1/
A term found in the archives:
A side-note: FOA, Foreign Operations Administration (after June 30, 1955, International Cooperaton Administraton (ICA))
Source: http://history.state.gov/historicaldocuments/frus1955-57v09/terms#t_FOA1
2/
A term found in wiki:
"The Iran–Iraq War (also known as the First Persian Gulf War and by various other names) was an armed conflict between the armed forces of Iraq and Iran, lasting from September 1980 to August 1988, making it the longest conventional war of the 20th century. It was initially referred to in English as the "Persian Gulf War" prior to the "Gulf War" of 1990." ~Wiki
Source: http://en.wikipedia.org/wiki/Iraq_Iran_War
3/
Gold quality swap
a)
"Gold quality swap exchange of gold of one delivery standard (purity) for gold of another delivery standard with a commitment to reverse the exchange at some specified future date."
http://archive.treasury.gov.uk/docs/2001/eea2802_glossary.html
b)
"Under a gold location swap, gold stored in a particular physical location is swapped with a
market counterparty for a specified period with gold stored in another physical location.
Under a gold quality swap, gold of a particular quality (“fineness”) is swapped with a market
counterparty for a specified period with gold of a different fineness. In each case a fee is
built into the transaction."
http://www.bankofengland.co.uk/markets/forex/offreserves.pdf
c)Exchange Equalisation
Account: Accounts 1998-99
Investments need to be highly liquid so they can be made available quickly for
intervention purposes if necessary and carry minimal credit risk. Essentially this means that the
bulk of the assets are securities issued by the national governments of the United States, France,
Germany and Japan and currency deposits with highly rated banks. During 1998-99 the EEA
also made use of other financial instruments including:
• bonds issued by supra-national organisations and selected official sector agencies,
• foreign currency spot, forward and swap transactions,
• interest rate and currency swaps,
• bond and interest rate futures,
• sale and repurchase agreements,
• forward rate agreements,
• gold deposits, gold loco and gold quality swaps,
• special drawing rights (SDRs),
Gold quality swap exchange of gold of one delivery standard (purity) for gold of another delivery
standard with a commitment to reverse the exchange at some specified future date.
http://www.hm-treasury.gov.uk/d/1998-99_pdf.pdf
and
http://www.hm-treasury.gov.uk/d/EEA_1999-2000.pdf
[Mrt -> Also note dates of those papers:]
Monday, January 30, 2012
Wednesday, January 25, 2012
IIE - The External Policy of the Euro Area: Organizing for Foreign Exchange Intervention
Working Paper S e r WP 06-4 JUNE 2006
The External Policy of the Euro Area: Organizing for Foreign Exchange Intervention
Source: http://iie.com/publications/wp/wp06-4.pdf
The External Policy of the Euro Area: Organizing for Foreign Exchange Intervention
Source: http://iie.com/publications/wp/wp06-4.pdf
HSG - 99. Memorandum From the Executive Secretary of the Economic Policy Board (Porter) to President Ford
Foreign Relations of the United States, 1973–1976
Volume XXXI, Foreign Economic Policy, Document 99
99. Memorandum From the Executive Secretary of the Economic Policy Board (Porter) to President Ford
Washington, August 29, 1975.
- SUBJECT
- Economic Policy Board Executive Committee Vote on U.S. Negotiating Position on Gold
The closest refinement of the issue is as follows:
| Treasury Position: | Central banks should not be free to sell gold to one another for the settlement of regular or normal transactions. |
| Federal Reserve Board Position: | Central banks should not be free to sell gold to one another for the settlement of regular or normal transactions and central bank transactions in gold must be restricted to emergency circumstances. |
| Treasury Position Supported by Simon, Dunlop, Morton, Kissinger, Seidman3 | |
| Federal Reserve Board Position Supported by Burns | |
| Abstentions: Lynn, Greenspan |
1 Source: Ford Library, President's Handwriting File, Subject File, Box 19, Finance—Gold. No classification marking. Attached to an August 29 covering memorandum from Connor to President Ford that reads: "Roger Porter sent this in per your request."
