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Federal Reserve Participation in Public Treasury Offerings

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  • Kenneth D. Garbade

Abstract

This paper describes the evolution of Federal Reserve participation in public Treasury offerings. It covers the pre-1935 period, when the Fed participated on an equal footing with other investors in exchange offerings priced by Treasury officials, to its present-day practice of reinvesting the proceeds of maturing securities with “add-ons” priced in public auctions in which the Fed does not participate. The paper describes how the Federal Reserve System adapted its operating procedures to comply with the 1935 limitations on its Treasury purchases, how it modified its operating procedures from time to time in response to changes in Treasury funding techniques, and how the Federal Reserve and the Treasury worked together to improve the Treasury’s debt management and the Fed’s reinvestment operations.

Suggested Citation

  • Kenneth D. Garbade, 2019. "Federal Reserve Participation in Public Treasury Offerings," Staff Reports 906, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:86640
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    References listed on IDEAS

    as
    1. Garbade, Kenneth D., 2012. "Birth of a Market: The U.S. Treasury Securities Market from the Great War to the Great Depression," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016370, April.
    2. Kenneth D. Garbade, 2004. "The institutionalization of treasury note and bond auctions, 1970-75," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 29-45.
    3. Cecchetti, Stephen G, 1988. "The Case of the Negative Nominal Interest Rates: New Estimates of the Term Structure of Interest Rates during the Great Depression," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1111-1141, December.
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    More about this item

    Keywords

    open market operations; auctions; debt management;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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