December 10, 2008 / 7:48 AM / 10 years ago

Fed mulls issuing own debt: report

Storm clouds gather over the U.S. Federal Reserve Building before an evening thunderstorm in Washington June 9, 2006. Picture taken June 9, 2006. REUTERS/Jim Bourg

(Reuters) - The U.S. Federal Reserve is considering issuing its own debt for the first time, the Wall Street Journal said, citing people familiar with the matter.

Fed officials have approached Congress about the move, which could include issuing bills or some other form of debt and would provide the central bank with more flexibility to tackle the financial crisis, the Journal said.

The Fed could not be immediately reached for comment.

The Fed can already print as much money as it wants, but issuing debt is largely the province of the Treasury Department.

The Fed stepped in with emergency credit for investment bank Bear Stearns in March and insurer American International Group (AIG.N) in September, and threw open its direct loan window to Wall Street firms this year in a bid to stabilize financial markets amid a credit freeze.

But with the credit crisis showing no signs of abating, and the narrow scope for further interest rate cuts from the present levels of 1 percent, economists expect the Fed to look at new ways to boost the supply and circulation of money to avoid a deflationary slump.

Reporting by Pratish Narayanan in Bangalore; Editing by Kazunori Takada, John Stonestreet

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