MEXICO CITY, Sept 9 Former Federal Reserve
Chairman Alan Greenspan said on Friday that he sees few results
from the U.S. central bank's "quantitative easing" program and
is not convinced a fresh intervention in bond markets will
"I find it very difficult to find any significant impact as
yet from QE1 and QE2," Greenspan told reporters after a public
forum in Mexico's capital city, referring to a central bank
policy in which the Fed bought debt assets to try and lower
The Fed cut benchmark rates to near zero almost three years
ago to pull the economy out of a sharp recession and has
promised to keep them low through mid-2013. It has also bought
$2.3 trillion worth of longer-term securities to fuel faster
expansion and prompt banks to lend.
But banks are still unwilling to make loans, Greenspan
said, adding that "until we begin to see an active relending of
excess reserves (held by banks), we don't get much from
expanding the monetary base."
One option for further easing would be for the central bank
to encourage lending by lowering the rate it pays banks for
excess reserves they hold at the Fed.
The Fed could also shift its $2.8 trillion balance sheet
toward holdings of more longer-term securities. The point of
such a move would be to "twist" down interest rates for longer
maturities, potentially spurring mortgage refinancing and other
activity that depends on longer-term interest rates.
But Greenspan said he also was not convinced of the value
of a so-called "operation twist."
"The results were quite mixed," Greenspan said of the last
time the Federal Reserve tried such a program. "It is unclear
to me whether or not it would work at this stage."
(Reporting by Tomas Sarmiento; Editing by Dan Grebler)