The Fed is a board of seven members that oversees the Federal Reserves banks. The Fed is important because they monitor the economic health of the country.
The Fed was established in 1913. The Fed is located in Washington DC. The Fed or Federal Reserve Board regulates:
Monetary policy
Credit availability
Securities purchased on margin
Domestic payment system
Regulations of financial institutions
One of the 12 regional banks established to maintain the balance on bank notes, lend money to member banks, and issue notes is the Federal Reserves Bank. The Federal Reserves Bank is responsible for supervising member’s banks in their areas.They are responsible for setting the national monetary policy.
Each of the 12 banks was created to provide certain services needed from financial institutions. These services are similar to the services that are provided to us, our personal banking needs and business banking needs.
Therefore the Fed as the (bankers, bank) help protect the safety and efficiency in the payment system. This is the critical pipeline, which all-financial transactions travel in our economical flow.
Together the 12 banks process more than 1/3 of the checks written in the United States. This would total more that $14 trillion dollars annually. The amount of money that comes through electronically is far greater; it is around $343 trillion dollars.
There are other areas the Fed is responsible for like, taking care of the nation’s largest banking customer, the US government. This involves trillions of dollars of processing.
The US Treasury keeps a checking account. This is where tax deposits and outgoing payments are kept.
There is a structure to the Fed. That structure includes:
– The Federal Reserve System
1. Nations Central Bank
2. Regional Structure with 12 districts
3. Operates from its earnings
– Board of Governors
1. 7 members
2. Oversees system operations
3. Appointed by the President
– Federal Open Market Committee
1. Main group to make money policy
2. Decisions that influence economic growth
3. 7 members
– The Federal Reserves Bank
1. 12 regional banks with 25 branches
2. Monitors the economy and financial institutions
3. Sets discount rates
One tool you can use to enquire into the actions of the Fed is the Beige Book. This book is part of the Federal Open Market Committee’s preparations for its meeting. It is published 8 times per year. The report is released on the two Wednesdays before each FOMC meeting about 2:15 pm.
The Beige Book will show a summary of economic conditions in each of the Fed’s regions. This report is an indicator of what actions the Fed may have up coming. You can find these reports on the Federal Reserve website.
The complicated system of checks and balances shows the Fed is the unmistakable result of the American political process. Congress created this system in order to respond to the ever-growing needs of the United States economy.
This was also to level out the booms and busts in the 1800s. By the early 1900s, it agreed, that there must be some form of a centralized banking process. However, the structure of this process took time. There was sorts of legislative tug-a-wars due to disagreements, suspicions and then finally resulted in compromise.
This what appears complicated structure with its intricate design has now proven to meet the economical needs of the United States. This is important because as a whole this process helps foster a sound financial system and healthy economy.