Federal Reserve

Nautica Friday

About The Fed....

The Fed Is a centeralized banking system .

  • The purpose of the Fed is to establish and maintain confidence in the US monetary system, to make sure to have a safe, stable, and healthy economy, and to monitor and regulate member banks and help serve the public efficiently.

The Functions of The Fed.....

Federal Supervision

  • Set reserve requirements
  • Audits memeber banks
  • Approves bank mergers
Agent for Federal Government

  • The Fed acts as a Agent of Federal Government. It holds a checking account for the U.S. Treasury.
Monetary Policy

  • Fed regulates monetary policy, Federal Reserve influences money and credit condtions in the economy to accomplish economic goals.
  • Fed lends money to member banks.
  • Fed acts as a clearing house. Clears/settles checks for member banks.
Open Market Policy

  • Fed works in open market operations by selling and buying government securities.
  • Open Market Operations- Government securities are sold at a discount but are redeemed got face value on the maturity date.
  • Goverment Securities include Savings bonds, short-term obligation of the US Treasury and long-term obligations of the US Tresury
  • Bank Discount rates ecourages borrowinf by member banks and so it encourages borrowing by consumers.
Lending Standards

  • Sets standards for consumer legislation dealing with leading and credit, it also sets limits for loans and investment by member banks.
Supplies Currency

  • The medium of exchange for value is money. US money is currency and coins.
  • Fed supplies paper currency.
  • Paper currency supplied is "Federal Reserve Notes" currency, like on dollar bills.