The Federal Reserve System. How it operates, its future role in monetary policy.

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The Federal Reserve System. How it operates, its future role in monetary policy.

Category: Research Paper

Subcategory: Economics

Level: College

Pages: 5

Words: 1375

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The Federal Reserve System
The Federal Reserve System is the Central Bank of the U. S. whose job is to oversee three functions: monetary policy; supervision and regulation of banks, and payment systems. The system is made up of three components: the Board of Governors; 12 Federal Reserve Banks, and member banks.
The Federal Reserve was formed in 1913 when the Federal Reserve Act was passed in the Senate after a series of failures in banks created the urgent need for a central bank to create an autonomous and healthy banking system in the country. The Board of Governors is the most important decision-making body in the Fed. The seven-member body is appointed by the president and approved by the Senate. It supervises the activities of the Fed and determines how the economy can be stabilized. Each board member serves a 14-year term of office. The terms are staggered such that a new board member is brought in every two years. The Fed chairman serves a four-year term. The Federal Open Market Committee (FOMC) is also at the national level. The FOMC supervises the implementation of the ‘open market operations. The FOMC comprises of the Board of Governors, New York Federal Reserve Bank President, and four Fed Bank presidents. At the district level, the Fed is made of 12 district Federal Reserve banks and 25 branches. The 12 district Fed banks serve a geographic region in the nation. They help stabilize the banking system and of…

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