March 18–19, 1974 FOMC Record of Policy Actions

FOMC minutes

3/18-19/74 the Federal Reserve Bank of New York, on maintained at a cash, regular, or deferred delivery basis, for the System prices, and, for such Account, Open Market Account at market U.S. Government and Federal agency to exchange maturing or the individual agencies with the Treasury securities without replacement; provided or to allow them to mature U.S. Government and Federal aggregate amount of that the in such Account (including forward agency securities held of business on the day of a commitments) at the close at which action is taken with meeting of the Committee directive shall not be increased respect to a domestic policy by more than $3.0 billion during the period or decreased of business on the day follow commencing with the opening ending with the close of business on ing such meeting and the day of the next such meeting; buy or sell in the open market, from or to (b) To acceptance dealers and foreign accounts maintained at the Federal Reserve Bank of New York, on a cash, regular, or deferred delivery basis, for the account of the Federal Reserve Bank of New York at market discount rates, prime bankers' acceptances with maturities of up to nine months at the time of acceptance that (1) arise out of the cur rent shipment of goods between countries or within the United States, or (2) arise out of the storage within the United States of goods under contract of sale or expected to move into the channels of trade within a reasonable time and that are secured throughout their life by a warehouse receipt or similar document con veying title to the underlying goods; provided that the acceptances held at any one aggregate amount of bankers' time shall not exceed $125 million; (c) To buy U.S. Government securities, obligations that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, and prime bankers' acceptances of the types authorized for purchase under 1(b) above, from nonbank dealers for the account of the Federal Reserve Bank of New York under agreements for repurchase of such sec urities, obligations, or acceptances in 15 calendar days or less, at rates that, unless otherwise expressly authorized by the Committee, shall be determined by com bidding, after applying reasonable limitations petitive

3/18-19/74 volume of agreements with individual dealers; on the that in the event Government securities or agency provided by any such agreement are not repurchased issues covered by the dealer pursuant to the agreement or a renewal they shall be sold in the market or transferred thereof, System Open Market Account; and provided further to the that in the event bankers' acceptances covered by any such agreement are not repurchased by the seller, they to be held by the Federal Reserve Bank or shall continue shall be sold in the open market. 2. The Federal Open Market Committee authorizes and directs Reserve Bank of New York, or, if the New York the Federal Reserve Bank is closed, any other Federal Reserve Bank, to purchase directly from the Treasury for its own account (with discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) such amounts of special short-term certificates of indebted ness as may be necessary from time to time for the temporary accommodation of the Treasury; provided that the rate charged on such certificates shall be a rate 1/4 of 1 per cent below the discount rate of the Federal Reserve Bank of New York at the time of such purchases, and provided further that the total amount of such certificates held at any one time by the Federal Reserve Banks shall not exceed $1 billion. 3. In order to insure the effective conduct of open market operations, the Federal Open Market Committee authorizes and directs the Federal Reserve Banks to lend U.S. Govern ment securities held in the System Open Market Account to Government securities dealers and to banks participating in Government securities clearing arrangements conducted through a Federal Reserve Bank, under such instructions as the Committee may specify from time to time. 4. Authorization for foreign currency operations The Committee approved an increase from $2 billion to $3 billion in the System's swap arrangement with the Bank of England and the corresponding amendment to paragraph 2 of the authorization

3/18-19/74 for foreign currency operations, effective March 26, 1974. With this change, paragraph 2 of the authorization read as follows: The Federal Open Market Committee directs the Bank of New York to maintain reciprocal Federal Reserve ("swap" arrangements) for the currency arrangements Market Account for periods up to a maximum System Open 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 250 National Bank of Belgium 1,000 Bank of Canada 2,000 National Bank of Denmark 250 Bank of England 3,000 Bank of France 2,000 German Federal Bank 2,000 Bank of Italy 3,000 Bank of Japan 2,000 Bank of Mexico 180 Netherlands Bank 500 Bank of Norway 250 Bank of Sweden 300 Swiss National Bank 1,400 Bank for International Settlements: Dollars against Swiss francs 600 Dollars against other European currencies 1,250 Votes for this action: Messrs. Burns, Hayes, Black, Brimmer, Bucher, Clay, Holland, Kimbrel, Mitchell, Sheehan, Wallich, and Winn. Votes against this action: None.

3/18-19/74 -21 This action was taken after consultation with the U.S. Treasury. It was expected to contribute to international monetary stability by expanding the facilities available for coping with temporary pressures on sterling arising from short-run possible fluctuations in international payments flows.