(a) Each Federal Reserve Bank
shall engage in open market operations under section 14 of the Federal
Reserve Act only in accordance with this part and with the authorizations
and directives issued by the Committee from time to time, and no Reserve
Bank shall decline to engage in open market operations as directed
by the Committee.
(b) Transactions for the System
Open Market Account shall be executed by a Federal Reserve Bank selected
by the Committee. The participations of the several Federal Reserve
Banks in such account and in the profits and losses on transactions
for the account shall be allocated in accordance with principles determined
by the Committee from time to time.
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(c) In accordance
with such limitations, terms, and conditions as are prescribed by
law and in authorizations and directives issued by the Committee,
the Reserve Bank selected by the Committee is authorized and directed—
(1) To buy and sell government securities
and U.S. agency securities in the open market for the System Open
Market Account, and to exchange maturing securities with the issuer;
(2) To buy and sell banker’s
acceptances in the open market for its own account;
(3) To buy government securities, U.S.
agency securities, and banker’s acceptances of the kinds described
above, under agreements for repurchase of such obligations, in the
open market for its own account; and
(4) To buy and sell foreign currencies
in the form of cable transfers in the open market for the System Open
Market Account and to maintain for such account reciprocal currency
arrangements with foreign banks among those designated by the Board
of Governors of the Federal Reserve System under section 214.5 of
this chapter [Regulation N].
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(d) The Federal Reserve Banks are authorized and directed to engage
in such other operations as the Committee may from time to time determine
to be reasonably necessary to the effective conduct of open market
operations and the effectuation of open market policies.
