Reuters, June 26, 2017
The Federal Reserve’s little-known role housing the assets of other central banks comes with a unique benefit to the United States: It serves as a source of foreign intelligence for Washington.
Senior officials from the U.S. Treasury and other government departments have turned to these otherwise confidential accounts several times a year to analyze the asset holdings of the central banks of Russia, China, Iraq, Turkey, Yemen, Libya and others, according to more than a dozen current and former senior Fed and Treasury officials.
The U.S. central bank keeps a tight lid on information contained in these accounts. But according to the officials interviewed by Reuters, U.S. authorities regularly use a „need to know“ confidentiality exception in the Fed’s service contracts with foreign central banks.
The exception has allowed Treasury, State and Fed officials without regular access to glean information about the movement of funds in and out of the accounts, those people said. Such information has helped Washington monitor economic sanctions, fight terror financing and money laundering, or get a fuller picture of market hot spots around the world.
Some 250 foreign central banks and governments keep $3.3 trillion of their assets at the Federal Reserve Bank of New York, about half of the world’s official dollar reserves, using a service advertised in a 2015 slide presentation as „safe and confidential.“