7 449.8 452.2 454.7 450.6 449.3 452.0 453.3 pe/ 346.7 346.6 347.2 347.0 345.8 345.7 346.5 345.0 pe/ pe--partly estimated (2) Since the last meeting of the Committee the Federal funds rate has worked gradually higher, moving up from 4-3/4 per cent to around 5-1/8 per cent most recently. 1/3 to 1/2 Short-term rates generally have risen by about a percentage point since the last meeting, with the 3-month bill most recently quoted around 4.90 per cent. Longer-term yields have also risen on balance, with the largest rise of about 1/2 a percentage point in the municipal market. (3) Several medium-sized commercial banks increased their prime loan rates during the inter-meeting interval, but thus far major money market banks have not followed this move. In addition, the Treasury announced a cash financing package on June 16 consisting of a $2-1/4 billion short-term note issue auctioned on June 22 and a $1-3/4 billion September tax anticipation issue for auction on June 30. The Treasury also increased the size of its weekly Treasury bill offering by $100 million; such increases may be continued in the future. The Treasury / -3financing package was well received by the markets. It may obviate the need for further market borrowing by the Treasury until July or early August, assuming that Germany sells $2 to $3 billion of its holdings of U.S. Treasury bills, as planned, and transfers the proceeds to the Treasury in exchange for special securities of longer-maturity, (4) Member bank borrowings at the Federal Reserve Banks during the last four statement weeks have averaged about $450 million, considerably above their May average of $212 million. Excess reserves have remained roughly unchanged at an average level of $200 million. The increase in member bank borrowing partly reflects the emergence of a positive spread of the Federal funds rate over the discount rate. Recent reports indicate that borrowing has been undertaken largely by banks that are not continuously in debt to the Federal Reserve. (5) The table on the next page summarizes seasonally adjusted annual rates of change in major financial aggregates for selected periods. Fourth Quarter (Dec. over Sept.) First Quarter (March over Dec.) 4th and 1st Qtrs. Combined (March over Sept.) Second Quarter (June over March)p e / Total Reserves 6.6 11.0 Nonborrowed Reserves 9.4 11.0 M1 (Currency plus demand deposits 1/) 3.4 8.9 M 2 (M1 plus time deposits at commercial banks other than large CD's) 9.2 17.8 13.7 13.0 M3 (M2 plus deposits at thrift institutions) 9.7 19.0 14.6 15.8 3/ 10.5 5.7 3/ 10.3 Concepts of Money 6.2 11.5 Bank Credit Total member bank deposits (Bank credit proxy adj.) 10.9 Loans and investments of commercial banks 2/ 12.2 Short-term market paper (actual $ change in billions) Large CD's $ 4.3 $ 1.8 $ 6.1 Bank-related commercial paper N.S.A. - 2.3 - 0.7 - 2.9 1.5 - 1.9 - 0.4 Nonbank commercial paper $ 0.1 0.1 3/ - 0.3 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. 3/ May 1971 over March 1971. pe/ Partly estimated. N.S.A. Not seasonally adjusted. NOTE: All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial paper and thrift institutions--which are either end-of-month or last Wednesday of month figures. Prospective developments Three possible policy alternatives showing different relation- (6) ships among money market conditions, bill rates, and monetary aggregates More detailed information and monthly are summarized in the table below. paths for the full range of aggregates are shown in the table on the next page. 1/ It should be noted that the wide borrowing ranges, particularly for alternatives B and C, allow for a possible increase in borrowings from one bank which has special problems. Federal funds rate Member bank borrowings 3-month bill rate Alternative A Alternative B Alternative C 4-7/8--5-1/8% 5--5-1/2% 5-1/2--6% $350-500 million 4-3/4--5-1/4% $450-700 million 5--5-1/2% $650-850 millionn 5-3/4--6-1/4% Growth in M1: (SAAR) 10% July August September 3rd Quarter (7) 10% 9-1/2% 10-1/2% 9-1/2% 8% 9% 8% 7% 10% 9% 8% For seasonal reasons--including Treasury cash borrowing require- ments and the ending of reinvestment demand that normally appears in the