FOMC Minutes

Meeting of Federal Open Market Committee March 14, 1968 MINUTES OF ACTIONS A meeting of the Federal Open Market Committee was held on Thursday, March 14, 1968, at 5:30 p.m., Martin. at the call of Chairman This was a telephone conference meeting, and each individual was in Washington except as otherwise indicated in parentheses in the following list of those participating. PARTICIPATING: Mr. Martin, Chairman Mr. Brimmer Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Daane Ellis Hickman Maisel Mitchell Robertson Sherrill Clay, Alternate for Mr. Galusha Mr. Coldwell, Alternate for Mr. Kimbrel Mr. Treiber, Alternate for Mr. Hayes (Boston) (Cleveland) (Kansas City) (Dallas) (New York) Mr. Holland, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Mr. Broida, Assistant Secretary Mr. Molony, Assistant Secretary Mr. Hackley, General Counsel Mr. Hexter, Assistant General Counsel Mr. Brill, Economist Messrs. Axilrod, Hersey, Partee, Reynolds, and Solomon, Associate Economists Mr. Holmes, Manager, System Open Market Account (New York) Mr. Coombs, Special Manager, System Open Market Account 3/14/68 Mr. Cardon, Assistant to the Board Mr. Sammons, Associate Director, Division of International Finance, Board of Governors Mr. Kiley, Associate Director, Division of Bank Operations, Board of Governors Mr. Ring, Assistant Director, Division of Bank Operations, Board of Governors Mr. Gramley, Adviser, Division of Research and Statistics, Board of Governors Mr. Bernard, Special Assistant, Office of the Secretary, Board of Governors Mrs. Semia, Technical Assistant, Office of the Secretary, Board of Governors Miss McWhirter, Analyst, Office of the Secretary, Board of Governors Messrs. Bilby and MacLaury, Vice Presidents of the Federal Reserve Bank of New York (New York) Mr. Geng, Assistant Vice President of the Federal Reserve Bank of New York (New York) With Messrs. Maisel, Mitchell, and Robertson dissenting, the Committee authorized the Special Manager to undertake negotiations looking toward increases in a number of the System swap lines, on the understanding that any such increases and corresponding amendments to paragraph 2 of the authorization for System foreign currency opera tions would become effective upon a determination by Chairman Martin that they were in the national interest. Negotiations were authorized for increases in the swap lines with the following foreign banks to new levels not exceeding the amounts indicated (millions of dollars equivalent): National Bank of Belgium Bank of Canada Bank of Italy 400 1,000 1,000 3/14/68 Bank of Japan Netherlands Bank Bank of Sweden Swiss National Bank Bank for International Settlements: System drawings in Swiss francs System drawings in other authorized European currencies 1,000 400 300 600 600 1,000 It was agreed that the Committee would take a more liberal view for the time being of the time period appropriate to swap drawings. Secretary's note: On March 17, Chairman Martin determined that nego tiations had been satisfactorily completed with respect to increases, to the levels indicated above, in the swap lines with (1) the Bank of Canada, (2) the Bank of Japan, (3) the Netherlands Bank, (4) the Swiss National Bank, and (5) the Bank for International Settlements. On March 17 Chairman Martin made the same determination with respect to an increase in the swap line with the Bank of Sweden to $250 million equivalent. Also, members of the Committee authorized the Special Manager to under take negotiations looking toward increases in the reciprocal currency arrangements with (1) the German Federal Bank, from $750 to $1,000 million equivalent, on March 16, 1968; and (2) with the Bank of England, from $1,500 to $2,000 million equivalent, on March 17, 1968. It was understood that such increases and the corresponding amendments to paragraph 2 of the authorization for System foreign currency operations would become effective upon a determination by Chairman Martin that they were in the national interest. Chairman Martin so determined on March 17, 1968. Messrs. Robertson and Maisel, in voting to approve the negotiation of a 3/14/68 swap line increase with the German Federal Bank, noted that they continued to hold the general reservations con cerning swap line increases at this juncture that they had expressed at the telephone conference meeting of the Committee held on March 14, but that since the majority of the Committee had approved such increases they felt it was appropriate that Germany also be included. As a result of these actions, the table contained in paragraph 2 of the authorization for System foreign currency operations was amended, effective March 17, 1968, to read as follows: Amount of 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 Settlements: System drawings in Swiss francs System drawings in authorized European currencies other than Swiss francs arrangement (millions of dollars equivalent) 100 225 1,000 100 2,000 100 1,000 750 1,000 130 400 100 250 600 600 1,000 By unanimous vote, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to 3/14/68 execute transactions in the System Account in accordance with the following current economic policy directive: In light of recent international financial develop ments, System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining firm but orderly conditions in the money market, taking into account the effects of in creases in Federal Reserve discount rates. By unanimous vote, procedures with respect to allocation of securities in the System Open Market Account were revised to read as follows: 1. The Board's Division of Bank Operations shall assemble, in the morning of each business day, data on the Federal Reserve note liability of each Bank and total gold reserves of each Bank for the preceding day. 2. The Division of Bank Operations shall deter mine from these data the amount of adjustment needed in each Bank's gold reserves to equalize, to five places to the right of the decimal with the last digit rounded, the reserve ratios of the 12 Federal Reserve Banks at the close of business on the preceding day. The amount of adjustment, rounded to the nearest dollar, will be furnished to the Federal Reserve Bank of New York. 3. The Federal Reserve Bank of New York shall then reallocate the securities in the System Open Market Account as of the preceding day in such a way as to provide each Bank with a net settlement as close as possible to the amount of adjustment in paragraph 2. 4. The Board's staff and each Federal Reserve Bank shall then be notified of the amounts involved and the Interdistrict Settlement Fund may be closed after giving effect to the adjustments. 5. Profits and losses on the sale of securities from the Account shall be allocated on the day of 3/14/68 -6 delivery of the securities sold on the basis of each Bank's current holdings at the opening of business on that day. It was agreed that the next meeting of the Committee would be held on Tuesday, April 2, 1968, at 9:30 a.m. The meeting adjourned. Secretary

Federal Reserve (1968, March 13). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19680314

@misc{wtfs_fomc_minutes_19680314,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1968},
  month = {Mar},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19680314},
  note = {Retrieved via When the Fed Speaks corpus}
}