PANews reported on September 26 that Dallas Federal Reserve President Logan said the Fed should abandon its use of the federal funds rate as a benchmark for conducting monetary policy and instead consider an overnight rate tied to the more robust U.S. Treasury-backed lending market. Logan believes the federal funds rate target is outdated, and the link between the little-used interbank market and the overnight money market is fragile and could suddenly break. She said updating the Fed's mechanisms for implementing monetary policy would be part of an efficient and effective central banking system. "Some might say that since everything is working now, there's no need to act," Logan said. "But if the transmission mechanism between the federal funds rate and other money markets breaks down, we will need to find an alternative target quickly. I don't believe that making important decisions under time pressure is the best way to promote a strong economy and financial system." She said the Tripartite General Guaranteed Rate (TGCR) could offer the most benefits. Logan noted that the TGCR covers over $1 trillion in daily transactions, allowing changes to be effectively transmitted through money markets. Meanwhile, trading volume in the federal funds market currently averages less than $100 billion.PANews reported on September 26 that Dallas Federal Reserve President Logan said the Fed should abandon its use of the federal funds rate as a benchmark for conducting monetary policy and instead consider an overnight rate tied to the more robust U.S. Treasury-backed lending market. Logan believes the federal funds rate target is outdated, and the link between the little-used interbank market and the overnight money market is fragile and could suddenly break. She said updating the Fed's mechanisms for implementing monetary policy would be part of an efficient and effective central banking system. "Some might say that since everything is working now, there's no need to act," Logan said. "But if the transmission mechanism between the federal funds rate and other money markets breaks down, we will need to find an alternative target quickly. I don't believe that making important decisions under time pressure is the best way to promote a strong economy and financial system." She said the Tripartite General Guaranteed Rate (TGCR) could offer the most benefits. Logan noted that the TGCR covers over $1 trillion in daily transactions, allowing changes to be effectively transmitted through money markets. Meanwhile, trading volume in the federal funds market currently averages less than $100 billion.