THE FED TODAY

The Fed Today

The FED Today

Federal bank is a central bank of the United States. The confidence that people have in financial system today, did not exist before.

FED was designed to be decentralized central bank. It has two primary parts, a board of governors that are responsible to frame the policies of the bank and other 12 regional reserve banks that provide service to the public and the government. FED has a distinctive structure where it operates within the government independently, but not independently of it. The President appoints the board of governors and then they are confirmed by the Senate. These represent the public sector and the 12 reserve banks represent the private sector.

These 12 reserve banks have three primary roles;

They work with the board of governors to formulate and employ monetary policy for the nation.

They provide variety of financial services.

They also provide financial supervision to the banks and bank holding companies.

These three roles are designed to fulfill the FED's goal of maintaining stable economy characterized by higher employment and production, steady growth and most of all stable prices.

The Foundation of FED rests upon developing and implementing a sound monetary policy for our country. The primary focus of the monetary policy is over the price stability in the country. FED has organized a committee known as Federal Open Market Committee to make decisions that influence the financial markets not only in US but all over the world. Decisions that are made by the committee affect the amount of credit and money available for the US economy.

As the money supply increases and more money is available in the country, the demand for commodities and goods also increases. However, when the money supply increases much rapidly than the production of goods and services then the ...