2 The meeting took place in the Cabinet Room from 11:15 a.m. to 12:15 p.m. In attendance were President Ford, Simon, Seidman, Dunlop, Lynn, Butz, Ingersoll, Domestic Council Executive Director and President's Assistant for Domestic Affairs James Cannon III, Morton, Enders, Yeo, Domestic Council Deputy Director Richard Dunham, Greenspan, Counselor John Marsh, Jr., Federal Energy Administration Administrator Frank Zarb, Counselor Robert Hartmann, Cheney, Rumsfeld, President's Assistant for Legislative Affairs Max Friedersdorf, Press Secretary Ronald Nessen, Assistant Press Secretary John Carlson, and Porter. (Ibid., President's Daily Diary) No other record of the meeting has been found.
Source: http://history.state.gov/historicaldocuments/frus1969-76v31/d99http://history.state.gov/historicaldocuments/frus1969-76v31/d99
Tuesday, January 24, 2012
HSG - 60. Paper Prepared in the Department of the Treasury
60. Paper Prepared in the Department of the Treasury1
Washington, March 5, 1974.
Possible U.S. Proposal on Gold
"An important objective of such a sale by the U.S. would be to establish U.S. credibility, and to enhance U.S. bargaining in discussion of the U.S. proposals to be made later, by bringing to the other governments a realization that the U.S. might well be willing to sell large amounts of gold into the market. It would be important to handle the proposal for prompt sales in such a way as not to trigger immediate European implementation of inter-central-bank gold transfers at a market-related price or to trigger offsetting gold purchases by the French or others. It would also be desirable to handle the sale in such a way as not to trigger immediate Congressional action forcing permission for private ownership in the U.S. For this reason presumably the prompt sales would be handled like exchange market intervention and not be immediately announced publicly.
Secondly, at the next small ministerial meeting the U.S. could propose a package agreement which would attempt to trade a U.S. commitment to limit severely possible U.S. gold sales over the next few years in exchange for European commitments not to take what we regard as a backward step toward placing gold back in the center of the international monetary system and to join with us in some steps toward phasing gold out of the system. Specicifically we might propose:
1. that each of the governments undertake not to sell in either of the next two years more than $500 million in market value of gold apart from the amount, if any, necessary to offset any increase in holdings by its citizens as a result of relaxation of restrictions on private ownership. (Such an undertaking would represent the "bait" being offered by the U.S. and would represent percentagewise a much more serious restraint on the U.S. than on others. This feature is proposed in the belief that a less stringent restraint on the U.S. would not offer much hope of gaining acceptance of the other parts of the package. The proposed limitation on sales would represent the following percentages of present gold holdings:
(at $100/oz.) (at $150/oz.)
% %
U.S. 1.8 1.3
Germany 4.2 3.1
France 5.0 3.8
Italy 6.1 4.5
UK 23.5 17.7
Japan 23.7 17.9)
2. that each of the governments undertake not to acquire gold either from the market or from other governments during the next two years,
3. that the governments agree to attempt to persuade the C–20 at its ministerial meeting in June2 to adopt principles for use in subsequent redrafting of the IMF articles to provide
a. there would be no link between the SDR and gold,
b. there would be no mandatory gold component in future subscriptions to the Fund,
c. there would be no gold link in obligations to or rights to draw upon the General Account, and
d. in calculating the value of the liquid assets held by the Fund or by any member, the Fund would value gold at its market price.
Thirdly, we could inform the others of our expectation that in the near future we will permit private U.S. ownership of gold and will sell from U.S. stocks at least enough gold to prevent the added U.S. private demand from creating disorderly market conditions. At the same time we could announce an intention to recommend to the Congress that the par value of the dollar in terms of gold be eliminated."
Persons
Bennett, Jack F.
Bryant, Ralph
Burns, Arthur
Ford, Gerald R.
Volcker, Paul A.
