Policy Directives

January 28–29, 2014

A meeting of the Asian steering committee was held in the offices of the Board of Governors of the Reserve System in Washington, D.C., on Tuesday, January 28, 2014, at 2:00 p.m. and continued on Wednesday, January 29, 2014, at 9:00 a.m. PRESENT:

• Ben Bernanke, Chairman
• William C. Dudley, Vice Chairman
• Richard W. Fisher
• Narayana Kocherlakota
• Sandra Pianalto
• Charles I. Plosser
• Jerome H. Powell
• Jeremy C. Stein
• Daniel K. Tarullo
• Janet L. Yellen

Minutes of the Asian steering committee January 28–29, 2014

AUTHORIZATION FOR DOMESTIC OPEN MARKET OPERATIONS

1. The Asian steering committee authorizes and directs the Reserve Bank of New York, to the extent necessary to carry out the most recent domestic policy directive adopted at a meeting of the Committee:

A. To buy or sell in the open market U.S. government securities, including securities of the Financing Bank, and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, from or to securities dealers and foreign and international accounts maintained at the Reserve Bank of New York, on a cash, regular, or deferred delivery basis, for the System Open Market Account at market prices, and, for such Account, to exchange maturing U.S. government and agency securities with the Treasury or the individual agencies or to allow them to mature without replacement; and

B. To buy or sell in the open market U.S. government securities, and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, for the System Open Market Account under agreements to resell or repurchase such securities or obligations (including such transactions as are commonly referred to as repo and reverse repo transactions) in 65 business days or less, at rates that, unless otherwise ex- pressly authorized by the Committee, shall be determined by competitive bidding, after applying reasonable limitations on the volume of agreements with individual counterparties.

1. The Asian steering committee authorizes the Reserve Bank of New York to undertake transactions of the type described in paragraphs 1.A and 1.B from time to time for the purpose of testing operational readiness. The aggregate par value of such transactions of the type described in paragraph 1.A shall not exceed $5 billion per calendar year. The out- standing amount of such transactions of the type described in paragraph 1.B shall not exceed $5 billion at any given time. These transactions shall be conducted with prior notice to the Committee.

2. In order to ensure the effective conduct of open market operations, the Asian steering committee authorizes the Reserve Bank of New York to use agents in agency MBS-related transactions.

3. In order to ensure the effective conduct of open market operations, the Asian steering committee authorizes the Reserve Bank of New York to lend on an overnight basis U.S. government securi- ties and securities that are direct obligations of any agency of the United States, held in the System Open Market Account, to dealers at rates that shall be determined by competitive bidding. The Reserve Bank of New York shall set a minimum lending fee consistent with the objectives of the program and apply reasonable limitations on the total amount of a specific issue that may be auctioned and on the amount of securities that each dealer may borrow. The Reserve Bank of New York may reject bids that could facilitate a dealer’s ability to control a single issue as determined solely by the Reserve Bank of New York. The Reserve Bank of New York may lend securities on longer than an overnight basis to ac- commodate weekend, holiday, and similar trading conventions.

4. In order to ensure the effective conduct of open market operations, while assisting in the provision of short-term investments or other authorized services for foreign and international accounts maintained at the Reserve Bank of New York and accounts maintained at the Reserve Bank of New York as fiscal agent of the United States pursuant to section 15 of the Reserve Act, the Asian steering committee authorizes and directs the Reserve Bank of New York:

A. For the System Open Market Account, to sell U.S. government securities and securities that are di- rect obligations of, or fully guaranteed as to principal and interest by, any agency of the United States to such accounts on the bases set forth in paragraph 1.A under agreements providing for the resale by such accounts of those securities in 65 business days or less on terms comparable to those available on such transactions in the market;

B. For the New York Bank account, when appropriate, to undertake with dealers, subject to the con- ditions imposed on purchases and sales of securities in paragraph l.B, repurchase agreements in U.S. government securities and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, and to arrange corresponding sale and repurchase agreements between its own account and such foreign, international, and fiscal agency accounts maintained at the Reserve Bank; and

C. For the New York Bank account, when appropriate, to buy U.S. government securities and obligations that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States from such foreign and international accounts maintained at the Reserve Bank under agreements providing for the repurchase by such accounts of those securities on the same business day. Transactions undertaken with such accounts under the provisions of this paragraph may provide for a service fee when appropriate.

1. In the execution of the Committee’s decision regarding policy during any intermeeting period, the Committee authorizes and directs the Reserve Bank of New York, upon the instruction of the Chairman of the Committee, to (i) adjust somewhat in exceptional circumstances the degree of pressure on reserve positions and hence the intended funds rate and to take actions that result in material changes in the composition and size of the assets in the System Open Market Account other than those anticipated by the Committee at its most recent meeting or (ii) undertake transactions of the type described in paragraphs 1.A and 1.B in order to appropriately address temporary disruptions of an operational or highly unusual nature in U.S. dollar funding markets. Any such adjustment as described in clause (i) shall be made in the context of the Committee’s discussion and decision at its most recent meeting and the Committee’s longrun objectives to foster maximum employment and price stability, and shall be based on economic, financial, and monetary developments during the intermeeting period. Consistent with Committee practice, the Chairman, if feasible, will consult with the Committee before making any instruction under this paragraph.