before the introduction of the first regularly issued u. s. treasury bill in 1929. 11 the maintenance of gold vaults and reciprocal gold custody accounts among major central banks provided significant operational advantages for the functioning of the international gold standard. in addition to the safety of storing gold with another central bank, through the practice of earmarking central banks could settle accounts with one another without the need to physically deliver gold bullion. this was especially useful in periods, such as wartime, when navigation of sea lanes could be impeded. the new york fed has maintained a gold vault used to store the gold reserves of foreign central banks since 1924 when construction of its main building was completed. prior to 1924, the new york fed held gold in custody for foreign central banks in other nearby vaults, such as the one maintained by the new york clearing house. 12 defined in general terms as “ an arrangement under which one bank ( correspondent ) holds deposits owned by other banks ( respondents ) and provides payment and other services to those respondent banks. ” see the glossary of terms used in payments and settlements, published by the committee on payments and market infrastructures of the bank for international settlements. 13 perhaps the most vivid historical example of this involved large - scale flight - to - safety flows of european central bank gold reserves to the vaults of the new york fed during the second world war. in addition to safeguarding their gold reserves from the axis powers, inflows of gold were used by allied nations to finance their purchases of war supplies from the u. s. 14 the federal reserve ’ s bretton woods swap lines with foreign central banks were first established in 1962 and used extensively until the collapse of the bretton woods fixed exchange rate system in the early 1970s. 15 the mechanics of currency swap operations among central banks is a case in point. with respect to the federal reserve ’ s current dollar swap lines, for example, when a foreign central bank draws on its swap line with the federal reserve, the foreign central bank sells a specified amount of its currency to the federal reserve in exchange for dollars at the prevailing market exchange rate. the federal reserve holds the foreign currency in an account at the foreign central bank. the dollars that the federal reserve provides are deposited in an account that the foreign central bank maintains at the new york fed. when the foreign central bank lends to institutions in its jurisdiction the dollars it obtains by drawing on its swap line, the dollars are transferred from the foreign central bank ’ s account at the

the first issue only last week, following the passage of enabling legislation in october. so nearly all the secured issuance this year has been in the form of mbs. bis central bankers ’ speeches credit growth in australia, while slow relative to recent australian history, has outstripped that in the other three regions ( graph 5 ). but it is apparent from the australian data that total wholesale issuance is broadly the same in 2011 as it was in 2007, and hence a smaller share of overall funding, with deposits accounting for the difference. graph 5 differences in central bank support the nature of central bank support has also had an influence on the developments in bank funding. the balance sheets of the fed, ecb and bank of england have increased significantly since 2007. the ecb ’ s balance sheet has approximately doubled, while those of the fed and the bank of england have roughly tripled over the past four years ( graph 6 ). the reserve bank of australia ’ s balance sheet, while increasing in 2008, 4 is smaller than it was in 2007 ( reflecting the withdrawal of deposits at the rba by the future fund to invest in a broader range of assets ). graph 6 see the “ operations in financial markets ” chapters in the reserve bank of australia annual reports of 2009 and 2010 for more discussion. bis central bankers ’ speeches in the us, the fed ’ s program of quantitative easing has injected a large amount of liquidity into the banking system. moreover, the fed ’ s program of asset purchases has included over us $ 1 trillion of mortgage - backed securities. similarly in the uk, the bank of england has conducted a large asset purchase program. it has also provided support to the banking system through the special liquidity scheme, whereby banks were able to exchange mbs or covered bonds for treasury bills to more easily obtain liquidity in the market. at its peak, £287 billion of securities were exchanged for £185 billion of bills. drawdowns under this scheme closed in january 2009, and a large part has been repaid this year with the remainder to be repaid by january 2012. in europe, the ecb has assisted bank funding through its fixed rate full allotment liquidity provision operations. this has enabled banks that are having difficulties obtaining funding in the market to borrow from the ecb against acceptable collateral at the ecb ’ s policy rate for terms of up to one year or so. as mentioned above, some of this collateral has taken the form of secured iss