last half of June as mid-year tax bills mature--the 3-month bill rate is expected to rise in July from its recent level. Sales of bills for foreign accounts may also put upward pressure on rates. The bill rate would be expected to rise more if the Federal funds rate and associated day-to-day dealer financing costs go up. If the Federal funds rate moves rapidly to or above 5-1/2 per cent, expectational factors may well push the bill rate above the funds rate. 1/ Weekly paths are appended on p. 13. Alternative Monthly and Quarterly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Alt. A Alt. B Alt. 225.7 227.6 229.4 230.9 225.7 227.5 229.0 230.3 C Alt. A Alt. C Alt. B 1971 June July August September 225.7 227.6 229.6 231.3 451.8 455.3 458.2 460.6 451.8 455.6 459.1 462.0 451.8 455.6 459.5 462.8 Per Cent Annual Rates of Growth September 10.0 10.5 9.0 9.5 10.0 9.5 8.0 9.5 9.5 8.0 7.0 12.5 10.0 10.5 8.5 12.5 10.0 9.0 7.5 12.5 9.5 7.5 6.5 2nd Q. 1971 3rd Q. 1971 11.5 10.0 11.5 9.0 11.5 8.0 13.0 9.5 13.0 9.0 13.0 8.0 June July August 9.5 Adjusted Credit Proxy Alt. A Alt. B Alt. Total Reserves C Alt. A Alt. B Alt. 1971 June July August September 346.0 350.4 353.1 355.2 346.0 350.4 352.9 354.6 346.0 350.3 352.2 353.7 31.3 31.8 32.2 32.3 31.3 31.8 32.1 32.2 31.3 31.8 32.1 32.1 Per Cent Annual Rates of Growth June July August September 7.5 15.5 9.0 7.0 7.5 15.5 8.5 6.0 7.5 15.0 6.5 5.0 3.5 18.5 13.5 4.5 3.5 18.5 12.5 3.0 2nd Q. 1971 3rd Q. 1971 7.0 10.5 7.0 10.0 7.0 9.0 7.5 12.5 7.5 12.0 3.5 18.5 11.5 1.0 7.5 10.5 C -7Alternative A maintains money market conditions in a range (8) around the average level of recent weeks; in the last few business days the Desk has been aiming at a rate around the upper end of that range. alternative A money market conditions would seem most The likely to be associated with around a 10 per cent annual rate of growth in M1 over the third quarter. Alternatives B and C provide for more scope to vary money market conditions in an effort to reduce rates of growth in the monetary aggregates. Because of the lagged relationship between tighter money market conditions and money demand, however, such slower growth rates would not be expected to develop in any significant way until later in the summer. In the fourth quarter we would expect a further marked slowing in growth rates of M 1 as lagged reactions to earlier high interest rates continue and as the apparently sizable precautionary demand for cash of the past few months is worked off. Indeed, under alternative C, little or no growth in M 1 would be expected in the fourth quarter; and alternative B, if maintained, might provide a growth rate of only modest proportions. (9) Growth in M2 is likely to slow more in the third quarter than growth in M1. We would expect the higher level of market interest rates to moderate net savings inflows somewhat; and the AT&T preferred stock offering will be a factor adding to withdrawals from banks (and other savings institutions) during the mid-year reinvestment period. Of course, to the extent money market conditions tighten further (as under alternatives B and C) and this is communicated to the broader structure of -8market yields, relatively more slowing of expansion in consumer-type time and savings deposits at banks and in M 2 would be expected. (10) In contrast to the behavior of M 1 and M2 , the bank credit proxy is expected to grow more rapidly over the third quarter than in the second, with July and August the period of greatest growth. Banks are likely to be adding to their U.S. Government security holdings on average as they help underwrite and also add to portfolio more permanently, part of the expected large Treasury cash borrowings. In contrast, banks' Government security holdings had declined somewhat on balance during the second quarter (apart from acquisitions of the newly auctioned 6 per cent Treasury note for payment at the end of June). Part of the anticipated acceleration of bank credit growth would be financed by an increase in U.S. Government deposits, which are now projected to rise by about $2 billion from June to August, following a decline of nearly $1-1/2 billion from April to June. In