The Federal Reserve System: The US Central Banking System

Federal Reserve System, commonly referred to as Fed, was established in 1913. This was after American congress passed the Federal Reserve Act in December the same year, establishing a new set of institutions which were meant to govern the relationship between banks, the government, and the production of money (Broz 1997 p. 1). The Federal Reserve System divides the nation in 12 districts, each with its own federal reserve bank (Boyes & Melvin, 2006). Overall administrative structure of the system consists of: Board of Governors. The board is headed by a chairman who is appointed by the president to a four year term (Boyes & Melvin, 2006). The chairman serves as a leader and also as a spokesperson for

These reserve banks also have their own Board of Directors, which is made up of 6 people appointed by the member banks who hold stock in the reserve bank, as well as 3 people appointed by the Board of Governors. Together all of these banks make up the Federal Reserve, and attempt to manipulate the economy through the use if the FOMC.

Federal Reserve can be very confusing to understand and know what is their purpose and how they help the economy. The Federal Reserve was started in December 23,1913 by President Woodrow Wilson who sign the Federal Reserve Act. The Fed has many things that it controls in are economy. One of the Reason that President Woodrow Wilson put the Federal Reserve Act in to place because in 1913 there were a feel that banks were instable so many investors did not feel confident in the banks and felt that it was unsafe. One thing that made Woodrow Wilson make the Federal reserve is the people making a run on the banks frequently, which many bank at this time did not keep enough money in the bank and people panic heard about other banks falling so they would try and get all their money out of the banks as fast as possible. With so many people running on the bank would cause the bank to fell which became a big problem following the Great Depression. Then Woodrow Wilson need to find a way to make the bank safer and build a more secure financial system. One thing to understand is also the monetary policy which refers to Fed nation central bank, which influence the amount of money and credit in the U.S. economy and how we spend money and credit affects interest rates which help the U.S economy perform. However, the monetary policy main reason it to promote maximum employment, stable prices, and long term interest rates which help the feds control the economic growth.

The Federal Reserve System was signed by President Woodrow Wilson in 1913 and began operating in 1914; to this day it is still the central banking system for the United States. The responsibilities of The Federal Reserve are un-ending and complex. Due to the frequent re- occurring financial issues occurring between the years 1906-1907, like many things The Fed has had to change in numerous ways to adjust to the growing need of our expanding and evolving economy. The income for The Federal Reserve comes from interest on the U.S government securities that are acquired through open market operations (Federal Reserve education). Three major responsibilities of The Federal Reserve are stabilizing prices, interest rate adjustments, conducting investigations

The Federal Reserve was created primarily to be the lender of last resort to provide cash during a financial panic; however, their responsibilities have evolved and increased over time. In November 1977, Congress expanded the Feds responsibilities with the Federal Reserve Act to include the creation of monetary policies to promote price stability and the maximization of employment to keep the economy moving

After the Civil War started, another need for a national bank emerged. The government wanted to learn from the mistakes of the first and second banks, so they developed the National Bank in 1869, which was modeled after the free banking system. This system allowed banks to choose between state and national charters. Though the bank was transformed into another bank in 1913, this was the United States first success at a uniform currency. Finally in 1913, the Federal Reserve was established. The architects of the federal reserve learned from the mistakes from the previous banks so that they could make this bank a success. This new federal reserve bank was given control over the nation’s payment system. The federal reserve was broken up into 12 District Banks that operated independently, so that there was not a concentration of power. Though not the original role of the Federal Reserve, today it is best known for the monetary policy. Today the federal reserve is run by the Board of Governors,which are seven members that are appointed by the President and are approved by the Senate. The Federal Reserve is composed of the Board of Governors, and twelve district

The Fed, established in 1913, has several main functions that include: establishing monetary policy, regulating smaller banking institutions, and finding ways to create financial stability. There are several reasons that these responsibilities need to remain out of the hands of politicians. The economic rule that economics and politics do not mix well because of their differing focuses, the differing goals of the two bodies, and the inconsistency of politicians in Congress

The tour of Federal Reserve Houston branch was so interesting. After that tour, I was impressive by the Fed’s function. As the textbook mentioned, The Federal Reserve System is the central bank of the United States and is responsible for setting monetary policy and regulating the banking system. [1] So the Fed has play extremely important role in the national economic.