Source: http://history.state.gov/historicaldocuments/frus1969-76v31/d60
Washington, March 5, 1974.
Possible U.S. Proposal on Gold
"An important objective of such a sale by the U.S. would be to establish U.S. credibility, and to enhance U.S. bargaining in discussion of the U.S. proposals to be made later, by bringing to the other governments a realization that the U.S. might well be willing to sell large amounts of gold into the market. It would be important to handle the proposal for prompt sales in such a way as not to trigger immediate European implementation of inter-central-bank gold transfers at a market-related price or to trigger offsetting gold purchases by the French or others. It would also be desirable to handle the sale in such a way as not to trigger immediate Congressional action forcing permission for private ownership in the U.S. For this reason presumably the prompt sales would be handled like exchange market intervention and not be immediately announced publicly.
Secondly, at the next small ministerial meeting the U.S. could propose a package agreement which would attempt to trade a U.S. commitment to limit severely possible U.S. gold sales over the next few years in exchange for European commitments not to take what we regard as a backward step toward placing gold back in the center of the international monetary system and to join with us in some steps toward phasing gold out of the system. Specicifically we might propose:
1. that each of the governments undertake not to sell in either of the next two years more than $500 million in market value of gold apart from the amount, if any, necessary to offset any increase in holdings by its citizens as a result of relaxation of restrictions on private ownership. (Such an undertaking would represent the "bait" being offered by the U.S. and would represent percentagewise a much more serious restraint on the U.S. than on others. This feature is proposed in the belief that a less stringent restraint on the U.S. would not offer much hope of gaining acceptance of the other parts of the package. The proposed limitation on sales would represent the following percentages of present gold holdings:
(at $100/oz.) (at $150/oz.)
% %
U.S. 1.8 1.3
Germany 4.2 3.1
France 5.0 3.8
Italy 6.1 4.5
UK 23.5 17.7
Japan 23.7 17.9)
2. that each of the governments undertake not to acquire gold either from the market or from other governments during the next two years,
3. that the governments agree to attempt to persuade the C–20 at its ministerial meeting in June2 to adopt principles for use in subsequent redrafting of the IMF articles to provide
a. there would be no link between the SDR and gold,
b. there would be no mandatory gold component in future subscriptions to the Fund,
c. there would be no gold link in obligations to or rights to draw upon the General Account, and
d. in calculating the value of the liquid assets held by the Fund or by any member, the Fund would value gold at its market price.
Thirdly, we could inform the others of our expectation that in the near future we will permit private U.S. ownership of gold and will sell from U.S. stocks at least enough gold to prevent the added U.S. private demand from creating disorderly market conditions. At the same time we could announce an intention to recommend to the Congress that the par value of the dollar in terms of gold be eliminated."
Persons
Bennett, Jack F.
Bryant, Ralph
Burns, Arthur
Ford, Gerald R.
Volcker, Paul A.
Source: http://history.state.gov/historicaldocuments/frus1969-76v31/d60
HSG - 54. Foreign Relations of the United States, 1973–1976 Volume XXXI, Foreign Economic Policy, Document 54
HSG - 168. Memorandum From the President's Assistant for International Economic Affairs (Flanigan) and the President's Assistant for National Security Affairs (Kissinger) to President Nixon
Foreign Relations of the United States, 1969–1976
Volume XXIV, Middle East Region and Arabian Peninsula, 1969–1972; Jordan, September 1970, Document 168
- SUBJECT
- State Department Draft Letter from the President to King Faisal re Saudi
- Proposal for a Special Relationship in Oil
Source: http://history.state.gov/historicaldocuments/frus1969-76v24/d168
HSG - 164. Memorandum of Conversation
Foreign Relations of the United States, 1969–1976
Volume XXIV, Middle East Region and Arabian Peninsula, 1969–1972; Jordan, September 1970, Document 164
164. Memorandum of Conversation1
Washington, September 29, 1972.
