17 Overall, observations from testing and reports from market participants suggest that ON RRP operations generally work the way we have expected, with market participants evaluating the attractiveness of ON RRP investments relative to other opportunities available to them in the market. Indeed, take-up in the operations generally increases as the spread between alternative market rates and the ON RRP offering rate narrows, and aggregated usage patterns differ across counterparty types. 18 Take-up, particularly for prime money market funds, substantially increases around quarterand year-ends, when cash investors’ access to other short-term investments can become more limited. All else equal, the decline in the supply of short-term investment alternatives can create volatility in market rates, so the Federal Reserve’s ability to provide investment capacity through ON RRPs at these times may be important for monetary control. Tellingly, the only time the $ billion aggregate cap on ON RRP operations was reached was in the September 2014 quarter-end operation, soon after the cap’s introduction surprised market participants, leaving them searching for investment options when less than two weeks remained before quarter-end. Money market rates softened over that period as lenders sought to protect themselves against the risk of not having their bids fully filled in the Fed’s  15  An October 29, 2014, policy statement announcing the details of the test plan is available at http://www.newyorkfed.org/markets/opolicy/operating_policy_141029.html. 16  A similar dynamic is present in the brokered Eurodollar data. 17  Money market prices also appear to reflect some stickiness.

In addition, we have a surplus on the current account, which is tantamount to a surplus in the balance for the economy as a whole. Things look rather different in the USA. There, private sector saving has declined to –7 per cent of GDP, the household sector's burden of debt is at a record high level and the deficit on the current account balance is growing rapidly. Both American consumers and international investors have had strong confidence in the American economy's capacity to generate future income. USA central point in economic picture When it comes to the actual economic activity situation, interest is mainly focused on the USA, not least because of the low level of saving and the large build-up of debt described above. If American households were to rapidly increase their saving and reduce their consumption, and if foreign investors were to begin to feel hesitant over financing the current account deficit, there would be considerable consequences for the global economy. However, the American economic picture is still fragmented. It is true that the household sector's consumption is still at a high level and developments in the construction and residential sector are also satisfactory. Moreover, the large fall in the confidence indicators seems to have slown down, at least for the time being. But at the same time, industrial production is still weak, the inflow of orders is falling and the adjustment of stocks is moving unexpectedly slowly, particularly in the sensitive IT sector.