Fed forms working group to create emergency bank
Washington, DC -- The Federal Reserve Board announced in late January that it has formed a private-sector body called the Working Group on NewBank Implementation. The group will be in charge of developing the concept of a dormant bank that could, in the event of a catastrophe, clear and settle US government securities.
All of the major firms involved in the US government securities markets use one of two commercial banks to settle their trades and facilitate financing of their positions. After the attacks of September 11, 2001 disrupted the normal operations of these institutions, the government decided to examine how it could ensure the smooth running of the government securities market in the event of another disruption.
In a report released at the beginning of January, a previous private sector panel, the
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