March 4, 1969 FOMC Record of Policy Actions

FOMC minutes

(3) Additional currencies purchased spot or forward, up to the amount necessary for System oper ations to exert a market influence but not exceeding $250 million equivalent; and Sterling purchased on a covered or guaranteed (4) basis in terms of the dollar, under agreement with the Bank of England, up to $300 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; (2) Commitments to deliver Italian lire, under special arrangements with the Bank of Italy, up to $500 million equivalent; and Other forward commitments to deliver foreign (3) 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 amount outstanding 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 arrange ments ("swap" arrangements) for 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:

Amount of arrangement (millions of bank dollars equivalent) Foreign Austrian National Bank 100 National Bank of Belgium 225 Bank of Canada 1,000 National Bank of Denmark 100 England 2,000 Bank of Bank of France 1,000 German Federal Bank 1,000 Bank of Italy 1,000 Bank of Japan 1,000 Bank of Mexico 130 Netherlands Bank 400 Bank of Norway 100 Bank of Sweden 250 Swiss National Bank 600 Bank for International Settlements: Dollars against Swiss francs 600 Dollars against authorized European currencies other than Swiss francs 1,000 Votes for this action: Messrs. Martin, Hayes, Bopp, Brimmer, Clay, Coldwell, Daane, Maisel, Mitchell, Robertson, Scanlon, and Sherrill. Votes against this action: None. With respect to the increase in the limit on outright holdings of foreign currencies, the System's current holdings were close to the of $150 million. That limit had been established in previous limit 1963, at a time when the foreign exchange operations of the Federal Reserve had not yet assumed the scale of more recent years. The judgment of the Special Manager that more Committee concurred in the to permit acquisitions from time to time of leeway was now desirable to prove useful in future operaforeign currencies that were likely tions.

to the introductory text of paragraph 1 consisted The amendment after the words "to the extent necessary to carry out of the addition, foreign currency directive," of the phrase "and express the Committee's by the Committee pursuant thereto." This amendment was authorizations for the purpose of making clear that the language of the authorization extended not only to operations undertaken under the specific language of the foreign currency directive but also to those undertaken under express authorities given by the Committee, for which provision was made at a number of points in the directive. to paragraph 1B involved a clarification of The main amendment the form of authorization for foreign currency transactions undertaken with System "warehousing" operations for the Stabilization in connection Fund. While the forward commitments associated with such warehousing operations were separately authorized in paragraph 1C(1), the spot holdings had been subsumed under general language in 1B authorizing holdings "up to the amounts necessary to fulfill outstanding forward commitments." As amended, the authorization contained a new paragraph 1B(1) separately covering the spot holdings in question. Concurrently, a number of other conforming and clarifying changes were made in 1B and in 1C(1). The amendment to paragraph 2, which affected the table contained in that paragraph listing authorized swap arrangements, involved the incorporation of more precise descriptions of the System's two swap arrangements with the Bank for International Settlements.

3. Review of continuing authorizations. This being the first meeting of the Federal Open Market Committee following the election of new members from the Federal Reserve Banks to serve for the year beginning March 1, 1969, and their assumption of duties, the Committee followed its customary practice of reviewing all of its continuing authorizations and directives. The action taken with respect to the authorization for System foreign currency operations has been described in the preceding portion of the record for this date. The Committee reaffirmed its continuing authority directive for domestic open market operations and its foreign currency directive in the forms in which both were outstanding at the beginning of the year 1969. Votes for these actions: Messrs. Martin, Hayes, Bopp, Brimmer, Clay, Coldwell, Daane, Maisel, Mitchell, Robertson, Scanlon, and Sherrill. Votes against these actions: None.