The New York Fed has maintained a gold vault used to store the gold reserves of foreign central banks since 1924 when construction of its main building was completed. Prior to 1924, the New York Fed held gold in custody for foreign central banks in other nearby vaults, such as the one maintained by the New York Clearing House. 12 Defined in general terms as “an arrangement under which one bank (correspondent) holds deposits owned  by other banks (respondents) and provides payment and other services to those respondent banks.” See the glossary of terms used in payments and settlements, published by the Committee on Payments and Market Infrastructures of the Bank for International Settlements. 13 Perhaps the most vivid historical example of this involved large-scale flight-to-safety flows of European central  bank gold reserves to the vaults of the New York Fed during the Second World War. In addition to safeguarding their gold reserves from the Axis powers, inflows of gold were used by Allied nations to finance their purchases of war supplies from the U.S. 14 The Federal Reserve’s Bretton Woods swap lines with foreign central banks were first established in 1962 and  used extensively until the collapse of the Bretton Woods fixed exchange rate system in the early 1970s. 15 The mechanics of currency swap operations among central banks is a case in point.
Regional Network surveys normally include supplementary questions on special topics, and over the past year, many of the special topics have concerned prices. We think they give us better insight into price drivers than the standardised questions we asked previously. We will continue to ask network contacts about prices when relevant, such as in the upcoming survey that will be published in March. If we learn that some of these questions adequately capture future price increases, we can include them in our regular questionnaire. It is also useful to look at similar surveys in other countries, as Norges Bank Watch points out. Norges Bank Watch discusses monetary policy trade-offs in an environment of high inflation, and whether the costs of high inflation after a cost-push shock are exaggerated in our modelling system. They point out that an optimal monetary policy response depends on the nature of the economic shock and the transmission of monetary policy. At the same time, the cost of high inflation must be measured correctly. Let me first say that these are the very questions that have featured in the discussions of our Monetary Policy and Financial Stability Committee over the past year. Among other things, we have devoted considerable time to assessing the effect of higher interest rates on household disposable income and the relative importance of the nominal and real interest rate. The results were also presented in a box in the June 2022 Monetary Policy Report.