New York Fed Sets Y2K Open-Market Policies
NEW YORK -- The Federal Reserve Bank of New York unveiled several moves aimed at ensuring there will be enough funds in the banking and financial systems ahead of year 2000.</br></br>The initiatives involve the Fed's so-called open-market operations, whereby the Fed adds and subtracts money from the financial system. The moves are aimed at preventing financing shortages if the year-2000 computer bug, or worries about it, causes disruptions at year end.</br></br>There is concern from some parts of the banking industry that demand for short-term financing will increase sharply as 2000 approaches. Earlier this year, the Federal Reserve said it would put $50 billion in extra currency in circulation to cope with possible cash-hoarding by individuals, and announced a special liquidity facility for lending to banks.</br></br>"We want to mitigate the risks," said Peter R. Fisher, executive vice president of the New York Fed and the Federal Open Market Committee's manager for the system open-market account. "We face uncertainty" as far as possible strains on the system, he said.</br></br>The steps taken yesterday seemed to reassure members of the bond community and helped the tone in various bond markets yesterday.