Gold and the Central Bank Swap Network

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Excerpt from Gold and the Central Bank Swap Network: Hearings Before the Subcommittee on International Exchange and Payments of the Joint Economic Committee Congress of the United States, Ninety-Second Congress, Second Session, September 11, 13, and 15, 1972Congress of the United States, Subcommittee ox International Exchange and Payments of the Joint Economic Committee, The subcommittee met, pursuant to notice, at 9:30 a.m., in room 1202, New Senate Office Building, Hon. Henry S. Reuss (chairman of the subcommittee) presiding.Present: Representatives Reuss and Conable, and Senator Javits. Also present: John R. Karlik, economist, Jerry J.Jasinowski, research economist, George D. Krumbhaar, Jr., and Walter B.Laesrg, minority counsels.Chairman Reuss. Good morning. The Subcommittee on International Exchange and Payments of the Joint Economic Committee will be in order. Today we begin 3 days of hearings on U.S. official policies regarding gold as an international reserve asset and on the swap network among central banks and how the Federal Reserve has used this network to intervene in the foreign exchange market. In March 1968 the United States concluded an agreement with the other major industrial nations to divide world gold markets into two sectors - one official and one private. With the exception of limited purchases of gold from South Africa by the IMF, private and official dealings in gold have now for over 4 years been effectively segregated.In the last 13 months, however, sweeping changes in the international monetary system have occurred which bring into question the relevance of the March 1968 agreement. First, the United States has stopped selling gold to foreign monetary authorities in exchange for dollars. Second, the price of gold in private markets throughout the world has increased until it is now approaching twice the official level. These events and other considerations which will be brought out in the course of this weeks hearings suggest that the March 1968 agreement ought to be substantially revised.Since 1962 the Federal Reserve System has entered into agreements with other central banks in which dollars were swapped for blocks of foreign currencies having an equivalent value. In many instances, foreign monetary authorities have used the dollars they obtained in this manner to buy their own currencies in exchange markets and thus prevent the value of these currencies from falling.About the PublisherForgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.comThis book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully, any imperfections that remain are intentionally left to preserve the state of such historical works.