speeches · March 13, 1966

Regional President Speech

Karl R. Bopp · President

C E N T R A L B A N K I N G S E M I N A R Sponsored by Federal Reserve Bank of Dallas March 14-16, 1966 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis m .0fH Z ^ MARI 1966 CENTRAL BANKING SEMINAR Federal Reserve Bank of Dallas March 14, 159 and 16, 1966 Agenda March 14 First Day 8:45 - 9:15 Registration and Welcome to Group 9:15 - 9:^5 Film: Money on the Move - Federal Reserve Bank Today 9:45 - 11:00 Tour of Bank 11:00 12:00 Questions and Answers: Operating Functions of the - Reserve Banks Moderator: Watrous H. Irons, President, Federal Reserve Bank of Dallas 12:15 - 1:15 Lunch - Bank dining room 1:30 - 2:15 Research and Formulation of Monetary Policy Daniel H. Brill, Director, Division of Research and Statistics, Board of Governors of the Federal Reserve System 2:15 - 3:00 Member Bank Reserves and Related Factors Ralph T. Green, Vice President, Federal Reserve Bank of Dallas 3:00 - 3:15 Recess 3:15 - 4:00 The Discount Window: Policy and Practice P. E* Coldwell, First Vice President, Federal Reserve Bank of Dallas 6:00 - 7:15 Dinner - Baker Hotel \ / 7:30 - 9:00 Role of Monetary Policy Karl R. Bopp, President, Federal Reserve Bank of Philadelphia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis March 15 Second Day 9:00 - 10:00 Formulation and Execution of Monetary Policy Robert C. Holland, Adviser to the Board, Board of Governors of the Federal Reserve System 10:00 - 11:00 Open Market Operations Alan R. Holmes, Vice President, Federal Reserve Bank of New York, and Manager, System Open Market Account 11:00 - 11:15 Recess 11:15 “ 12:15 Treasury Debt Management R. Duane Saunders, Director, Office of Debt Analysis, United States Treasury Department 12:30 - 1:30 Lunch - Bank dining room 1:45 - 2:45 United States Balance-of-Payments Problems / Ralph A./Young, Senior Adviser to the Board, and Director, Division of International Finance, Board of Governors of the Federal Reserve System 2:45 - 3:00 Recess 3:00 - 4:00 Work of the Presidents Council of Economic Advisers Wilfred Lewis, Jr., Senior Staff Economist, Council of Economic Advisers, Executive Office of the President 5:30 - 7:15 Social Hour and Buffet Dinner - Baker Hotel 7:30 - 9:00 -/ Panel Discussion: Current Policy and Problems (all speakers) March 16 Third Day 9:30 - 10:45 Foreign Operations Charles A* Coombs, Vice President, Federal Reserve Bank of New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 10:^5 - 11:00 Recess 11:00 - 12:00 Nonbank Financial Institutions: Impact of Monetary and Debt Management Policies James J* O'Leary, Vice President and Director of Economic Research, Life Insurance Association of America 12:00 - 12:15 Concluding Questions and Discussion 12:15 - 1:15 Lunch - Bank dining room March 1, 1966 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis THE ROLE OP MONETARY POLICY Introduction A* My carder 1« Began study just 40 years ago a* Had answers after my first course! (I) "Premature anxiety to establish fundamental lavs" - Bentham (II)Brown & Rogers, favorite students of Pisher 2« Practicing the art has been a sobering experience a* Much less certain of either theory or application Still have some convictions- or prejudices - as you will discover - B. Definition of the Problem 1» Torn have full courses devoted to it 2 . What does one say in an hour? I shall limit myself to a« How does monetary policy fit into economic policies of the government generally^ h* Where does the monetary au thority fit into the structure of government? Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Relation of Monetary P0licy to fcther Economic Policies. A. Concerned primarily (but not exclusively: selective instruments 1) with influencing AGGREGATE DEMAND. B. But other governmental policies also influence aggregate demand1 1« Fiscal policy: a* ¡Origin in the great depression -as a supplement to monatBHy policy b. Soon usurped the whole field (graduate enrollment*) c. Neither can do the whole job alone at all times* The large surplusses of 1947 and 1948 did not halt inflation; because with an easy monetary policy, the private economy went into debt faster than the government came out (also local governments) d* Advantages of fiscal policy It has not only aggregative effeets but inherently has selective or distributive effects Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 3 (I) The sources of revenue (tax policy) affect (A) The distributi on of wealth and income (±*EBjLfc±xaai (B) The division of GNP between consumption and investment and therefore the rate of GROWTH (Cj The profitability (both absolute and relative) of enterprise and thus total output as well as the distribution of our resources (eg. depletion allowances; investment credits, depreciation- allowances, etc, capital gains vs income, etc.) (D) The rate of interest (II) Government expenditures affect (A$ The allocation of our resources (B) The level of structural unemployment (1) Regional: Appalachia (2) Other: Poverty pockets education (C) The balance of payments government expenditures for defense development 2. Debt management policy a. Reginald McKenna ■£ Chancellor and of Midland Bank on the grewt refunding of 1932? b. Debt management, liquidity, and the flow of expenditures some problems of application: issue long terms when rates are nigji & rising the 4%fo ceiling 3. Other governmental policies a. Price/wwge guidelines b. trade policy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 4 C* The role of general monetary policy l..The matter of timings a» Fiscal policy though powerful, is cumbrous b. Monetary policy is flexible c* Handicap to monetary authoritys it must operate on economy as it results from other governmental policies* 2* Its contribution to our economic objectives a* to the basic economic environments It is ”calcdlated to foster and promote free competitive enterprise.” The b±z role of money as an instrument of choice Monetary policy as a means of inducing individuals of their own volition to achieve socisl goals while pursuing their own interest* b. Maximum employment (I) relation of unemployment to social problems youth and the disadvantaged (II) If full employment becomes our sole objective, irrespective of wage rates, we are in for trouble (III) Monetary policy for aggregate demand deficiency expenditure for structural c. Stabll prices (I) Not for their own sake, but because of con sequences of fluctuating levels d. Balance of Payments e. Growth specific rate is not appropriate objective for monetary policy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis /) í'<M - fií»--,, "fe fi, „ Ì c < LAJ~*-*C(J-P '. """"Cx-*"1- ■*• c - /ö ffl-C-JT' /. Æ-t, <xJ~^ LA+^~f LA~ ^ ¿JL-u Í^^JfL £ CX , OtTV-WV^SJW ^TU? ¿u -^ U ^ V ¿ ¿^S-e-ju^JL^J (%~Jh J un, *M ^USS.) 3 , (X ^ ^ .U J-L*- ¿ I L *-o- A^"^4 £ 'r*^ ß y j - ¿ru 6 , - j2— /¿í> ¿LamjuX ^ á Ö..S. C*-«^aJ^í <hch-o^ T / /2L~-»-a_A¿v~ i / ¿ e 8 <C S*0c*~Æjk. /vVm /Íj-tíí-.c. V\ J j í L - A S^\ I 3. Cw . C— i - . f Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis /, A w . <*. Jr f. J^aIî yû-#Vw^CkV**3 ^~-^s~xjl^^-QA^ ¿ / é ^ Jt W<-Cu^UrU *' M «. //I& LJ ¿& U iJr <*, /fo h lIT \ d < ^ C ^ P " " " «2- _* A-c-J*’ A-^£~AA.