addition, banks are not expected to run off nondeposit sources further, and may add modestly to outstanding large CD's. If money market conditions tighten, as assumed under alternatives B and C, we would anticipate somewhat more rapid growth in CD's and greater use of Euro-dollar borrowings as banks make an effort to compensate, at least in part, for smaller inflows of funds through private demand and consumer-type time deposits. (11) With the corporate calendar tending to moderate, corporate bond yields could decline under the conditions of alternative A, especially if there were no general rise in the prime rate, or if the rise was limited -9to only 1/4 of a percentage point. Any significant drop in corporate rates would tend to moderate upward pressures in the municipal and mortgage markets. Alternative B money market conditions(particularly if the funds rate moves to the upper end of the range) would reduce the likelihood of any rally in the corporate bond market over the near-term, and could cause such yields to back up somewhat, at least for a time. The higher Federal funds rate would also probably lead to increased yields on U.S. Government securities as the cost to banks and dealers of participating in the forthcoming Treasury financings rises. Under alternative C, substantial across- the-board increases in long-term interest rates would be highly likely. A rise in the Federal funds rate of the size specified would be viewed by the market as a marked tightening in monetary policy. It would seem to signal a rise in the discount rate, would bring the viability of even a 6 per cent bank prime rate under question, and would represent a sizable movement toward the point where the remaining Regulation Q ceilings on longer maturity CD's would begin to bite. Possible directive language (12) This section presents possible language for the second paragraph of the directive corresponding to the three alternative policy courses discussed above. (13) Alternative A. The following language is proposed for possible use if the Committee decides to call for preserving about the same money market conditions to which the credit markets have adjusted in recent weeks, subject to a proviso clause. "To implement this policy, [DEL: to seeks Committee the moderate ahead, months the over aggregates monetary in growth markets.] capital in developments of account taking System open market operations until the next meeting of the Committee shall be conducted with a view to MAINTAINING PREVAILING and] reserve bank achiveing [DEL: withthose objectives] consistent money market conditions; [DEL: PROVIDED THAT SOMEWHAT FIRMER CONDITIONS SHALL BE SOUGHT IF IT APPEARS THAT THE MONETARY AND CREDIT AGGREGATES ARE SIGNIFICANTLY EXCEEDING THE GROWTH PATHS EXPECTED AND IF CAPITAL MARKETS ARE NOT UNDER EXCESSIVE PRESSURE." If the Committee adopts this alternative, it may wish to consider the money market conditions noted for alternative A in paragraph (6) as a description of "prevailing" conditions, and for purposes of the proviso clause to adopt the aggregate growth paths discussed earlier in connection with alternative A as the "expected" paths. The proviso clause has been formulated in one-way terms, guarding against excesses but not -11- shortfalls, on the assumption that the Committee would not want money market conditions to be eased in the coming period if the aggregates should fall short of the indicated paths. The proposed language con- templates that firming actions under the proviso clause would be taken only "if (14) use if capital markets are not under excessive pressure." Alternative B. This language is proposed for possible the Committee decides to continue to formulate its primary instruction in terms of objectives for the monetary aggregates, sub- ject to any constraints that might be imposed by developments in capital markets. "To implement this policy, the Committee seeks to moderate growth in monetary aggregates over the months ahead, taking account of developments in capital markets. System open market operations until the next meeting of the Committee shall be conducted with a view to achieving bank reserve and money market conditions