So as much as the account openings themselves, today we commemorate the symbolism, principles, and values they represent. Today’s event commemorates the start of the Federal Reserve’s international operations and involvement in the international arena. It honors the Federal Reserve’s past and ongoing support for the principle of the major central banks to provide safe, confidential, and reliable account services in their currencies to the global central banking community in support of financial stability and other central banking mandates. And it acknowledges the value of cooperation among the world’s central banks and the role that these initial operational ties played in paving the way for broader and deeper cooperation among central banks. In doing so, we also recognize the individuals past and present who have played a role, often behind the scenes, in managing the Federal Reserve’s dollar account operations for the global official sector. The early years: war, ambition, and cooperation The story of the early years of the Federal Reserve’s dollar accounts for foreign central banks is one of war, ambition, and cooperation. It is no coincidence that the first agreement was signed less than a month after the United States entered the First World War on April 6, 1917.
See Barry Eichengreen and Marc Flandreau, “The Federal Reserve, the Bank of England, and the Rise of the Dollar as an International Currency, 1914– 1939,” Open Economies Review 23, no. 1 (2012): 57–87. 9 In his report on the discount system in Europe, Paul Warburg wrote that the “annual tribute to Europe resulting  from our primitive financial system is not merely a waste of money, but reflects upon the dignity of a nation and economic importance of the United States.” See Paul Warburg, The Discount System in Europe (Washington: Government Printing Office, 61st Congress, 2nd Session, Senate Doc 402, 1910), 9. 10 For the guarantee, from 1921 until 1974 when the New York Fed discontinued the guarantee option on banker’s  acceptances, the New York Fed charged 1/8th of 1% on the face amount of banker’s acceptances purchased on behalf of foreign central bank accountholders. Dollar banker’s acceptances became a favored investment instrument by foreign central banks in the days before the introduction of the first regularly issued U.S. Treasury bill in 1929. 11 The maintenance of gold vaults and reciprocal gold custody accounts among major central banks provided  significant operational advantages for the functioning of the international gold standard. In addition to the safety of storing gold with another central bank, through the practice of earmarking central banks could settle accounts with one another without the need to physically deliver gold bullion. This was especially useful in periods, such as wartime, when navigation of sea lanes could be impeded.