Doc! re: Ur GATA sentiments: Thot this quoted snippet from a recent public speech, (considered significant to find bandwidth on the BIS website ººº ) has direct bearing (preview?) upon the counter-arguments that will be used against GATA movement currently looking for a legal beagle; aka: FRB's normal M.O?.
What say you?
BIS Review 15/1999 from Bank of
International Settlement Home Page
ººº bis.org
OPEN QUOTES:
"Mr Hayami outlines recent economic
conditions in Japan and gives his thoughts
on the role of a central bank and its
balance sheet.
from Page 5: . Transaction Counterparties (CP's)
The second question is whether the central
bank should make direct contact only with
the banking sector, and influence the
economy indirectly.
Some argue that direct contact with the
corporate sector is undesirable in that it
creates a potential for arbitrary behavior by
the central bank, or for the prolongation of
the life of inefficient firms.
This is a matter of principle of whether a
central bank should limit its counterparties
to banks, or whether it should also deal
with the non-banking sector.
The concern seems to have originated in
the Bank's active use of private-sector
debt through such means as expansion of
CP repo operations, which may have given
the impression that the Bank is excessively
involved in corporate fund-raising. But this
concern appears to contain a slight mis-
understanding.
Although the Bank is indeed buying CP——
which is a form of corporate-sector debt——
through market operations, it buys the CP
from financial institutions including banks,
and therefore the counterparties in its
operations have not changed. Furthermore,
the Bank does not specify the individual CP
issues to be submitted, but rather the
counterparty financial institutions offer
issues of their choice from among those
deemed eligible by the Bank.
Purchasing CP is no different from
providing commercial banks with loans on
bills in the sense that the Bank supplies
funds to commercial banks by refinancing
corporate debt.
However, it merits consideration whether
participation in market operations and other
Bank transactions should be made open to
non-bank entities. If we look at examples
overseas, it appears that the ECB will carry
out its market operations only with banks.
In the United States, however, the Federal
Reserve conducts market operations with
so-called primary securities dealers, many
of which are securities companies that do
not have accounts at Federal Reserve
banks.
from Page 6:
A key point in considering this counterparty
issue is whether the emphasis is on inter-
bank transactions or open market transac-
tions. If a central bank primarily conducts
interbank transactions, the counterparty will
naturally be the banking sector. Yet it
seems that the global trend is a growing
preference by central banks for open
market transactions."
CLOSE QUOTES
COMMENTARY:
Relevant highlighted section is MY doing.
Also, since the ECB acc'd to this speaker
is going to be doing things "differently than
the "incestuous securities dealers" network
currently implementing the FRB's gold wishes,
I now see ANOTHER reason why the Euro is
going to take a big dent out of our market.
We Westerners just aren't going to be able to
heads or tails of open market ECB maneuvers
where we are so inured by historically traceable
shennigans of the JP's/GS's/ML's
of the FRB's ole boy network. |
