Foreign Exchange Operations of U.S. Banks

Abstract

In recent months the Federal Reserve Board and other bank regulatory agencies have been giving special consideration to supervisory or regulatory reforms that might be implemented to limit banks' exposure to foreign exchange losses. This paper reviews the nature of certain of the risks associated with bank's foreign exchange operaions and discusses, in general terms, some of what the Federal Reserve has learned in a recent survey of the procedures employed by the U.S. banks to monitor and limit their exposurein foreign exchange operations.