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Economic Quarterly

Spring 1996

Sterilized Foreign Exchange Intervention: The Fed Debate in the 1960s

Robert L. Hetzel

The Federal Reserve System began its intervention in the market for foreign exchange in 1962. Such intervention is undertaken at the behest of the Treasury. That year there was a spirited debate within the Federal Reserve over whether this involvement would be consistent with the Fed's independence. That debate dealt with some of the fundamental issues of the Fed's role in the U.S. government.

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