FEDERAL RESERVE SYSTEM FED Central banking system of the United States Federal Reserve Act (1913)

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Presentation transcript:

FEDERAL RESERVE SYSTEM FED Central banking system of the United States Federal Reserve Act (1913)

Federal reserve system contains: Board of Governors Federal Open Market Committee 12 Federal Reserve Banks and their branches Three advisory councils

Federal Reserve Districts

Committee of Govemors 7 members, elected for 14 years (change every 2yrs) formulating monetary policy, determines rates, establishes rules of regulation and supervision, and establishes rules for the protection of bank clients

Committe of Govemors

FED Aims: price stability full employment economic growth ensure the stability of the financial system and reduce system risk provide financial services for deposit institution and government strenghten U.S. position in world economy

National payments system The Federal Reserve plays an important role in the U.S. payments system. The twelve Federal Reserve Banks provide banking services to depository institutions and to the federal government. For depository institutions, they maintain accounts and provide various payment services, including collecting checks, electronically transferring funds, and distributing and receiving currency and coin

Banking legislative in the U.S. National Currency Act (1863), National Bank Act (1864) founding office to check currency,centralization banknotes,introduction of mandatory minimum reserves Federal Reserve Act (1913) establishment of the Federal Reserve Systém (the systém performing the tasks central banks) Banking Act (Glass-Steagall Act) (1933) separating trade and investment law, estabilishing of mandatory deposit insurance Full Employment and Balanced Growth Act (1978) monetary policy objectives: price stability, full employment, economic growth Financial Services Modernization Act (1999) allowing merge insurance companies and investment banks -> creation of holding companies – canceling Glass-Steagall Act Emergency Economic Stabilization Act (2008) Rescue programs and changes in troubled financial institutions Wall Street Reform and Consumer Protection Act (2009) tightening oversight of derivate transaction, restriction on bank trader on its own account increase in client protection against unfair practices

Quantitative easing (QE) „ quantitative easing“ QE1, QE2, QE3 increasing the quantity of money in circulation and improve their availability lowering interest rates

QE3 and market reaction in prices of Gold

Questions 1) What formulate Committeee of Governors? 2) How many districts have Federal Reserve Banks? 3) Fed aims?? 4) QE – is it good way how to solve problem?