’ s approach to designing an effective counterparty framework has been informed by our experience of conducting asset purchases as well as other balance sheet actions and exercises necessary to implement policy in the post - crisis period. in these years, we have ventured beyond the primary dealers to conduct open market operations with a wider and more diverse range of market participants. the introduction of daily reverse repurchase agreement ( rrp ) test operations in september 2013 required several years of work by the desk to establish relationships with an expanded set of counterparties beyond the primary dealers or entity types that are currently eligible to be primary dealers, and to develop an approach to evaluating the capabilities of these firms that is distinct from the process for assessing primary dealers. this expansion is a requirement of our business needs given the current size of our balance sheet, specifically the need to maintain appropriate control of short - term interest rates with abundant excess reserves in the bis central bankers ’ speeches banking system. 13 primary dealers, and entities of the type that are currently eligible to be primary dealers, which typically exhibit structural demand for cash financing to support inventories, are unlikely to satisfy this requirement. to the extent that the ongoing evolution of the structure of the treasury market, including technological advancements and changing investor behavior, affects the role of primary dealers as market makers, it is important to analyze the implications for the fed ’ s ability to meet its objectives. the primary dealer system has proven to be very effective for both the conduct of monetary policy and the issuance of treasury debt. i am very confident that the existing counterparty framework – continuing to utilize primary dealers for traditional domestic policy open market operations, expanding to new counterparty types, as appropriate, for targeted operations to increase the effectiveness of domestic policy implementation, and maintaining relationships with a sufficient number of large market participants in the relevant foreign exchange markets for possible foreign exchange policy and investment operations – provides enormous capacity to implement a wide range of monetary policies. moreover, we have demonstrated a commitment throughout our history to make any adjustments necessary to ensure a robust and effective operational framework. toward that end, the desk presented at the june 2015 fomc meeting an update on a review of the counterparty framework, and indicated that we anticipate regular reviews of the counterparty framework roughly every three years in the future. 14 we look forward to working with our official and private sector partners represented in this room as we pursue these goals. thank you. for more on policy normalization, see these three earlier speeches : “ interest rate

’ s public website within a few minutes of the operations ’ completion. results of treasury auctions are likewise released to the public within a few minutes of the close of competitive bidding and contain considerable detail regarding participation by primary dealers and both direct and indirect bidders. such reporting by the treasury exhibits a high level of transparency relative to foreign treasuries ’ reporting. in most foreign jurisdictions, the central bank or monetary authority has the ability to conduct open market operations with a large number of banks that make markets in government securities and also have reserve accounts with the central bank, while the national treasury separately manages relationships with financial institutions to underwrite and distribute its debt issuance ; these latter entities are termed “ primary dealers ” and are often the only entities having access to primary market auctions. in the united states, by contrast, a comparatively smaller number of firms simultaneously act as counterparties for the central bank ’ s domestic open market operations and as backstop underwriters and distributors for treasury debt issuance ; firms designated as “ primary dealers ” are required to act in both capacities. in fact, the united states is somewhat unique in that ( i ) being a “ primary dealer ” means that the firm is a counterparty for central bank monetary policy operations and has certain obligations with respect to primary national debt issuance and ( ii ) management of the primary dealer system resides with the central bank rather than the national treasury. this unique structure is a legacy of history. beginning in world war i, the treasury offered coupon - bearing securities on a fixed - price basis. small banks and securities brokers commonly subscribed for their own and customers ’ accounts, and there was little need for any formal or informal underwriting process. market making in outstanding treasury securities, however, was a capital - intensive process conducted mostly by nonbank dealers, though a few banks did have significant dealer operations. these dealers maintained the liquid secondary market for treasuries and served as counterparties for open market operations. this state of affairs continued until 1970, when the treasury introduced auction offerings of coupon - bearing debt. auction participation, like market making, was a risky, capital - intensive activity, and dealers – especially primary dealers – began to play an increasingly important role in the primary market. though the transition was gradual, this period represented the moment in history when the same set of counterparties began to participate in both open market operations and the primary issuance of treasury securities. recent changes more recently, the federal reserve