- SUBJECT
- Participation and Saudi–U.S. Oil Relations
- PARTICIPANTS
- His Excellency Ahmad Zaki Yamani, Minister of Petroleum and Mineral Resources of Saudi Arabia
- His Excellency Ibrahim al-Sowayel, Saudi Arabian Ambassador to the U.S.
- Honorable John N. Irwin, Acting Secretary
- Honorable Rodger P. Davies, Acting Assistant Secretary for NEA
- Mr. James Akins, Director, Office of Fuels and Energy
- Mr. Nicholas Veliotes, Special Assistant, U
- Mr. Francois M. Dickman, Director, NEA/ARP
"...The Minister observed that given the present growth in Saudi oil production, the Kingdom's oil revenues will soon exceed its spending capacity. There will no longer be any need to accumulate any more surplus foreign exchange to deposit in foreign banks since the appreciation of oil left under ground will be greater than the return on foreign exchange assets. This problem could be avoided if national oil companies of producer nations can go downstream. Otherwise, if no outlets for this surplus cash are available, pressures to implement a production control program would be inevitable and this would have a serious and adverse effect on the consumer..."
Source: http://history.state.gov/historicaldocuments/frus1969-76v24/d164
Monday, January 23, 2012
BIS - AG - The euro as an international currency
Remarks by Mr Alan Greenspan, Chairman of the Board of Governors of the US Federal Reserve
System, before the Euro 50 Group Roundtable, Washington, 30 November 2001.
"...In today’s world of government-issued monies, the unit of currency is not, and need not be, defined. It circulates as legal tender under government fiat. Its value can be inferred only from the values of the present and future goods and services it can command.
In the international arena, however, no overarching sovereign exists to decree what is money. Instead, a myriad of private agents must somehow reach agreement on which currency to use as an international currency..."
...
"...We are left with the question of how the international role of the euro will unfold. The attraction of investing in dollar-denominated assets depends upon relative rates of return. To the extent that the capital flows we have observed from Europe to the United States are a critical piece of the story, the future will be determined, at least in part, by the success in Europe of matching the expected rates of return on U.S. assets. But market pressures toward portfolio diversification are clearly also going to play a major role in the future relative positions of the dollar and the euro. The world can only benefit from the competition."
[Mrt: let the games begin! ]
Source: http://www.bis.org/review/r011206a.pdf?frames=0
System, before the Euro 50 Group Roundtable, Washington, 30 November 2001.
"...In today’s world of government-issued monies, the unit of currency is not, and need not be, defined. It circulates as legal tender under government fiat. Its value can be inferred only from the values of the present and future goods and services it can command.
In the international arena, however, no overarching sovereign exists to decree what is money. Instead, a myriad of private agents must somehow reach agreement on which currency to use as an international currency..."
...
"...We are left with the question of how the international role of the euro will unfold. The attraction of investing in dollar-denominated assets depends upon relative rates of return. To the extent that the capital flows we have observed from Europe to the United States are a critical piece of the story, the future will be determined, at least in part, by the success in Europe of matching the expected rates of return on U.S. assets. But market pressures toward portfolio diversification are clearly also going to play a major role in the future relative positions of the dollar and the euro. The world can only benefit from the competition."
[Mrt: let the games begin! ]
Source: http://www.bis.org/review/r011206a.pdf?frames=0
BIS - AF - The relationships between currencies and gold
Antonio Fazio: The relationships between currencies and gold
Speech by Mr. Antonio Fazio, Governor of the Bank of Italy, at the World Gold Council International
Conference “The Euro, the Dollar and Gold”, held in Rome on 17 November 2000.
“If a gold standard had never existed, it might be necessary to invent something of the kind”. This quotation from a monograph by Dennis Robertson (Money, 1928, p 122) refers to one of the positive aspects of the gold standard: that of shielding central bankers from pressures to increase the money supply. After the First World War the return to gold was in fact the overriding objective of economic policymakers, in order to ensure monetary stability.
