In that regard, it is worth noting that, even as the  14  The weighted average coupon rate is closer to 4 percent. However, to get to the reported income stream on these assets, we have to adjust for the amortization of any premium that we paid at our operations. I am referring to this adjusted measure as the average coupon yield. 15  Factors other than currency held also affect the amount of reserves in the financial system, as reported in the Federal Reserve’s H.4.1 Statistical Release. 16  Indeed, the SOMA portfolio has already produced a large flow of income for the Federal Reserve for these same reasons. Over 2009 and 2010, the SOMA portfolio produced $ billion and $ billion of interest income, respectively, while the interest expense on reserve balances was $ billion and $ billion, respectively, in those years. Over the preceding 10 years, the average SOMA income was about $ billion. The excess income in recent years has already been remitted to the Treasury. 17  In the most extreme case, the Federal Reserve would have to cease remittances to the Treasury for a time. Of course, one might also want to take into consideration the additional tax revenue to the government that could be generated by the more robust economic recovery supported by the asset purchase programs. 6  BIS central bankers’ speeches  Federal Reserve has been expanding its balance sheet, it has not lost any momentum in the preparation of its exit tools.
Small wonder that I delighted when President Clinton asked me to become deputy U.S. trade representative and help implement NAFTA – even if it meant matching wits with formidable negotiators like Luis de la Calle and Herminio Blanco! Small wonder that as president of the Federal Reserve Bank of Dallas, I have delighted in working closely with Guillermo Ortiz and Agustín Carstens. Small wonder that at meetings of the Federal Open Market Committee or in U.S. banking circles, I have often argued Mexico’s case. Or taken sheer pleasure in pointing out to U.S. congressmen and senators, and in speeches and media interviews, that the Mexican government – unlike my own government – actually can agree on a budget, keep deficits under control, bring about structural change and resist interfering with the workings of an independent central bank. BIS central bankers’ speeches  1  I am full of pride for Mexico. I am full of pride that this country, the country of my happiest childhood years, would now choose to honor me with the Order of the Aztec Eagle. The citation for this honor speaks of my being a fierce defender of price stability. In the parlance of central banking, I am referred to as a “hawk.” Well, it may not surprise you to learn that taxonomists place the eagle and the hawk in the same bird family.