Why We Need an 'Accord' for Federal Reserve Credit Policy: A Note

FRB Richmond Economic Quarterly, vol. 87, no. 1, Winter 2001, pp. 23-32

10 Pages Posted: 2 Dec 2012

See all articles by Marvin Goodfriend

Marvin Goodfriend

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

Date Written: November 29, 2012

Abstract

An accord for Fed credit policy should supplement the monetary policy Accord of 1951 and should be based on three principles: (1) credit policy should not fund insolvent institutions, (2) credit policy should not fund expenditures that ought to get congressional authorization, and (3) Congress should not direct the Fed to transfer assets to the Treasury to reduce the federal deficit. The proposed accord is discussed with regard to three Fed credit policies: liquidity assistance to depository institutions, sterilized foreign exchange operations, and the transfer of Fed surplus to the Treasury.

Suggested Citation

Goodfriend, Marvin, Why We Need an 'Accord' for Federal Reserve Credit Policy: A Note (November 29, 2012). FRB Richmond Economic Quarterly, vol. 87, no. 1, Winter 2001, pp. 23-32. Available at SSRN: https://ssrn.com/abstract=2182612

Marvin Goodfriend (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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