consistent with those objectives." Although this language is identical to that adopted at the June 8 meeting, it is not regarded as a "no change" directive in the sense of calling for no further policy action. Rather it calls for holding to the course of continued orderly firming of bank reserve and money market conditions, insofar as that might be necessary to maintain downward pressure on the growth rates of the monetary aggregates. The money market specifications mentioned earlier in connection with this alternative--including the proposed 5 to 5-1/2 per cent range for the Federal funds rate--would give -12- the Manager more flexibility to firm market conditions than he would have under alternative A. If the Committee adopts alternative B it could choose to instruct the Manager to move gradually toward the upper end of the indicated range for the funds rate even if the mone- tary aggregates are growing at the rates specified earlier in connec- tion with alternative B, so long as it appears that such action would not be unduly disturbing to the capital markets. (15) Alternative C. This language is proposed for possible use if the Committee decides to strive for the more substantial moderation of growth in the monetary aggregates discussed earlier in connection with alternative C. "To implement this policy, [DEL: to seeks Committee the months the over aggregates monetary in growth moderate markets.] capital in developments of account taking ahead, System open market operations until the next meeting of the Committee shall be conducted with a view to achieving bank reserve and money market conditions consistent with [DEL: objectives] those SUBSTANTIAL MODERATION OF GROWTH IN MONETARY AGGREGATES OVER THE MONTHS AHEAD." -13Alternative Weekly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) M1 Alt. A Alt. M2 B Alt. C Alt. A Alt. B Alt. C 452.9 453.9 455. 1 455.7 456.8 452.9 453.9 455.1 455.6 456.6 452.9 453.9 455.0 455.4 456.3 1971 June July 30 7 14 21 28 226.1 226.8 227.3 227.5 228.3 226.1 226.8 227.3 227.4 228.2 226.1 226.8 227.3 227.4 228.1 Total Reserves Adjusted Credit Proxy Alt. A Alt. 346.3 349.9 351.0 350.1 349.9 346.3 349.9 351.0 350.0 349.8 B Alt. C Alt. A Alt. B Alt. C 1971 June July 30 7 14 21 28 346.3 349.9 351.0 349.9 349.7 31.4 31.2 31.4 32.2 32.3 31.4 31.2 31.4 32.2 32.3 31.4 31.2 31.4 32.2 32.3 CHART 1 STRICTLY CONFIDENTIAL (FR) MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 1230 BROADER MONEY SUPPLY M22 13.5% PATH r 1969 --- Actual Currently Projected 1971 1970 --- Wkly Path, Indicated at FOMC Meeting (6/8/71) 4 F t M ] -L- A 71 M J -Zi Longer Run Path CHART 1A STRICTLY CONFIDENTIAL(FR) 6/25/71 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS --I 7.5% PATH -330 -320 I 1 I I TOTAL RESERVES 10.5% I 1969 - Actual -- Currently Proec4ed 1970 1971 --- Wkly. Path, Indicated at FOMC Meeting 16//71) 1 F M I 4 A '71 -Z- M / J Longer Run Path CHART 2 t/25/71 INTEREST BEARING SOURCES OF BANK FUNDS BILLIONS OF DOLLARS 280 -260 TOTAL TIME AND SAVINGS DEPOSITS - 240 220 - 20 TIME AND SAVINGS DEPOSITS OTHER THAN CD'S - 30 CDE'S 20 NONDEPOSIT SOURCES 197 1970 1971 1971 CHART 3 MONEY MARKET CONDITIONS AND INTEREST RATES INTEREST RATE Short-term MONEY MARKET CONDITIONS PER CENT INTEREST RATES Long-term PER CENT WEEKLY -110 NEW CORPORATE Aaa WEDNESDAY FHA MORTGAGES FNMA MONDAY AUCTION \A\ A/ ^ F R. DISCOUNT RATE WEDNESDAY FEDERAL FUNDS GOVERNMENT RESERVES BILLIONS OF DOLLARS 0O 20 YEAR AVERAGES -1 12 VMJ\' BORROWED NET BORROWED II I 1970 III 1971 I 1971 STRICTLY CONFIDENTIAL (FR) Table 1 PATHS OF KEY MONETARY AGGREGATES June 25, 1971 Monthly Pattern in Billions of Dollars 1971- Jan. Feb. Mar. 214.8 217.3 219.4 423.0 430.8 437.6 334.1 337.7 340.2 30.2 30.5 30.7 Apr May June 221.1 223.9 (225.7) 442.0 447.2 341.7 343.8 (346.0) 30.8 31.3 (31.3) 0.5 6.5 17.2 8.3 -2.9 2.6 19.1 6.6 226.1 452.4 (4 51.8) 346.7 Annual Percentage Rates of Change--Quarterly and Monthly 1970: Ist 2nd 3rd 4th 1971- 1st Qtr. 2nd Qtr. 1971- Qtr. Qtr. Qtr. Qtr 5.9 5.8 6.1 3.4 12.0 Jan. Feb. Mar. Apr Mav li1mO 9 5 3.4 8.4 11.0 9.2 8.9 (11.5) 13.5 17.8 :13.0) 7.5 10.9 (7.0) 1.1 14.0 11.6 11.5 22.1 18.9 10.5 12.9 8.9 9.3 15.2 ( 9.5) 12.1 14.1 :12.5) 5.3 7.4 ( 7.5) 12.5 9.0 11.0 (7.5) 12.2 11.4 9.2 2.7 17.0 (U.0) WeeklyPattern in Billions of Dollars 220.6 223.2 224.7 225.5 NOTES 1 4 4 1 Annual rates of change other than those for the past are rounded to the nearest half per cent. Data shown in parenthesis are current projections. 