Journal Article
Origins of the Federal Reserve book-entry system
Abstract: The conversion of U.S. Treasury securities from physical to book-entry form was a major event in the history of the Treasury market. The conversion, which began in 1966, resulted in an automated system that has greatly reduced market operating costs and risks. This article examines the origins and development of the Federal Reserve book-entry system for Treasury securities. It suggests that the system was the product of three important factors: the interest of the Federal Reserve Banks and the Treasury in lowering their operating costs and risks, the intention of the Reserve Banks and the Treasury to preserve the liquidity of the market, and the desire of the Reserve Banks to reduce member bank operating costs. Two critical incidents-a loss of securities at a Reserve Bank in 1962 and an \\"insurance crisis\\" in 1970-71-played major roles in the early development and subsequent expansion of the book-entry system.
Keywords: Federal Reserve banks - Automation; Treasury bonds; Government securities; Federal Reserve banks - Costs;
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Authors
Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Economic Policy Review
Publication Date: 2004
Issue: Dec
Pages: 33-50
Order Number: v.10 no.3