The economic disequilibria produced by the war were so pronounced, however, that they made it hard to re-establish the gold standard. The cost, in terms of welfare, imposed by inflation, rising public debt and war reparations was so high that it prevented the rapid return to gold.
The Genoa conference of April 1922 laid the foundations for an important innovation: the creation of the gold exchange standard, under which gold was flanked by convertible currencies and central banks were granted greater autonomy; this was to be used to stabilize the value of gold, through international cooperation. However, the new system did not enjoy the same credibility as the earlier regime and, at the same time, failed to leave the monetary authorities sufficient room for manoeuvre. Culturally still under the influence of the gold standard, the monetary authorities were in any case little inclined to cooperate and tended to accumulate gold reserves, thereby exerting powerful deflationary pressure on the economy.
The monetary disorder of the thirties created the need for a new reform, which was implemented after the Second World War with the Bretton Woods agreements.
The suspension of the dollar’s convertibility on 15 August 1971 officially cut the link between legal tender and gold - an epochal change after more than 2,500 years during which money had always been based explicitly or implicitly on a precious metal, prevalently gold.
The abandonment of a monetary system hinging directly or indirectly on gold was a consequence of the severe economic disequilibria that developed between the two world wars. The advances made in monetary theory also exerted a powerful influence.
Ricardo provides us with a clear indication of the main objective of the gold standard: “To secure the public against any other variations in the value of currency than those to which the standard itself is subject, and, at the same time, to carry on the circulation with a medium the least expensive…”. He also noted that: “Experience, however, shews, that neither a State nor a Bank ever had the unrestricted power of issuing paper money, without abusing that power: in all States, therefore, the issue of paper money ought to be under some check and controul; and none seems so proper for that purpose, as that of subjecting the issuers of paper money to the obligation of paying their notes, either in gold coin or bullion.” The same concepts are to be found some hundred years later in Irving Fisher..."
...
"...In practice the system turned into a fixed-rate dollar standard. The importance attributed to domestic targets in the economic policy of the United States undermined the coherence and operation of the system, thereby preparing the ground for the abandonment of the link with gold and the move to floating exchange rates...."
...
"...The process up to now has followed a virtuous course, without excessive inflationary pressures thanks to heightened competition and productivity gains in the United States. Its Achilles’ heel is the rise in the prices of raw materials and energy products...."
...
[Mrt: The conclusion in the document]
Source: http://www.bis.org/review/r001201b.pdf?frames=0
Speech by Mr. Antonio Fazio, Governor of the Bank of Italy, at the World Gold Council International
Conference “The Euro, the Dollar and Gold”, held in Rome on 17 November 2000.
“If a gold standard had never existed, it might be necessary to invent something of the kind”. This quotation from a monograph by Dennis Robertson (Money, 1928, p 122) refers to one of the positive aspects of the gold standard: that of shielding central bankers from pressures to increase the money supply. After the First World War the return to gold was in fact the overriding objective of economic policymakers, in order to ensure monetary stability.
The economic disequilibria produced by the war were so pronounced, however, that they made it hard to re-establish the gold standard. The cost, in terms of welfare, imposed by inflation, rising public debt and war reparations was so high that it prevented the rapid return to gold.
The Genoa conference of April 1922 laid the foundations for an important innovation: the creation of the gold exchange standard, under which gold was flanked by convertible currencies and central banks were granted greater autonomy; this was to be used to stabilize the value of gold, through international cooperation. However, the new system did not enjoy the same credibility as the earlier regime and, at the same time, failed to leave the monetary authorities sufficient room for manoeuvre. Culturally still under the influence of the gold standard, the monetary authorities were in any case little inclined to cooperate and tended to accumulate gold reserves, thereby exerting powerful deflationary pressure on the economy.
The monetary disorder of the thirties created the need for a new reform, which was implemented after the Second World War with the Bretton Woods agreements.
The suspension of the dollar’s convertibility on 15 August 1971 officially cut the link between legal tender and gold - an epochal change after more than 2,500 years during which money had always been based explicitly or implicitly on a precious metal, prevalently gold.
