this is very long, but includes lots of graphs which immediately drive the IMF's points home ...
the conclusions are also pretty blunt ...
(snip)"The degree to which the Federal Reserve has explicitly intervened in the U.S. money and
capital markets is historically unprecedented. The dramatic role reversal of the Fed’s balance
sheet from supporting average daily transactions of $25 billion in the fed funds market to the
central linchpin and key to global financial market stability has raised concerns about its
ability to exit once normality returns; the risk to its balance sheet and potential financial and
operational independence. The contrast of the flexible and rapid response of the Fed and the
more complex response of the U.S. Treasury has also raised more fundamental issues as to
the appropriate roles of monetary and fiscal policy, Congressional oversight and institutional
independence.
One aim of this paper has been to bring some clarity to the size of the FRB intervention and
quantify both the risks being borne and its ability to cope with potential losses. While the
risks are material, the Fed’s ability to independently cope with potential losses is ample.
While other central banks have abandoned policies owing to actual and prospective losses,
there would seem little possibility that the FRB would be compelled to change course for
similar reasons. Effective communication of this message could enhance the credibility of
current FRB interventions and quell speculation that it may not be willing to respond
aggressively to an incipient rise in inflationary expectations owing to balance sheet concerns.
The strength of the FRB balance sheet coming into the crisis, the risk control measures that
have been employed to date and a cooperative relationship with the Treasury have ensured
that the risks taken by the innovative liquidity management operations are well contained.
"(snip)



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