+ <^4 >¡$1. *J¡sl^ ¿ ,i <¿. r«-<j> ^Cc/-* - £*^. „». ^ cts¿e-l ¿ A^Cfr. > /ttf y ^ x JL - 4 U*. C+^.pJXaa^Q C x^r^yt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis ^ (jis jf'X * Ícl-c^. p , Ë J/zruJ A ^^ó-& "\J^ ííí^^^^A JL cC -C ^ 'f -€.. ¿y c¿ou¿ ^ uj^ h> /$a^cJ<i Á r*^ v V * & t ^ 2U^, ^ <Z' ¿y /é ^ + ^ u A -r^ 5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FR 731* NET CHANGE IN U.S. INTERNATIONAL RESERVE POSITION Billions of dollars +4 +2 -2 -U Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis FR 731» U.S. NONMILITAKY IMPORTS AS PERCENTAGE OF GROSS NATIONAL PRODUCT Percent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 1« U«, Sc Tntemattonai Reserve Position (In billio-is of dollars.) Reserve assets Reserve Liabillties To official institute ons in foreign couriiiri? s__ U.S. Govt, Reserve Foreign boiids and notes Assets Assets as End of Gold position currency Short- Market- Nonnar- To less percent of year stock in IMF holdings Total term able ketable IMF Total Liabilities Liabilities 1945 20.1 -- — 20.1 4.2 .3 — — 4.5 15.6 450 1946 20.7 « » 20.7 3.0 .1 _ _ _ _ 3.2 17.6 660 1947 22.9 1.0 22.9 1.8 .1 -- 2.0 21.9 1,220 1948 24.4 1.4 -- 25.8 2.8 .1 -- -- 3.0 22.8 930 1949 24.6 1.5 26.0 2.9 .1 — -- 3.0 23.0 860 1950 22.8 1.4 -- 24.3 3.6 .9 -- -- 4.5 19.8 540 1951 22.9 1.4 _ _ 24.3 3.5 .3 _ _ _ _ 3.9 20.4 630 1952 23.3 1.5 -- 24.7 4.7 .5 -- 5.2 19.6 480 1953 22.1 1.4 23.5 5.7 .5 -- -- 6.1 17.3 380 1954 21.8 1.2 -- 23.0 6.8 .4 -- — 7.2 15.8 320 1955 21.8 1.0 — 22.8 7.0 .9 — -- 7.8 15.0 290 1956 22.1 1.6 23.7 8.0 .7 -- .2 8.9 14.7 260 1957 22.9 2.0 24.8 7.9 .8 -- .2 8.9 16.0 280 1958 20.6 2.0 22.5 8.7 .6 -- .2 9.5 13.1 240 1959 19.5 2.0 -- 21.5 9.2 .9 — .5 10.6 10.9 200 1960 17.8 1.6 — 19.4 10,2 .8 — .8 11.9 7.5 163 1961 16.9 1.7 .1 18.8 10.9 .9 ... .8 12.6 6.2 149 1962 16.1 1.1 .1 17.2 12.0 .7 .3 ,8 13-7 3.5 125 1963 15.6 1 .0 .2 16.8 12 e 5 1.2 .9 .8 15.3 1.5 110 1964 15.5 .8 .4 16.7 13c 2 1.1 1.4 .8 16c 6 .1 101 1965 13.8 .9 .8 15.5 1 3 .0 1.1 1.7 c 8 16.7 -1.2 93 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Table 2. Changes in U.S. International Reserve Position (In billions of dollars) Reserve assets Reserve liabilities Assets less IMF position To official liabilities and foreign institutions J-year Gold currency in foreign To During moving ave. Period stock holdings Total countries IMF Total period centered 1946 + .6 «• m +• 6 -1.3 • • -1.3 +2.0 n.a. 1947 +2.2 +1.0 +3.2 -1.2 -- -1.2 +4.4 +2.4 1948 +1.5 +.4 +1.9 +1.0 — +1.0 +.9 +1.8 1949 +.2 +.1 +.3 +.0 — +. 0 +. 2 -.7 1950 -1.7 -.0 -1.8 +1.5 -- +1.5 -3.3 -.8 1951 +.1 -.0 +.0 -.6 -- -.6 +.7 -1.1 1952 +.4 +. o +.4 +1.3 — +1.3 -.9 -.8 1953 -1.2 -.1 -1.3 +1.0 — +1.0 -2.2 -1.5 1954 -.3 -.2 -.5 +1.0 — +1.0 -1.5 -1.5 1955 -.0 -.1 -.2 +.6 -- +.6 -.8 -.9 1956 +• 3 +.6 +.9 +.9 +.2 +1.1 -.3 +.1 1957 +.8 +.4 +1.2 -.1 -- -.1 +1.2 -.6 1958 -2.3 -.0 -2.3 +. 6 — +.6 -2.9 -1.3 1959 -1.1 +.0 -1.0 +.8 +. 3 +1.1 -2.2 -2.8 1960 -1.7 -.4 -2.1 +1.0 +. 3 +1.3 -3.4 -2.3 1961 -.9 +. 3 -.6 +.7 -- +.7 -1.3 -2.5 1962 -.9 -.6 -1.5 +1.1 -- +1.1 -2.7 -2.0 1963 -.5 +.1 -.4 +1.6 — +1.6 -2.0 -2.0 1964 -.1 -.0 -.2 +1.2 -- +1.2 -1.4 -1.6 1965 -1.7 +.4 -1.2 +.0 +.0 +.1 -1.3 n.a. 1946-49 +4.5 +1.5 +5.9 -1.5 -- -1.5 +7.4 1950-57 -1.7 +.5 -1.2 +5.6 +.2 +5.8 -7.0 1958-65 -9.1 -.3 -9.4 +7.2 +.6 +7.8 -17.