CHAIRMAN GREENSPAN. Any further comments?
MS. MINEHAN. I just want to reiterate what Gary Stern said before.
For better or for worse, my understanding of the way swaps work is that there is an activation process of some sort and then an actual use.
There are principles and rules that apply and so on.
I think we need to be very flexible as we move forward, and I think we ought to be responsive as a central bank.
We need to be aware of the political nature of these transactions, particularly in the reverse repo situation where there is at least a debate about whether it is the same kind of extension of credit that ended up being debated.
Accordingly, I think we need to have a fairly firm set of principles under which we would operate and that would not vary a great deal, except in extremis, from country to country.
Those principles would be something that we would talk about in advance of actually providing dollars.
I am a little nervous about extreme flexibility because I think it could lead into difficulty for us.
TO BE CONTINUED ...
MINUTES OF JULY 3, 1996 FOMC MEETING
Re: MINUTES OF JULY 3, 1996 FOMC MEETING
CHAIRMAN GREENSPAN. Further remarks or questions?
If not unless I hear an objection, I think we probably ought to move forward and see whether we can get some responses on this general issue from our counterparties and bring those observations back to the Committee the next time we discuss this operation.
Is that okay with everybody?
MR. PRELL. Mr. Chairman?
CHAIRMAN GREENSPAN. Yes.
MR. PRELL. Could I remind Committee members that there is an opportunity to submit revisions of their forecasts?
It would be very helpful to us if those could be sent to me by close of business on Monday to give us time to incorporate them in our draft of the Humphrey-Hawkins report.
VICE CHAIRMAN MCDONOUGH. If I could just add a remark that is probably gratuitous and unnecessary, but I will make it anyway.
There were many references to the tremendous importance of the upcoming Humphrey-Hawkins testimony, and that testimony is going to be infinitely more meaningful if all of us maintain a very studied silence in the meantime.
MR. STERN. Do you have a date for that testimony?
Mr. COYNE. It's scheduled for Thursday, July 18.
CHAIRMAN GREENSPAN. The next meeting is August 20th.
We will adjourn for lunch.
END OF MEETING
https://www.federalreserve.gov/monetary ... eeting.pdf
If not unless I hear an objection, I think we probably ought to move forward and see whether we can get some responses on this general issue from our counterparties and bring those observations back to the Committee the next time we discuss this operation.
Is that okay with everybody?
MR. PRELL. Mr. Chairman?
CHAIRMAN GREENSPAN. Yes.
MR. PRELL. Could I remind Committee members that there is an opportunity to submit revisions of their forecasts?
It would be very helpful to us if those could be sent to me by close of business on Monday to give us time to incorporate them in our draft of the Humphrey-Hawkins report.
VICE CHAIRMAN MCDONOUGH. If I could just add a remark that is probably gratuitous and unnecessary, but I will make it anyway.
There were many references to the tremendous importance of the upcoming Humphrey-Hawkins testimony, and that testimony is going to be infinitely more meaningful if all of us maintain a very studied silence in the meantime.
MR. STERN. Do you have a date for that testimony?
Mr. COYNE. It's scheduled for Thursday, July 18.
CHAIRMAN GREENSPAN. The next meeting is August 20th.
We will adjourn for lunch.
END OF MEETING
https://www.federalreserve.gov/monetary ... eeting.pdf