The Federal Reserve System

Federal Reserve exercises considerable control over the demand for and supply of balances that depository institutions hold at the Reserve

The Federal Reserve System



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. General information about Federal Reserve System

1.1History of formation and development of FRS

1.2The organizational structure of the U.S Federal Reserve

2. Monetary policy of Federal Reserve System

2.1 Monetary policy

2.2 The implementation of Monetary Policy

2.3 The Federal Reserve System in international sphere


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In his term paper I will discuss the creation of the Federal Reserve of its functions, which includes the Federal Reserve System. How to influence interest rates on exchange rates, as banks around the world depend on the Federal Reserve system. I think it is very important and interesting topic for me because I am a financier. In this paper I will try to reveal all the details.U.S. economy and the world economy are linked in many ways. Economic developments in this country have a major influence on production, employment, and prices beyond our borders; at the same time, developments abroad significantly affect our economy. The U.S. dollar, which is the currency most used in international transactions, constitutes more than half of other countries official foreign exchange reserves. U.S. banks abroad and foreign banks in the United States are important.Federal Reserve has supervisory and regulatory authority over a wide range of financial institutions and activities. It works with other federal and state supervisory authorities to ensure the safety and soundness of financial institutions, stability in the financial markets, and fair and equitable treatment of consumers in their financial transactions. the U.S. central bank, the Federal Reserve also has extensive and well-established relationships with the central banks and financial supervisors of other countries, which enables it to coordinate its actions with those of other countries when managing international financial crises and supervising institutions with a substantial international presence


1. General information about Federal Reserve System


.1 History of formation and development of FRS


The U.S. Congress as the supreme legislative body passed the Federal Reserve System (some domestic sources call it the Federal Reserve Act - approx. Per.), Which marks the beginning of its work 1913. Interest of the U.S. banking system in the establishment of country's central bank has increased markedly since the banking crisis of 1907. At this time, several large financial institutions were close to bankruptcy and closure due to the fact that banks in this period experienced significant difficulties in meeting the demand depositors withdraw their funds and turn them into cash. In addition, small banks in agricultural areas of the country at this time sought to obtain from its correspondent banks in major cities heavily in cash. During the banking crisis, savings banks usually require pre-application for withdrawal of bank deposits, and many banks in both New York and across the country artificially limited the appeal of deposits in cash. At that time, several months cash sold above their face value, yielding additional economic system.1908, Congress passed the so-called law Oldrncha-Ryland (Aldrich-Vreeland Act), in essence demanded the establishment of the National Commission treatment, whose functions were attributed to the development of the project for the central issuing bank of the country. Appointed a commission consisting of nine senators and nine House members held several hearings on the issues under examination, and organized an extensive special investigation being banking in the United States and in foreign countries. Materials of these studies were so comprehensive, that the final report of this commission consisted of 23 heavy volumes. In 1913, President Woodrow Wilson, despite some opposition to the idea of a central institution issuing bank in the U.S., has entered into financial and economic practices of U.S. financial institution such as the Federal Reserve System. the beginning, the main purpose of the Federal Reserve System was to help banks during the banking crisis and stock market fever. It was further established that in the period in question there has been no fully satisfactory mechanisms for the needs of banks in the appropriate level of liquidity. Initially, control over the quantity of bank credit, money supply and the rate of interest does not fall within Fed. In this era of economic and financial relations between the U.S. dominated the gold standard ', and it was assumed that the amount of gold stored in the bowels of the U.S. banking system is the mechanism that regulates the amount of money in circulation and bank credit. The founding fathers of the Fed in his dreams represented the central bank of issue, which would be capable of providing elastic supply of cash by means of discounting commercial banks. Original position, lying in the basement of the organization of the Federal Reserve System, based on a kind of cooperative system in which the U.S. federal government, the banking system, businessmen, entrepreneurs and ordinary consumers would cooperate on an equal footing. Initially, the Law on the Federal Reserve System in 1913 detailed the development of relations between the twelve Federal Reserve Bank and Federal Reserve Board (renamed in 1935 in the Board of Governors of the Federal Reserve System) does not provide. From 1914 to 1922, officials from the twelve Federal Reserve banks hold periodic meetings and consultation meetings, which developed the direction of monetary policy and make decisions accordingly. In those early years of the Federal Reserve System, a series of socio-political power in one center at a time when the foundations of the Federal Reserve System. role and importance of Federal Reserve Banks. Every single Federal Reserve Bank itself has played an important role in conducting and realization of a particular monetary policy, despite the fact that the management of these processes as a whole belongs to the Board of Governors of the Federal Reserve. Firstly, as members of the Federal Open Market Committee, five of the twelve presidents of Federal Reserve Banks are actively involved in developing and determining objectives and tactical objectives of monetary policy. " Second, the Board of Directors of the Federal Reserve Banks and produces certain outlines a specific point level of bank interest rates - one long key parameters of the economic system, which is submitted for consideration and approval by the Board of addition, Federal Reserve Bank made an important contribution to the development of concepts of monetary and credit relations, governing the activities of the Federal Open Market Committee. Most Reserve Banks publish articles and monthly reports on current issues of financial and economic life, with a number of these works received very widespread. Participation by all federal banks in the development of the main directions of monetary policy provides equal representation on these issues from different districts, but also provides the Board of Governors of the Federal Reserve variety of information from places that otherwise would have been unlikely to see such a centralized body, the Council Governors of the Federal Reserve. For example, in the late sixties and early seventies, the Federal Reserve Bank of St. Louis has played an important role by providing the corresponding impact on the entire Federal Reserve System, and thus contributes to the transition from a flexible monetary policy to a more rigid. In the late seventies, the Federal Reserve Bank of Minneapolis has managed its actions to convince stakeholders to individuals at the Fed to pay more attention to the importance and influence of the effects of expectations in financial and economic spheres of a certain monetary policy pursued by the Federal Reserve System. In 1980 - 1982's economic model of the money market, developed by the Federal Reserve Bank of San Francisco, has made a significant contribution to the understanding of the entire Federal Reserve Reserve banks have a decisive influence on the management of the entire U.S. banking sphere. These functions include monitoring and inspection activities 1,000 member banks of the Federal Reserve, 6000, bank holding companies, corporations, whose activities fall under the jurisdiction of the Law Edge 2, branches and representative offices of foreign banks in the U.S. In addition, the Federal Reserve Banks provide loans to banks experiencing financial difficulties. The purpose of such events (remember the number of loans of commercial banks in New York, Oklahoma and Seattle) is to provide a stable financial environment and isolation of banks facing difficulties in order to prevent possible under these circumstances, a crisis of confidence. last area of responsibility of the Federal Reserve Banks is to provide a happy financial services. These include the processing of checks, issuance and receipt of cash, sale and storage of securities the U.S. federal government, wire transfers of funds. Federal Reserve banks can be classified as some "semi." Corporations, mainly due to the mechanism of elections and appointments of directors. Each Federal Reserve Bank is a corporation having a charter for the right to introduce the operations issued by public authorities, and, of course, includes the shareholders, board members and president. Stockholders of the Federal Reserve Bank are member banks of the Fed's district, but they choose only six of the nine directors of the Federal Reserve Bank: three directors of the first rank (class A), representing the usual bankers of creditors, and three directors of the second rank (class B), representing leadin

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