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis SOURCES AND USES OF MEMBER BANK RESERVES (in millions of dollars) Effect of Change on Reserves Dec. 30» 1964 Dec. 29, 1965 Change Source Use Sources Gold stock 15,388 13,734 -1,654 1,654 Treasury currency outstanding 5,405 5,591 +186 186 Reserve bank credit— total (39,688) (43,808) (+4,120) (4,120) U.S. Government securities Bought outright 36,506 40,631 +4,125 4,125 Held under repurchase agreement 257 258 +1 1 Acceptances Bought outright 56 73 +17 17 Held under repurchase agreement 10 91 +81 81 Discounts and advances Member bank borrowings 327 499 +172 172 Other 30 4l +11 11 Float 2^21^ -287 287 i t Total sources 60 &LÌ33 Uses Currency in circulation 39,775 42,314 +2,539 2,539 Treasury cash holdings 64 2 820 +I78 178 Treasury deposits with Federal Reserve banks 15k 533 -221 221 Foreign deposits with Federal Reserve banks 228 159 -69 69 Other deposits with Federal Reserve banks 188 227 +39 39 Other Federal Reserve accounts (net) 1,067 338 -729 729 Member bank reserves at Federal Reserve banks 17,826 18,742 +916 916 Total uses 60,480 53A33 K M 5 3 3 NOTE: Member bank reserves With Federal Reserve banks 17,826 18,742 Currency and coin (estimated) ... jb .35? 4,644 Total reserves held 22,185 23,386 Required reserves (estimated) 21,554 22.786 Excess reserves (estimated) 63T 600 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Chart I CHANGE IN FEDERAL RESERVE ACCOUNTS December 1964 - December 1965 Millions of dollars REQUIRED RESERVE Required COMPONENTS Against Reserves supplied reserves _______/\______ interbank through other 1,160 ----- bO factors (net) Excess reserves, : Against pri- -130 — ^ Against *__vate demand United States Total member deposits Government deposits bank reserves Member bank Against time borrowings 1,030 deposits 0 Currency Federal Reserve's held by the holdings of nonbank public United States Government securities 2,090 and bankers1 acceptances 3,980 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Chart II CHANGE IN THE MONEY SUPPLY December 1964 - December 19^5 Millions of dollars MONEY SUPPLY COMPONENTS __________a 15 Currency held by Foreign deposits the nonbank public at the Federal Reserve Nonmember bank demand deposits 2,160 Member bank demand deposits Required reserves M 2 5 against member bank private demand deposits 575 ------- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Chart III CHANGE IN BANK ASSETS AND LIABILITIES December 1964 - December 1965 Millions of dollars All other assets All other liabilities Borrow ^,130 and adjustments and adjustments ings ____ E =Zj<---- 935 -4,185 Bank 2,435 capital 'Nonmember' ^ Member bank reserves Nonmember bank 3,480 bank credit 1,030 time deposits 4,500 Member bank time deposits United States 16,600 Member Government bank credit Demand deposits id deposit« 21, 58O in money supply -900 v Nonmem r 2,160 ber bank Member 4,325 bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Chart IV CHANGE IN COMMERCIAL BANK CREDIT BY COMPONENTS December 1964 - December 1965 Billions of dollars or percent Composition of change in total bank credit I I Investments Total Loans bank credit other than business 26 loans .I 48* Business Business loans loans I Other I securities United States II.7 5.9 Governments -4.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Cite this document

APA

Karl R. Bopp (1966, March 13). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19660314_karl_r_bopp

BibTeX

@misc{wtfs_regional_speeche_19660314_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1966},
  month = {Mar},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19660314_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}