1/ Currency plus private dem and deposits. M1 plus time deposits other than large CD's. 2/ pe -- Partially estimated. FR 712 D Rev 2/16/71 STRICTLY CONFIDENTIAL (FR) Table 1-A PATHS OF KEY MONETARY AGGREGATES June 25, 1971 Monthly Pattern in Billions of Dollars 1071. Jan. Feb. Mar. 6.7 6.2 4.8 235.3 240.9 246.1 208.2 213.5 218.3 27.1 27.4 27.8 10.1 8.6 7.0 Apr. May Jue 5.4 4.2 (4.1) 248.3 251.4 (254.5) 221.0 223.4 27.3 28.0 (28.4) 5.1 4.1 (4.4) 3.9 254.5 226.3 (226.1) Annual Percentage Rates of Change-Quarterly and MonthlI 1970: 1971- 1971- lst Q 2nd Q 3rd Q 4th q 1t 2nd 0.9 1.4 14.1 32.2 21.8 ( ( 11.3 16.5 15.4 27.2 (14.5) 27.3 13.5 (13.5) 15.0 Tan Feb. Mar 25.5 28.6 25.9 22.3 30.5 27.0 Apr May Tune 10.7 15.0 (15.0) 14.8 13.0 (14.5) 15.0 15.0 Weekly Pattern in Billions of Dollars 1971, May 5 12 19 26 June 2 9 16 23 pe 30 4.8 5.1 3.4 2.9 253.2 253.7 254.3 255.3 255.2 4.5 4.2 5.0 3.4 (3.1) .1 NOTES: 249.9 250.6 251.2 252.4 1 L Annual rates of change other than those for the past Data shown in parenthesis are current projections. pe - Partially estimated. 253.3 253.7 254.0 255.2 (255.3) I_ 225.0 225.5 226.1 227.1 226.9 I 222.3 223.0 223.3 224.0 27.6 27.6 27.9 28.3 4.5 4.2 4.0 3.8 225.1 225.2 225.8 226.7 (226.8) 28.2 28.5 28.2 28.5 (28.5) 4.2 4.5 4.4 4.4 (4.4) I_ are rounded to the nearest half per cent. I I I FR 712-K Rev2/16/71 Table 2 CONFIDENTIAL (FR) AGGREGATE RESERVES AND MONETARY VARIABLES June 25, 1971 RETROSPECTIVE CHANGES, SEASONALLY ADJUSTED (Annual rates in percent) 1 e r oPerodTotal d P i Reserves Annualy 1968 1969 1970 2 3 Total Nonborrowed Member k Reserves Bank Deposits _ + 6.0 4 Money Supply Adjusted 56 Credit Proxy Total Currency _ rivat Private Demand Deposits 8 Time Deposits Adlusted Adjusted 9 Thrift instit. Deposits Deposits 10 Nonbank Commercial Paper Paper + 9.5 + 9.0 -4.0 +11.8 + 0.7 - 3.7 -3.5 - 2.4 -4.6 - 1.2 + 5.1 + 1.2 + 4.7 + 0.1 - 3.5 - 6.6 + 5.3 + 1.6 n.a. +28.3 + 5.3 + 4.7 + 7.8 +27.9 + 4.7 +10.6 +12.8 + 1.7 + + + + 5.3 5.3 6.7 2.7 + 1.4 +14.1 + 21.8 + 2.5 + 7.0 + 9.3 +11.6 +17.8 + 7.5 -16.2 +20.4 - 3.0 n.a. n.a. + 8.3 + 7.8 4 3.1 + 5.4 + 7.4 + 6.0 + 6.3 + 7.9 + 2.4 + 5.1 +11.1 - 5.0 +18.4 + 6.3 + 3.4 + 7.8 n.a. n.a. + 7.3 Semi-annually Ist Half 1969 2nd Half 1969 3.9 n.a. - 1st Half 1970 2nd Half 1970 +13.0 + 1.9 +17.1 + 3.3 +20.0 + 3.5 +12.9 + 5.9 + 4.8 Quarterily 1st Qtr. 1 2nd Qtr. 1 3rd Qtr. 1 4th Qtr. 1 - - + 2.6 +19.1 4 6.6 + 4.1 -24.4 + 9.4 + 0.6 + 6.0 +24.1 415.1 + 0.5 + 6.5 +17.2 + 8.3 + + + 1st Qtr +11.0 +11.0 +17.0 +10.9 + 8.9 + 9.0 4 8.9 +27.3 +23.3 -24 +21.3 -13.9 + 0.5 +25.4 -19.0 + 6.2 +16.8 +13.7 - - + 9.9 + 5.2 +10.3 +15.3 + 2.5 +10.5 + 3.0 + 2.2 +19.7 +10.9 + 8.1 + 5.3 + 7.3 +34.4 +18.9 -30.0 +35.6 +11.9 + 5.9 +10.0 -87.5 +15.1 +10.6 + 9.4 +32.4 -28.7 +58.1 1970. 1971: 1 Apr May tiune NOTE: 2.9 0.4 4.5 + 5.8 1.2 + 7.0 - 5.9 5.8 6.1 3.4 2.3 + + + + 6.1 9.4 3.3 5.8 +32.2 +11.4 July Aug. Sept. + 6.0 +23 3 +27.5 -16.1 +48.8 +40.1 +22.7 +29.2 +19.0 +18.1 +23.2 + 9.7 + 5.7 + 6.8 + 5.7 + 7.5 + 2.5 + 4.4 + 8.9 + 6.6 Ort. 1.9 3.6 +10.1 + 4.4 Dec. 4-18.4 +22.8 +13.1 +21.4 4 1.1 + 7.0 +16.5 + 1.1 + 2.8 + 6.2 + 7.5 + 4.9 + 4.9 - 0.7 + 2.2 + 6.6 +20.3 Nov + +28.8 +14.5 Jan. FEb. Mar. +12.2 + 8.8 +15.1 + 8.8 + 9.7 +12.4 -116. 1 +19.3 +14.9 +12.2 +11.1 +10.5 F12.9 + 8.9 + 5.3 + 7.4 + 1.1 +14.0 +L1.6 + 9.3 +15.2 + 7.4 + 9.8 + 9.7 +12.0 4- 9.5 - 1.4 +16.0 +12.2 +25.5 +28.6 +25.9 +10.7 +15.0 +25.1 +18.5 +24.9 +21.8 +13.4 Apr. May -- -0.2 +11.4 + 9.2 + 2. 7 +17.0 + 7.8 +17. 