March 10, 1970 FOMC Record of Policy Actions

FOMC minutes

authority directive that Another amendment to the continuing 1969, involved the addition of a paragraph 3 had been made on October 7, the Reserve Banks to engage in lending of U.S. Government authorizing securities held in the System Open Market Account, under such might specify from time to time. That instructions as the Committee on the basis of a judgment by the Committee that action had been taken circumstances such lending of securities was reason in the existing ably necessary to the effective conduct of open market operations and to the effectuation of open market policies, and on the understanding that the authorization would be reviewed periodically. At this meeting the Committee concurred in the judgment of the Manager of the System Open Market Account that the lending activity in question remained necessary and, accordingly, that the authorization should remain in effect subject to periodic review. certain modifications that had The Committee also approved recommended by the Manager, in light of the operating experience been to date, in the instructions it had issued in conjunction with this authorization. Among the more important of these were an increase from $75 million to $150 million in the dollar limit on the par of securities involved in outstanding loans to any individual value time; a lengthening from three to five business days dealer at any the limit on the duration of loans to dealers, with loans remaining of

subject to renewal; and certain revisions in the rates to be charged on contracts renewed beyond their initial maturity. 3. Amendment to authorization for System foreign currency operations. approved an increase from $1,000 million to The Committee $1,250 million equivalent in the System swap arrangement with the Bank of Italy, and the corresponding amendment to paragraph 2 of the authorization for System foreign currency operations, subject to the understanding that the action would become effective upon a deter mination by Chairman Burns that it was in the national interest. Chairman Burns made the indicated determination later on the day of this meeting. As a result of this action, paragraph 2 read as follows: The Federal Open Market Committee directs the Federal Reserve Bank of New York to maintain reciprocal currency arrangements ("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 Foreign bank dollars equivalent) Austrian National Bank 200 National Bank of Belgium 500 Bank of Canada 1,000 National Bank of Denmark 200 Bank of England 2,000 Bank of France 1,000 German Federal Bank 1,000 Bank of Italy 1,250 Bank of Japan 1,000 Bank of Mexico 130 Netherlands Bank

Amount of arrangement (millions of Foreign bank dollars equivalent) Bank of Norway 200 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. Burns, Hayes, Brimmer, Daane, Heflin, Hickman, Maisel, Mitchell, Robertson, Sherrill, Swan, and Kimbrel. Votes against this action: None. Absent and not voting: Mr. Francis. (Mr. Kimbrel voted as his alternate.) This action was taken on recommendation of the Special Manager, who advised that it should prove helpful in providing against destabilizing short-run pressures on the lira. It was understood that the U.S. Treasury would concurrently make available a $250 million swap facility to the Bank of Italy. 4. 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, 1970, and their assumption of duties, the Committee followed its customary practice of reviewing all of its continuing authorizations and directives. The actions taken with respect to the continuing authority directive for domestic open market operations and the

authorization for System foreign currency operations have been described in the preceding portions of the record for this date. Except for the changes resulting from those actions, the Committee reaffirmed the two instruments, and also the foreign currency directive, in the form in which they were outstanding at the begin ning of the year 1970. Votes for these actions: Messrs. Burns, Hayes, Brimmer, Daane, Heflin, Hickman, Maisel, Mitchell, Robertson, Sherrill, Swan, and Kimbrel. Votes against these actions: None. Absent and not voting: Mr. Francis. (Mr. Kimbrel voted as his alternate.)