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These banks are located in different cities of the United States of America, which include New York, Richmond, Philadelphia, Boston, Cleveland, Atlanta, Chicago, Dallas, St. Louis, Kansas City, Minneapolis, and San Francisco. “These branch banks retain reserves of currency, and each bank has its own President and board” (Smith, n.d.). The Board of Governors has also established 25 branches of the 12 Federal Reserve Banks in order to support the business activities of the Federal Reserve Banks.
For each bank, there is a nine-member board of directors, which manages and controls the business activities of the Federal Reserve Bank. The members of the boards serve their respective banks for the period of three years. The Board of Federal Reserve selects three members of each board, also known as the Directors, whereas remaining six members are selected by the local member banks working in their respective districts. The members of each board are divided into three classes which are A, B, and C. Class C directors are selected by the board of governors whereas class A and Class B directors are selected by the commercial banks (Smale, 2005).
The Board of Governors is the most powerful part of the Federal Reserve System. The board of Governors consists of seven members of the board and a chairperson. The President appoints the members of the board for a period of fourteen years whereas the chairperson serves a four-year contract.
The Federal Open Market Committee is the third subgroup of the Federal Reserve System. It is a 12-members committee, which includes four presidents of the regional Federal Reserve Banks, the President of the New York Federal Reserve Bank, and the seven members of the Board of Governors. The basic role of the Federal Open Market Committee is to make the decisions regarding changes in the
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(Functions of Money) If money had not been there all transactions would have to be done through barter system. That is a tedious process on day to day operations. Money also functions as a unit of account measuring the value of goods or services under exchange.
The persistent decline in the economic activity therefore attracted the attention of the Government as well as the Federal Reserve System. Government took both the fiscal as well as monetary measures in order to stimulate the economy. These events however, led Federal Reserve System or FED to intervene into the economy in order to take some measures to correct the economic situation.
The role of a central bank in any economy is to manage the monetary policy of the country while ensuring that it manages to achieve broader macroeconomic objectives. One of the key objectives of any central bank is therefore to ensure that inflation within economy remains under control.
The Federal Reserve is the fundamental bank of America initiated in 1913 through the ratification of Federal Reserve Act as a reaction to the financial apprehensions of 1907 (Greider 67). However, the functions of the Federal Reserve have widened over time as the bank develops to meet the tests of organization in the economy.
There is a certain contrast between how the system ought to work (or is expected to work) and how it actually works (with its actual effects on banking systems) in reality. Because the Federal Reserve (which, from here on, shall be referred to as
ample is its mode of activities in the face of the recent global meltdown that not only helped in controlling the crisis but included measures to effectively control any aftermath. The present paper deals with the institution’s monetary policies which from time to time had
?s three key functions are providing and maintaining an efficient and effective payment system, supervising and regulating banking operations throughout the country and developing the country’s monetary policy (Federal Reserve Bank of Dallas, n.d.). This paper will focus on
essure from the political actors to act in a predetermined way, to reduce recession, making it favorable for the political actors to have their way into office with precept of acting to improve the economy.1 In 1992, Fed reduced short term interest’s rates to check