The Federal Reserve System Essay Example | Topics and Well Written Essays - 750 words

The Federal Reserve System - Essay ExampleThe Federal Open market Committee (FOMC) consists of the Board of Governors and Federal Reserve Bank Presidents. The FOMC is the monetary politymaking body that creates policy designed to make water economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments. It makes responsible decisions concerning the promiscuous market operations. In addition, the FOMC directs system operations in foreign currencies.The Board of Governors makes decisions regarding cost and availability of bullion and credit in the economy. The Board regulates banks, contributes to the monetary policy, and oversees the activities of the Federal Reserve Banks. Members of the Board of Governors include Ben S. Bernanke, the Chairman Roger E. Ferguson, Jr., the wrong Chairman, Susan Schmidt Bies, Mark W. Olson, Donald L. Kohn, Kevin M. Warsh, and Randall S. Kroszner all of whom are responsible for discount rate and rese rve requirements. The responsibilities for discount rate policy are shared with the Federal Reserve Banks. In 1976, the Consumer Advisory Council, consisting of consumer and creditor representatives was established to advise the Board of Governors on consumer related issues.Before the appointment to the Board of Governors, Bernanke was one of President Bushs top economic advisers. He veritable his bachelors degree in economics from Harvard and his PhD for MIT. He was a professor at Princeton University and chair of the Economic Department. As a member of the Federal Reserve Board, Bernanke is the first new Fed chairman in around two decades. The Federal Reserve Banks conduct research on the economy, supervise banks in their region, and provide monetary services to banks and the United States government. They hold cash reserves for monument institutions and make loans to them move currency and coins in and out of circulation collect and process millions of checks daily provide c hecking accounts for the Treasury issue and redeem government securities and are the fiscal agents for the United States government. The Federal Reserve Bank districts include Atlanta, GA Boston, MA Chicago, IL Cleveland, OH Dallas, TX Kansas City, MO St. Louis, MO Minneapolis, MN New York, New York St., Philadelphia, PA Richmond, VA and San Francisco, CA Simplistically speaking, monetary policy is used to concur the cyclical fluctuations in the economy. It influences economy activities, by manipulating the supplies of money and credit, thus altering the federal funds rate. development the three monetary tools - open market operations, discount rate, and reserve requirements, the Fed regulates the money supply. Each affects the core of funds in the banking system. The open market operations are the purchases and sales of United States Treasury and federal agencies securities. When the Fed desires to increase reserves, it buys securities and to decrease reserve, it sells securit ies. Such transactions affect the amount of money and credit banks posses, which affects the occupy rates and the performance of the United States economy. The discount rate is the interest charged to commercial banks and other depository institutions for loans they receive from their regional Federal Reserve Banks. When the discount rate increases the amount lending made by banks