Federal Reserve System

Sierra Thompson and Chasity Asbury

What is the Federal Reserve System

It is a centralized banking system, organized by the government in 1913. It was established to establish and maintain confidence in the US monetary system, ensure a safe, healthy, and stable economy, to supervise and regulate member banks and help serve the public. All national banks are required to be apart of the Federal Reserve, but its optional for state banks to join.

Functions explained....

Federal Supervision: This sets the reserve requirments.

Agent for Federal Gov.:Acts as an agent and holds checking account for U.S. Treasury.

Monetary Policy: This is how the federal reserve regulates the amount of money supply in the economy.

Open Market Policy: This is the bying and selling of Gov. securities in the open market in order to expand or contract the amount of money in the banking system.

Lending standards: sets limits for loans and investments by memeber banks.

Supplies currency: money is currency and coins. the federal reserve supplies paper currency.