- On behalf of the Federal Reserve System, the
Federal Reserve Bank of New York offers banking and financial
services to over 200 foreign central banks, foreign governments
and international official institutions.
- New York Fed services are available only to
public institutions.
- Most of the assets held in foreign official
accounts are in the form of U.S. Treasury and agency securities.
Foreign accounts also hold a large quantity of monetary
gold at the New York Fed.
Overview
On behalf of the Federal Reserve System, the Federal Reserve
Bank of New York offers banking and financial services to
more than 200 foreign central banks, foreign governments
and international official institutions. The services provided
by the New York Fed are available only to public institutions.
The Bank's services for foreign official account holders
are in four main areas: demand deposit transactions, investments,
custodial and safekeeping responsibilities and foreign exchange
operations. The Bank offers other services on an occasional
basis, such as providing technical assistance and training
to foreign central bankers. The wide-ranging services available
to foreign account holders have, in large part, given the
New York Fed its significant role in the international financial
system.
Demand Deposit Transactions
The New York Fed effects payments from and to foreign official accounts via the Reserve System's Electronic Payment System, commonly referred to as Fedwire. In 2006, the New York Fed processed an average of about $50 billion a day in funds receipts and transfers for foreign official accounts.
Foreign official account holders also can send U.S. currency to the Bank for deposit in the accounts. Should other central banks need U.S. currency, the New York Fed will arrange the shipment of banknotes or make the currency available for pickup at the Bank. The customer's account is charged for the amount of currency provided.
Investments
The New York Fed invests funds in money-market instruments for foreign central banks and international official institutions. Investments may be in overnight repurchase agreements, federal funds, or U.S. Treasury and other securities. The Bank also purchases and sells securities on these customers' behalf as part of an automatic investment program, or if requested. It is important to note that the Federal Reserve does not give investment advice. Any automatic investment program must be specific in the type of securities a customer wants to buy. In 2006, the New York Fed invested on average about $55 billion a day on behalf of foreign official institutions.
Custodial and Safekeeping Responsibilities
Most of the assets held by foreign official accounts at
the Bank are held in the form of marketable U.S. Government
and agency securities, most of which are deposited in electronic
(book-entry) form at the New York Fed. At year-end 2006,
foreign official and international accounts held nearly
$2 trillion in U.S. dollar-denominated assets.
Safekeeping services including interest and maturity payments,
are provided directly by the FRBNY for Fedwire-eligible
securities or through an arrangement with the Depository
Trust and Clearing Corporation (DTCC) for some non-fedwire
securities. In 2006, the average daily volume of these services
was $68.2 billion. The Bank also provides facilities for
the clearing and settlement of a customer's own investment
trades.
In addition to holding U.S. dollar-denominated assets,
the New York Fed provides vault facilities to international
official institutions for the deposit and safekeeping of
gold, and releases gold upon request by a customer. The
Bank keeps the identity of all account holders strictly
confidential. The Bank charges account holders fees to move
gold, either when transferring gold from one account to
another or when releasing it to a customer.
The New York Fed's gold vault stores just over 6,630 tons
of monetary gold. The vault is the largest concentration
of monetary gold in the world, constituting one-quarter
of the world's official gold supply.
Foreign Exchange
The New York Fed will, at the request of a customer, execute transactions in the U.S. foreign exchange market for the purchase and sale of certain non-dollar currencies. In such transactions the Bank acts as agent for the customers, and these transactions are not considered intervention operations by the U.S. monetary authorities.
Other Services
On a less frequent basis, the New York Fed provides other services to foreign central banks and international official institutions. One of the services is an annual central banking seminar. In recent years, about 80 to 90 representatives of foreign central banks have attended this seminar, which consists of a series of group discussions and lectures at the Bank and the Board of Governors of the Federal Reserve System in Washington, D.C.
As another service, the New York Fed provides on-site technical assistance to a requesting central bank in a variety of areas relating to central bank operations. This assistance ranges from how to implement new technology to how to run bank examinations.
May 2007 |