The Federal Reserve System has three branches: the Board of Governors, The Federal Open Market Committee, and Reserve Banks. The Federal Reserve System (Fed) supplies and regulates America’s money to all the banks. The Board of Governors is the main authority of the three branches of the Fed, and it supervises other banks. The Federal Open Market Committee is the most prominent policymaker of the three branches and regulates the supply of money in the economy. Federal Reserve Banks serve other banks, this is why they are called banker’s banks. There are twelve Federal Reserve Banks which represent different states and these “districts” share data for monetary policies. The future role of monetary policy is vital

The Federal Reserve house the Board of Governors, The Federal Reserve Banks, The Federal Open Market Committee (FOMC), and Advisory Committees. The Federal Reserve Bank is directed by the Board of Governors or Federal Reserve Board, which is located in Washington D.C. The Board of governors is the national aspect of the Federal Reserve System and consists of nine board of directors which are appointed by the President serve a fourteen year term. The Chairman and Vice Chairman are appointed to four year terms which can be renewed (Federal Reserve, 2009). The Federal Reserve Banks are a network of 12 banks with 25 branches. Each banks serves a region of the country and the 12 locations are “Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco” (Federal Reserve System, 2001). These Federal Reserve Banks serve other banks, the U.S. Treasury and inadvertently, the public. The FOMC is made up of twelve members, seven from the Board of governors and five Federal Reserve Bank presidents (Federal Reserve System, 2001). The Advisory committee advises on the Federal Reserve System and provides information on the effect of system policies. The advisory committee includes the Federal Advisory Council, the Consumer Advisory Council, and the Thrift Institutions Advisory Council, which work together to advise individual Federal Reserve Banks on these interests (Federal Reserve System,

After the Revolutionary War, many of the country’s citizens were in great debit and there was widespread economic disruption. The country was in need of an economic overhaul and the new country’s leaders would need to decide how to do this to ensure the new country did not fall apart. After two unsuccessful attempts at a national banking system, the Federal Reserve System was created by the Federal Reserve Act of 1913. Since its inception, the Federal Reserve System has evolved into a central banking system that grows with the country. The Federal Reserve System provides this country with a central bank that is able to pursue consistent monetary policies. My goal in this paper is to help the reader to understand why the Federal

The Federal Reserve System was founded by Congress in 1913 to be the central bank of the United States. The Federal Reserve System was founded to be a safer, more flexible, and more stable monetary financial system. Over the years, the role of the Federal Reserve Board and its influence on banking and the economy has increased. Today, the Federal Reserve System's duties fall into four general categories. Firstly, the FED conducts the nation's monetary policy. The FED controls the monetary policy by influencing credit conditions in the economy. The FED measures its success in accomplishing these goals by judging whether or not the economy is at full employment and whether or not prices are stable. Not only

United States Federal Reserve system, also known as Federal Reserve or simply “Fed” is the United States central banking system. The Federal Reserve took inception in 1913, after the adoption of the Federal Reserve Act. The United States Congress has mandated three macroeconomic objectives to the Federal Reserve. These are minimum levels of unemployment, prices stability and keeping in check the rates of interests. Over the years, the role of Federal Reserve has expanded. It now formulates the country’s monetary policies, conducts supervision and regulation of the banking institutions, maintenance of the financial

One form of direct control can be exercised by adjusting the legal reserve ratio (the proportion of its deposits that a member bank must hold in its reserve account), and as a result, increasing or decreasing the amount of new loans that the commercial banks can make. Because loans give rise to new deposits, the possible money supply is, in this way, expanded or reduced. This policy tool has not been used too much in recent years. The money supply may also be influenced through manipulation of the discount rate, which is the rate if interest charged by the Federal Reserve banks on short-term secured loans to member banks. Since these loans are typically sought to maintain reserves at their required level, an increase in the cost of such loans has an effect similar to that of increasing the reserve requirement. The classic method of indirect control is through open-market operations, first widely used in the 1920s and now used daily to make some adjustment to the market. Federal Reserve bank sales or purchases of securities on the open market tend to reduce or increase the size of commercial bank reserves. When the Federal Reserve sells securities, the purchasers pay for them with checks drawn on their deposits, thereby reducing the reserves of the banks on which the checks are drawn. The three instruments of control explained above have been conceded to be more effective in preventing inflation in times of high economic activity than in bringing about revival from a

The Federal Reserve System is a central banking of the US Government, most commonly known as the Fed. A central bank serves as the banker to both the banking community and the government. It issues the national currency, conducts monetary policy, and plays a major role in