The abandonment of a monetary system hinging directly or indirectly on gold was a consequence of the severe economic disequilibria that developed between the two world wars. The advances made in monetary theory also exerted a powerful influence.
Ricardo provides us with a clear indication of the main objective of the gold standard: “To secure the public against any other variations in the value of currency than those to which the standard itself is subject, and, at the same time, to carry on the circulation with a medium the least expensive…”. He also noted that: “Experience, however, shews, that neither a State nor a Bank ever had the unrestricted power of issuing paper money, without abusing that power: in all States, therefore, the issue of paper money ought to be under some check and controul; and none seems so proper for that purpose, as that of subjecting the issuers of paper money to the obligation of paying their notes, either in gold coin or bullion.” The same concepts are to be found some hundred years later in Irving Fisher..."
...
"...In practice the system turned into a fixed-rate dollar standard. The importance attributed to domestic targets in the economic policy of the United States undermined the coherence and operation of the system, thereby preparing the ground for the abandonment of the link with gold and the move to floating exchange rates...."
...
"...The process up to now has followed a virtuous course, without excessive inflationary pressures thanks to heightened competition and productivity gains in the United States. Its Achilles’ heel is the rise in the prices of raw materials and energy products...."
...
[Mrt: The conclusion in the document]
Source: http://www.bis.org/review/r001201b.pdf?frames=0
BIS - D - Mr. Duisenberg reports on the outcome of the second meeting of the Governing Council of the European Central Bank
17 Jul 1998
"...(b) Foreign exchange issues
The Governing Council decided on the size and form of the initial transfer of foreign reserve assets to the European Central Bank from the national central banks participating in the euro area. This transfer is to take place on the first day of 1999. It has been decided that the initial transfer will be to the maximum allowed amount of EUR 50 billion, adjusted downwards by deducting the shares in the ECB’s capital subscription key of the EU central banks which will not participate in the euro area at the outset. The transfer will thus be equal to 78.9153% of EUR 50 billion, i.e. approximately EUR 39.46 billion.
The Governing Council furthermore agreed that this initial transfer should be in gold in an amount equivalent to 15% of the sum I have just mentioned, with the remaining 85% being transferred in foreign currency assets. I should stress that the decision on the percentage of gold to be transferred to the ECB will have no implications for the consolidated gold holdings of the ESCB.
The precise modalities of the initial transfer will be finalised before the end of the year.
Before the end of the current year the Governing Council will also have to adopt an ECB Guideline pursuant to Article 31.3 of the Statute of the ESCB, which will subject all operations in foreign reserve assets remaining with the national central banks - including gold - to approval by the ECB..."
Source: http://www.bis.org/review/r980717b.pdf?frames=0
"...(b) Foreign exchange issues
The Governing Council decided on the size and form of the initial transfer of foreign reserve assets to the European Central Bank from the national central banks participating in the euro area. This transfer is to take place on the first day of 1999. It has been decided that the initial transfer will be to the maximum allowed amount of EUR 50 billion, adjusted downwards by deducting the shares in the ECB’s capital subscription key of the EU central banks which will not participate in the euro area at the outset. The transfer will thus be equal to 78.9153% of EUR 50 billion, i.e. approximately EUR 39.46 billion.
The Governing Council furthermore agreed that this initial transfer should be in gold in an amount equivalent to 15% of the sum I have just mentioned, with the remaining 85% being transferred in foreign currency assets. I should stress that the decision on the percentage of gold to be transferred to the ECB will have no implications for the consolidated gold holdings of the ESCB.
The precise modalities of the initial transfer will be finalised before the end of the year.
Before the end of the current year the Governing Council will also have to adopt an ECB Guideline pursuant to Article 31.3 of the Statute of the ESCB, which will subject all operations in foreign reserve assets remaining with the national central banks - including gold - to approval by the ECB..."
Source: http://www.bis.org/review/r980717b.pdf?frames=0
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