The Federal Reserve System Open Market Account (SOMA) is one of the monetary policy tools used by the Federal Reserve System. It consists of the Federal Reserve's domestic and foreign portfolios. The SOMA domestic portfolio consists of U.S. Treasury securities held on both an outright and a temporary basis. The SOMA foreign currency portfolio consists of investments denominated in euros and yen.
The Federal Open Market Committee (FOMC) has designated the Federal Reserve Bank of New York to execute open market transactions on behalf of the entire Federal Reserve System. The resulting investments are held in the SOMA portfolio. Interest on the portfolio provides virtually all of the Fed's income; nevertheless, the central bank buys and sells securities purely to implement monetary policy and not for profit.
In addition, while the Treasury, in consultation with the Federal Reserve System, has responsibility for setting U.S. exchange rate policy, the New York Fed is responsible for executing foreign exchange intervention. The U.S. monetary authorities—the Treasury and the Fed—may intervene in the foreign exchange market to counter disorderly market conditions, using funds that belong to the Federal Reserve and to the Exchange Stabilization Fund (ESF) of the Treasury Department.
Famous quotes containing the words federal, reserve, system, open, market and/or account:
“The proposed Constitution ... is, in strictness, neither a national nor a federal constitution; but a composition of both.”
—James Madison (1751–1836)
“I do not know what right I have to so much happiness, but rather hold it in reserve till the time of my desert.”
—Henry David Thoreau (1817–1862)
“[Madness] is the jail we could all end up in. And we know it. And watch our step. For a lifetime. We behave. A fantastic and entire system of social control, by the threat of example as effective over the general population as detention centers in dictatorships, the image of the madhouse floats through every mind for the course of its lifetime.”
—Kate Millett (b. 1934)
“I not deny
The jury, passing on the prisoner’s life,
May in the sworn twelve have a thief or two
Guiltier than him they try. What’s open made to justice,
That justice seizes.”
—William Shakespeare (1564–1616)
“I respect not his labors, his farm where everything has its price, who would carry the landscape, who would carry his God, to market, if he could get anything for him; who goes to market for his god as it is; on whose farm nothing grows free, whose fields bear no crops, whose meadows no flowers, whose trees no fruit, but dollars; who loves not the beauty of his fruits, whose fruits are not ripe for him till they are turned to dollars. Give me the poverty that enjoys true wealth.”
—Henry David Thoreau (1817–1862)
“It is an agreeable change to cross a lake, after you have been shut up in the woods, not only on account of the greater expanse of water, but also of sky. It is one of the surprises which Nature has in store for the traveler in the forest. To look down, in this case, over eighteen miles of water, was liberating and civilizing even.”
—Henry David Thoreau (1817–1862)