6 +28.8 +29.8 - 7 7.2 +49.6 - 9.0 -10.9 -55.2 + 4.4 -15.8 -_ _____ __ .1 I _______ 1--p - Proliminary. FR 712 - E Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. CONFIDENTIAL Table 3 June 25, 1971 AGGREGATE RESERVES AND MONETARY VARIABLES SEASONALLY ADJUSTED 1969- 1970: 1971- 1971. (In millions of dollars) 27.354 | 26,210 1 27,129 Oct. Nov. Dec. 203.2 203.5 203.6 45.6 45.9 46.0 46.2 27,783 27,928 26,538 26,806 27,548 27,707 Jan. Feb. March 28,001 27,722 27,723 26,966 26,615 26,782 27,823 27,523 27,536 284.8 282.9 286.2 5.3 5.9 205.2 204.5 206.6 April May June 28,216 27,890 27,962 27,350 26,916 27,056 28,046 27,692 27,713 290.2 289.1 208.3 209.2 209.6 47.1 47.7 290.5 5.2 3.0 4.8 July Aug. Sept. 28,041 28,585 29,240 26,694 27,780 28,708 27,896 28,408 29,024 296.0 303.2 308.0 4.4 6.4 6.2 210.6 Oct. Nov. 28,928 29,033 29,584 29,134 29,233 29,703 310.6 314,0 319.6 5.2 DPc. 29,385 29,474 29,925 Jan. Feb. March 30,229 30,515 30,748 29,801 30,176 30,398 30,029 30,255 30,534 April May 30,816 31,253 30,644 30,961 5 12 19 26 31,477 30,903 31,163 31,378 2 31,467 31,289 31,446 May June 9 p 16 p 1 NOTES 3.1 5.6 4.9 283.5 285.8 285.8 (In billions of dollars) 157.6 I 194.2 1 11.5 194.0 194.6 182.6 182.9 183.4 302.2 157.6 157.7 159.0 158.1 159.8 193.3 193.5 195.3 182.7 182.9 183.8 304,8 303.4 306.1 198.5 200.3 202.2 185.6 309.6 47.8 161.2 161.6 161.9 187.1 189.0 309.3 311.1 48.1 48.2 48.2 162.5 163.7 164.6 208.2 213.2 218.5 191.3 194.2 196.8 315.8 48.5 48.7 48.9 164.5 164.8 165.7 222.2 225.0 230.4 199.1 201.1 204.4 324.8 326.7 6.2 213.0 213.5 214.6 323.9 329.1 13.2 6.7 6.2 4.8 214.8 217.3 219.4 49.2 165.5 167.7 169.4 235.3 240.9 246.1 208.2 213.5 218.3 334.1 49.6 30,611 30,998 336.6 339. 7 5.4 4.2 221.1 223.9 50.5 170.5 173.0 248.3 251.4 221.0 223.4 341.7 343.8 31,289 20,794 30,842 31,079 31,072 30,653 31,035 31,156 137.1 339.5 339.6 340.8 220.6 223.2 224.7 225.5 50.7 50.9 50.9 50.9 169.9 172.3 173.8 174.6 249.9 250.6 251.2 222.3 223.0 223.3 224.0 341.6 343.7 343.6 344.6 30,860 31,103 31,137 31,132 31,134 31,212 341.7 341.3 342.1 225.6 224.1 226.1 50.9 51.1 51.2 174.6 172.9 175.0 225.1 225.2 225.8 345.8 345.7 346.5 5.6 6.0 I 211.8 212.8 46.4 46.7 50.0 50.9 27.6 27,6 27.9 28.3 252.4 28.2 253.3 253.7 254.0 28.5 28.2 l L 305.5 305.7 321.9 324.5 331.2 337.7 340.2 | Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but leserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial pnper, and Eurodollar borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for nonhank commercial paper figures which are for last day of month. FR 712- F p - Preliminary. Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Membe Period Free reserves Excess reserves Total Banks Borr C r v R Rese Malor banks Outside N.Y. 8 N.Y. vwin r t Country O th Monthly (reserves weeks ending in): 1969--July August September October November December -1,045 997 744 995 975 849 - 266 214 282 195 238 27p 1,311 1,211 1,026 1,190 1,213 1,127 89 81 83 106 120 268 250 253 236 327 387 310 364 256 222 293 250 220 608 621 485 464 456 329 1970--January February March April May June July August September October November December 759 916 751 - 687 765 736 -1,134 706 374 274 199 84 - 169 210 129 178 159 171 183 175 235 193 210 264 928 1,126 880 863 924 907 1,317 881 609 467 409 348 148 106 90 227 165 140 218 143 101 12 42 36 287 317 225 331 241 289 460 278 115 40 17 16 232 289 287 119 228 217 348 273 274 113 294 265 261 414 278 188 290 261 291 187 119 102 57 30 1971--January February March - 140 71 120 238 264 192 378 335 312 45 29 41 36 30 17 262 248 238 35 29 16 2 6 154 218 152 212 15 78 9 36 119 60 9 38 April May 1970--Nov. 4 11 18 25 - 105 163 166 360 318 282 164 76 423 445 330 436 11 69 -86 15 29 1 22 311 282 295 287 86 65 34 41 Dec. 2 9 16 23 30 - 38 154 279 114 164 417 136 120 211 434 455 290 399 325 270 86 55 39 - 22 -48 11 -- 300 263 268 250 245 47 27 28 25 25 1971--Jan. 6 13 20 27 138 245 380 72 545 32 92 282 407 277 472 354 71 -82 26 60 -63 20 250 249 284 266 26 28 43 42 -- - 3 10 17 24 - 46 42 264 67 237 205 297 317 283 247 561 250 -114 - -121 -- 253 229 280 228 30 18 46 22 Mar. 3 10 17 24 31 - 88 339 25 265 119 170 82 265 68 376 258 421 290 333 257 -108 46 52 -- 1 51 -15 18 241 249 231 251 217 16 13 13 15 22 Apr. 7 14 21 28 277 208 81 48 197 150 84 176 -17 -42 --- - 80 58 3 128 1 34 184 127 79 86 IS 6 4 14 5 12 19 26 - 191 131 204 93 365 230 102 174 174 99 306 267 46 39 134 91 40 20 47 36 61 22 74 84 27 18 51 56 2 9 16 p 23 p - 361 69 165 360 285 85 238 258 646 154 403 618 171 46 86 103 100 27 19 161 218 25 137 201 157 56 161 153 Feb. May June p - Preliminary. Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) Period Year: - 12/31/69) 1969 (12/25/68 1970 (12/31/69 - 12/30/70) 1970--Nov. Dec. 1971--Jan. Feb. Mar. Apr. May June 1/ 2/ Total Federal Reserve credit (Excl. float) ' +5,539 +3,351 4 11 18 25 + - 2 9 16 23 30 + 986 6 13 20 27 + 938 3 10 27 24 3 10 17 24 31 7 14 21 28 692 48 + 671 - 141 + - 303 697 122 143 U.S. + 610 75 + 711 93 + 853 - 145 + 586 :5 33 + 241 ( -- + + 94 (- 214) 509 (+ 214) 2?3 (- 150) + + 475 (+ 150) 82 (- 244) 328 (+ 244) ) 4 152 - 95 (- 143) 4 137 + 428 (+ 97) + 109 + - 19 (+ 46) 26 (- 159) 65 (+ 85) - 534 64 - 204 + 722 - 308 - 153 81 + 8 - 236 +1,523 - 928 + 61 - 171 +1,082 - 518 + -4+ 275 761 516 502 155 255 3.48 54 5 12 19 26 + 771 + 201 + + 503 115 2 9p 16 p 23 p + - 305 973 201 159 + + Other +4,279 ( -- - + + Bills I/ +5,192 +4,276 + + 279 Government securities Total holdinre + 286 - 414 + 736 - 432 + 530 + 145 86 4 423 43 + 712 + 272 + 304 + 144 57 - 418 2 47 2f 83 1 ) +3,220 (- 143) + + 707 + 206 +1,180 - 124 + 4 369 19 ) 134 (-- + - + 63 - 500 337 + 73 - 177 - 30 + 258 4 24 321 - 45 + 185 • 67 63 4 - Bankers' acceptances + - - 6 + 62 - 107 + 202 4 114 Federal Agency Securltiesl 7 -64 - 327 4 - 51 59 + 83 4 13 - 16 35 28 q Hember banks borroins., + 245 - 884 4 29 + 11 + 13 - 47 4 41 4 37 - 22 6 - 21 + - 10 22 115 - 74 - 55 + -4 28 57 37 9 5 + 12 - 13 + 42 - 31 + 137 - 130 + 195 - 116 + 106 + 19 - 165 + 109 + 87 - 110 4 - 6 16 + 106 4 209 + 643 + 65 - 509 - 68 367) 204) 204) 107) + 207 - 41 104 8 604 131 + 554 372 + 43 + 153 7 90 90 36 - 5 (+ 107) + + 6 - 17 + 66 - 37 + 12 + + - 76 82) ((+ 12) (+ 70) ( - ) 4 124 4 84 + 113 17 298 - 50 73 + - 47 6B 11 7 + 23 - 54 + 2 + 12 - 60 47 66 + + 50 26 (+ 74) - 61 (- 412) + 333 (+ 412) - 218 (- 367) + 4 + + Repurchase aereements 120 407 64 60 (+ ((+ (- + + + + 4 128 360 30 + * + + 384(-173 ( 400 ( -256 (- + + 13 439 463 242 ((-((+ ) ) ) ) ) ) 39) 39) + 97 + 68 + 62 + - 328 4 99 + 71 - 167 + - 168 - + 56 9 - 6 - 4 6 70 S 73 - 8 27 23 + 28 + 11 + 10 4 + 16 9 - 36 1 1 Figures in parenthesis reflect reserve effect of match sale-purchase agreement. 494 sillion of the week of June 9, $ 4416 million of the week of June 16, Includes effect of changes in special certificates of and $ -348 million of the week of June 23. - 71 36 + - 314 311 +4 163 + 92 - 2 75 + 207 39 + 37 - 492 + 249 + 215 Table 6 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) F Federal Reserve creait (ecl 1/ float) Period Year 1969 (12/25/68 - 12/31/69 1970 (12/31/69 - 12/30/7 +5,539 +3,351 I c t o r s d s t affect Currency outside banks (Sign n -+1,1502' i ng s u p p1 y Treaury ea Float Ir operations s eff ica t r se rves Foreign Other nonmember deposits ard deposits F R accounts and gold loans of ct on -2,676 -3,122 - 813 + 773 + 241 + 667 + + 54 1 re = Change In total reserves Bank use of reserves e q" reserve Ex resrves +1,448 +1,163 +1,340 +1,257 + 108 "4 + - 271 - 86 16 -397 + + + - 205 73 38 390 + + + - 78 109 156 302 + 127 - 36 - 118 - 88 serves) - 898 -1,655 4 11 18 25 + 4 - 692 48 671 141 ----- + - 46 353 545 298 + 146 + 81 + 88 + 153 + + 382 482210 275 + + 24 1 17 18 2 9 16 23 30 + + - 986 303 67 122 143 ----- + + 13 85 263 688 264 + 34 + 103 - 107 + 1 - 376 + + + 349 174 85 873 843 + + - 5 8 3 - 187 - 39 + 75 + 206 2 - + + + + 502 157 320 260 545 + + + + + 161 124 336 169 322 + 341 -281 - 16 + 91 + 223 6 13 20 27 + + - 938 534 64 204 - 385 ---- + + + + 319 601 450 544 + 188 - 63 + 108 - 275 - 250 -673 + 191 - 889 + - 8 4 - 1 - 50 + 305 - 26 - 34 + + - 768 369 787 857 + 657 + 144 + 727 -1,047 + 111 - 513 + 60 + 190 Feb 3 10 17 24 8 + - 236 +1,523 - 928 ----- + - 3 237 587 102 +289 - 256 - 50 + 418 -402 + 542 - 533 + 844 + + 16 4 10 2 - 130 7 + 97 - 515 + - 213 199 442 286 + - 168 167 350 306 + + Mar. 3 10 17 24 31 7 14 21 28 + + + -------- + 220 + 92 - 635 - 180 + 435 257 483 -414 + 580 - 99 -105 + 508 - 186 - 60 - 243 + 249 - 131 - 384 + + + + 752 185 357 304 371 235 241 301 - 10 + + + + + 17 2 5 20 41 14 14 21 1 + + + + - 40 37 280 85 9 173 217 187 23 + + + + 374 138 551 473 458 270 45 313 219 + + + + + 227 50 368 276 150 171 24 440 252 + + + + 270 27 761 516 506 270 275 348 54 May 5 12 19 26 + + + + 771 201 503 115 -- 171 - 229 -- + + 129 351 