of the soma portfolio and would be less likely to affect exchange rates or the price of such debt. the markets for several of the other assets currently allowable by statute may be too small or too illiquid to be useful in open market operations. the bankers acceptance market is a relic of an earlier age and is now too small and inactive to serve as an option. the market for short - term municipal debt ( the municipal debt the fed is authorized by statute to hold ) is also quite small and not very liquid. gold does not yield a stream of earnings, and using gold for open market operations would also involve the cost of physical delivery. a second category of potential assets consists of assets that would require legislative change to authorize the fed to purchase and sell. this category includes all other private debt, equities, and other financial claims. the total size of the market for private debt of domestic businesses is about $ 15 trillion. specifically, it includes the corporate bond market ( about $ 5 trillion ) and the commercial paper market ( about $ 1. 5 trillion ) in addition to federal agency debt and mortgage - backed securities issued or guaranteed by the agencies. however, a considerable portion of this debt does not trade on markets but is held by financial institutions. these assets could be indirectly included in the fed's portfolio by having the fed purchase claims on financial institutions, including money market mutual funds, federal funds ( uncollateralized loans in the interbank market ), and certificates of deposit ( cds ), including euro - dollar cds. another class of assets that could be held in the fed's portfolio consists of securitized assets other than mortgage - backed securities - - an asset class that has been expanding rapidly. finally, equities could be held as well as private debt. this market, including both equities directly held and those held indirectly through ownership of shares in mutual funds, is about $ 16 trillion. many of the markets for private debt and equities are large, but some are not very liquid, and all involve some credit or market risk. i also note that double - counting in these numbers is considerable since money market mutual funds, for example, hold a lot of commercial paper. 2. greater use of repurchase agreements against a wider range of collateral. today, about $ 25 billion in federal reserve repurchase agreements is outstanding. the amount outstanding swung over a wide range in 1999 and 2000, rising to supply liquidity before

fellow board members and i know that community banks provide essential financial services to households, small businesses, and farms in communities throughout the country. we know that community banks serve many customers that large banks do not and provide services that are not offered by large banks in many communities. this circumstance is especially true in rural areas and other small communities, where community banks are sometimes the only retail financial institutions. we understand that community bankers serve members of their local communities who are not just their customers, but also their neighbors and their friends. we know the strong links these banks have to the people and businesses in their communities provide firsthand knowledge of local economic conditions. my colleagues on the board understand, as i do, that these close ties give community bankers special insight and understanding into local needs so that they can tailor their products and services to meet those needs. although community banks largely kept to their traditional business model of prudent, local lending and avoided the excessive risk - tasking that helped fuel the financial crisis, that crisis, and the deep recession that followed, devastated many communities and the banks that serve them. the significant improvement in the economy since then has helped communities bis central bankers ’ speeches and community banks, but i am well aware that the challenges for this sector continue, and my board colleagues understand this also. we know and appreciate these concerns because the board makes it our business to regularly and extensively meet with and talk to community bankers and industry leaders. the board of governors meets twice a year with the community depository institutions advisory council, which includes representatives of community banks, thrifts, and credit unions in each of the 12 federal reserve districts. 1 the board also has a subcommittee on smaller regional and community banking, headed by governor powell and including governor brainard. 2 let me also say that the experiences, aspirations, and challenges of community banking are not new to me. before i became chair of the board of governors and vice chair before that, i spent six years as president of the san francisco fed. in this role, i was responsible for the supervision of a substantial number of community banking organizations in the nine states of the 12th district. among the things i learned from that experience is that, when it comes to bank regulation and supervision, one size does not fit all. to effectively promote safety and soundness and ensure consumer compliance without creating undue regulatory burden, rules and supervisory approaches should be tailored to different types of institutions. that is why the congress chose to exempt community banks from many aspects