Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Thanks. I think I’d be a little concerned about stigmatizing the swaps by saying that we have enough doubts about these other countries that we need to take collateral— we don’t have confidence that their central banks will meet the obligations that they have taken on. So my preference would be to stick with the extension of our current swap agreements to these countries. I think they all are using their reserves to some extent already, so this is not a case of them not touching their reserves and instead taking the swaps. They say they don’t intend to use them, but they could very well use them. They’re already using them.

The other market that the Treasury has expressed some concern about is the agency market. If they were just meeting a huge demand for Treasuries by selling Treasuries, that might be one thing—although intermediate- and longer-term Treasury yields themselves have moved up presumably because of supply pressures there. But the agency spreads have widened quite a bit, and I think forcing them to sell agencies in a kind of lumpy way would feed back on our mortgage markets. It would not be in our interest.

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