465 69 + 307 -248 + 83 + 218 - 497 - 211 +421 - 177 + - 14 13 5 25 - 72 + 99 - 45 -315 + + - 623 696 278 116 + + - 306 561 406 188 + 317 - 135 -128 + 72 June 2 9p 16 p 23 p + + 305 973 201 159 ----- - 80 251 366 109 + + + - + + 4 + - 36 1 5 - 33 - 28 + 228 + 33 + + - 30 369 300 254 + - 81 169 147 274 + 111 - 200 + 153 + 20 1970--Nov. Dec 1971--Jan Apr For retrospective details, see Table 5. I/ in special drawing account. i Includes $400 mllior p - Prelmlnarv 169 522 398 648 327 323 161 315 1 -- 45 32 92 20 147 88 183 197 308 99 - 69 - 127 - 33 Table 7 Reconciliation--Money supply and Credit Proxy Adjusted (Billions of dollars, not seasonally adjusted) Levels, Item March 1971 Dollar Change May I June 2nd Otr., 1971 1. Money supply--M 1 217.4 219.7 223.7 6.3 2. Plus: Time deposits other than large CD's 218.9 224.5 226.2 7.3 436.3 444.2 449.9 13.6 3. Equals: Money supply--, i May to June, 1971 4.0 Plus: 4. 5. U.S. Gov't. deposits at member banks 4.5 6.7 4.6 Net domestic commercial bank deposits at member banks 4.3 4.0 4.2 27.6 28.3 28.0 6. Large CD's 7. Nondeposit funds 1/ 7.0 4.1 4.4 8. Time deposit of U.S. Gov't. and commercial banks 1.9 1.9 1.9 F.R. Float 2.7 2.7 2.7 Demand deposits at nonmember banks 38.3 39.0 40.0 Time deposits at nonmember banks 56.5 58.2 58.8 Currency component of the money supply 49.5 50.5 51.1 Deposits at Edge Act Corps., agencies and foreign branches 0.8 0.7 0.7 Foreign deposits at F.R. 0.4 0.4 0.4 339.2 342.5 345.0 9. -2.1 -0.1 0.3 -2.6 Less: 10. 11. 12. 13. 14. 2.3 -0.1 Equals: 15. Credit Proxy Adjusted p - Preliminary. 1/ Includes borrowings minor item. NOTE: from bank own foreign branches, commercial paper and other Sums of levels and changes may not add because of rounding. Table 7A Reconciliation--Money Supply and Credit Proxy Adjusted (Billions of dollars, seasonally adjusted) Levels, 1971 2nd Qtr. Dollar Item March May June p Change. 1971 May to June, Percentage Dollar Change lChange Change 1. Money supply--M 1 219.4 223.9 225.7 6.3 11.5 1.8 9.5 2. Plus: Time deposits other than large CD's 218.3 223.4 226.1 7.8 14.3 2.7 14.5 437.6 447 2 451.8 13.0 4.6 12.5 3. Equals: 1971 Percentage Money supply-- M2 14.2 Plus: 4. 5. U.S. Gov't. deposits at member banks 4.8 4.2 4.1 -0.7 -0.1 Net domestic commercial bank deposits at member banks 4.7 5.1 4.5 -0.2 -0.6 27.8 28.0 28.4 0.6 0.4 7.0 4.1 4.4 -2.6 0.3 50.0 50.9 51.2 1.2 0.3 91.8 94.0 96.0 4.2 2.0 346.0O 5.8 6. Large CD's 7. Nondeposit funds 1/ Less: 8. 9. Currency component of the money supply Deposits at nonmember banks, and other items 2/ Equals: 10. Adjusted Credit Proxy 340.2 343.8 7.0 Includes borrowings from banks own foreign branches, commercial paper and other minor items. Other items include money supply type deposits at Edge act corporations and 2/ domestic branches of foreign banks. NOTE: Sums of levels and changes may not add because of rounding. p - Preliminary. 1/ Table 8 Reserve Absorbtion by Type of Deposit--Selected Periods (Millions of dollars, seasonally adjusted) Dec. 1970May 1971 Change in total reserves Reserves absorbed by: Demand deposits adjusted Interbank deposits U.S. Government deposits Time and Savings deposits Eurodollars and Commercial paper 1/ Excess reserves Adjustment due to lagged accounting Per cent of total reserve change absorbed by: Demand deposits adjusted Interbank deposits U.S. Government deposits Time and Savings deposits Eurodollars and Commercial paper 1/ Excess reserves Adjustment due to lagged accounting 1/ Dec. 1970March 1971 March 1971May 1971 1,328 823 505 743 300 -322 686 289 213 -219 519 454 87 -103 167 -103 33 -85 -9 -18 42 -9 115 -124 56.-0 22.6 -24.2 51.6 35.1 25.9 -26.6 63.1 89.9 17.2 -20.4 33.1 -7.8 2.5 -10.3 -1.1 -3.6 8.3 -. 7 14.0 -24.6 Member bank borrowings from own foreign branches subject to Regulation M reserve requirements and commercial paper subject to Regulation D. 

Federal Reserve (1971, June 28). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19710629

@misc{wtfs_bluebook_19710629,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1971},
  month = {Jun},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19710629},
  note = {Retrieved via When the Fed Speaks corpus}
}