The Federal Reserve: What They Are, What They Do..

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Presentation transcript:

The Federal Reserve: What They Are, What They Do.

What is the Federal Reserve System? A is the government agency that oversees the banking system and is responsible for the amount of money and credit in the economy. 529

What is the Federal Reserve System? The Federal Reserve is the central bank of the United States and was created in the year. 529

Structure of the Federal Reserve Janet Yellen Current Chairman of the Federal Reserve Board of Governors (Since February 1 st 2014) Ben Bernanke: Alan Greenspan: The President appoints the 7 members of the while member banks appoint 5 bank presidents to the FOMC. 530

Structure of the Federal Reserve The Fed is divided geographically into Federal Reserve Districts. New Orleans is serviced by the Federal Reserve city of Atlanta in the 6 th district and is home to a branch bank. 529

The Fed’s Functions Banking. Control consumer credit and borrowing through interest rates. Act as the government’s by holding money, selling bonds and creating or destroying money. Conducting monetary policy to control the supply of money. 531

The FED’s Policy  is the process by which the central bank of a country controls the supply of money, availability of money and the cost of borrowing money (interest rates). 531

The Fed’s Main Monetary Policy Tool  Interest Rates The interest rate charged by the FED to its member banks is the rate (currently 0.75%) The interest rate charged by banks to other banks is the Federal Funds Rate (currently 0.25%). The interest rate charged by banks to their most favored customers is the Prime Lending Rate (currently 3.25%). 532

Two more Monetary Policy Tools  is the buying and selling U.S. government securities to raise and lower the money supply.  The requirement is a regulation that sets the minimum percent of customer deposits that each bank must store out of circulation with the FED’s vaults. $0 to $13.3 million0 % depositsEffective date: More than $13.3 million to $89.0 million 3 % depositsEffective date: More than $89.0 million10 % depositsEffective date:

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