25 More detail about the Fed’s purchases of agency MBS can be found in my “Concluding Remarks at the Monetary  Policy Implementation in the Long Run Conference,” Federal Reserve Bank of Minneapolis, Minnesota, October 19, 2016. 26 Broad market indicators include, among others, trading volumes, bid-ask spreads, trade quote sizes, financing  costs, and settlement fails. Operations also yield valuable information, including executable prices compared to those prevailing in the market, counterparty concentration measures, and settlement fails. 27 The TBA market is a forward market that allows market participants to efficiently trade a wide range of agency  MBS with similar characteristics without requiring them to analyze the underlying details of each individual mortgage security, since any security with the same agency issuer, original maturity term, and coupon can be delivered into a single TBA contract. This structure transforms a market of hundreds of thousands of individual mortgage securities into a limited number of homogenous TBA contracts. For more information on the TBA market, see James Vickery and Joshua Wright, “TBA Trading and Liquidity in the Agency MBS Market,” Federal Reserve Bank of New York Economic Policy Review 19, no. 1, May 2013. 28 A dollar roll sale is a transaction that involves the sale of agency MBS for delivery in one month and the  simultaneous agreement to purchase substantially similar securities in a later month, thus effectively postponing delivery when there is a dislocation in available supply.
I think the gradual and predictable approach the FOMC has adopted has been successful so far, but we will learn more as we proceed and as other central banks reach those milestones as well. 1 My discussion here focuses on the Federal Reserve’s actions to adjust the stance and conduct of monetary  policy in pursuit of its statutory mandate of full employment and price stability. However, the Fed’s response to the crisis also included numerous temporary programs and facilities aimed at supporting the liquidity of financial institutions and fostering improved conditions in key financial markets. 2 The Fed’s outright purchases of securities did not raise any credit risk exposure. 3 The FOMC also undertook a program to extend the maturity profile of its Treasury holdings. This Maturity  Extension Program (MEP) did not affect the portfolio’s overall size, yet still increased the portfolio’s duration risk —an important characteristic of all asset purchase programs. A common metric for communicating about the dollar value of duration risk held in the portfolio is in terms of ten-year Treasury equivalents. 4 9 / 13  BIS central bankers' speeches  4 Even before asset purchases were launched, the reserve-adding effects of the Fed’s crisis-related lending  programs highlighted shortcomings of its pre-crisis monetary policy implementation framework.