Talk:Reform of the Federal Reserve

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  • Chairman Ben S. Bernanke At the Federal Reserve Board Conference on Key Developments in Monetary Policy, Washington, D.C., October 8, 2009, "The Federal Reserve's Balance Sheet: An Update"
  • Fed Chairman Bernanke to testify to the House Oversight Committee on June 25, 2009 re Bank of America and Merrill Lynch merger CNBC June 25, 2009
  • Interview and discussion with Dominic Konstam of the Credit Suisse. He give his analysis in treasury market and interest rate. 19 largest financial institutions need to raise approx. $ 300 billion in additional capital and need to earn it. So if the Fed raises rates then it makes it more difficult for these banks to earn the profit they need to be adequately recapitalized.(Bloomberg News video running time = 6 minutes)
  • Various credit spreads, like LIBOR-OIS and TED would suggest there has been a dramatic improvement in capital markets. The rally in the stock market points in the same direction and a handful of banks have returned TARP money. But the sad truth of the matter is that the deus ex machina of credit creation is still terribly impaired.Data via Brown Brothers'

And to appreciate this is partly to understand another reason why inflation fears are overstated. The Federal Reserve’s balance sheet has expanded to $2.055 trillion from $871 billion last May. The expansion has been financed primarily in two ways: Extra Treasury bill issuance by the Treasury Department which is in essence given to the Fed, and by creating reserves, “printing money” in the vernacular. Therein is where many see the inflation risk.

The reserves in excess of what is required, hence they are called “excess reserves, are the fuel for inflation, the monetarists amongst us argue. The key though seems to be what the banks are doing with these reserves. The short answer: nothing. That is to say, that the banks are sitting on a virtual mountain of excess reserves which are kept with their creator, the Federal Reserve itself.

In the most recent two-week bank statement period, these excess reserves stood at almost $800 billion—yes, a little more than the entire TARP allocation. Prior to the crisis, excess reserves were minimal—a couple of billion dollars. What this means is that nearly two-thirds of the dramatic expansion of the Fed’s balance sheet that so worries many investors is still with the Fed itself. It is not chasing assets or goods. It has not truly entered the circuit of capital. In essence, the inflation risk is being exaggerated because the “real effective” expansion of the Fed’s balance sheet is being exaggerated.

  • "On Thursday, 2 July, at 1 pm, the Deputy Governor Barbro Wickman-Parak will chat via the Riksbank’s website, www.riksbank.se, about the monetary policy decision and the conclusion of the Monetary Policy Report. Questions can be submitted from Thursday 2 July at 10 am via the Riksbank’s website, www.riksbank.se." Source: Riksbank media release

The Australian Foreign Exchange Committee (AFXC) is a representative forum of the Australian foreign exchange market operating under the sponsorship of the Reserve Bank of Australia (RBA). Membership is drawn from the leading foreign exchange banks and also includes representatives from the Association Cambiste Internationale (ACI) and the Australian Financial Markets Association (AFMA). The Chairman is elected from the Committee and the RBA provides a permanent secretary to the Committee.

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Turnover in the global foreign exchange market is in excess of US$3.2 trillion each day. The Australian foreign exchange market is the seventh largest foreign exchange market in the world. The Australian dollar/US dollar exchange rate pair is the fourth most traded currency pair in the global market.

See latest survey details in News releases for 28 July 2009.

Financial Aggregates – June 2009 Reserve Bank of Australia statistical tables

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