The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilise rocky financial markets, reports the WSJ. Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools. Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter. It isn’t known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle, however, is that the Federal Reserve Act doesn’t explicitly permit the Fed to issue notes beyond currency.
