Prior discussion:
speaker: VICE CHAIRMAN MCDONOUGH.
text: When we renew the swap lines, it is such a routine matter that nobody pays any attention. If we didn't renew the swap lines, it would create an international hoopla of very considerable seriousness and, I think, a very negative one. 
speaker: CHAIRMAN GREENSPAN.
text: We haven't used the swap lines. Indeed, all the intervention that has taken place has been profit-taking, because we have been selling off our deutschemark and yen reserves. President Jordan. 

MR. JORDAN. "It is troubling to me that nothing has changed institutionally."

Full utterance: Mr. Chairman, this to me is an exceedingly difficult issue and not one that this central bank or any central bank in today's world can solve by itself, whether by any unilateral declaration by us or even all the central banks. Both your initial remarks and your response to Al's comment, I think, highlight what the problem is. Since August 1971, this country has not had a policy toward its currency; it has had a sequence of policies, and sometimes they are consistent internally and sometimes externally. Therein lies the problem. It is not just the traders who don't know that sterilized intervention cannot produce results inconsistent with domestic monetary policy, but sometimes members of executive and legislative branches of the government, ours and other governments around the world, don't know that. The hazard comes from having the power to do these things in the context of outside expectations, that we do not share, that they will work. I remember being told that when President Nixon was confronted by his advisors--some of the outside people--about the issue of wage/price controls, he said: I don't believe in controls; I know they won't work; and you don't believe in controls; you know they won't work; but the people don't know that. And so we got controls. In the late 1970s, we had a policy toward the currency externally that was inconsistent with what at least I would want for domestic monetary policy. Earlier in the 1970s, as we were thrashing around for a policy, the Open Market Committee had a number of debates on the issue. At one point, Arthur Burns made what I thought at the time was a pretty effective argument, that the only way to be certain that you absolutely have to intervene is to declare you are never going to intervene and you will get some asymmetric bets in the foreign exchange markets. If you want to be in a position where you don't have to intervene in this institutional setting, you have to declare that you are willing to intervene massively and often to burn speculation and so on. It reminds me of Charlie Coombs' beartrap arguments. In the early 1980s, the Treasury tried out the idea of declaring unilaterally that we would never intervene. However people viewed that experience, the Treasury Department abruptly changed our currency policy at the beginning of 1985 in association with the Plaza Accord and the Louvre Accord and all of that. It is troubling to me that nothing has changed institutionally. In going forward, we can again find ourselves in a position with an executive or a legislative branch view that we can or should have a policy toward our currency in the international markets that is incompatible with what this Committee thinks is appropriate for domestic markets. We ought to attack that policy issue as something that our government in its totality needs to address.

Opinion: yes
About monetary policy: no