StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

The Federal Reserve Board - Essay Example

Cite this document
Summary
The Federal Reserve Board, commonly called the Fed, is the federal banking system, its governors, and its regulatory mechanisms. It has a board of governors known as the Federal Reserve Board, regional banks, and smaller banks that own shares in the federal system…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.2% of users find it useful
The Federal Reserve Board
Read Text Preview

Extract of sample "The Federal Reserve Board"

The Fed: Who, What, When, Where, Why The Federal Reserve Board, commonly called the Fed, is the federal banking system, its governors, and its regulatory mechanisms. It has a board of governors known as the Federal Reserve Board, regional banks, and smaller banks that own shares in the federal system. The Fed is responsible for regulating the economy through the control of the money supply. They are also charged with the oversight of the banking industry to insure compliance by the participants.

They also act as the servicer for several other banking institutions. One of the primary functions of the Fed is to stabilize the economy. There is some debate about when the Fed should act as a stabilizing force and when it should act as an energizer or cooling factor. However, generally the Fed tries to maintain a stable growth rate, low inflation, and optimize the unemployment rate. Controlling the money supply and the interest rate regulates these factors. By lowering the interest rate, money is easier to borrow and the economy picks up steam.

However, this may also create inflation. By raising interest rates, the money supply contracts and inflation falls. At a recent meeting, the Fed left the interest rate alone saying they were more concerned about inflation than a weak economy (Fed Leaves). However, with falling inflation there is a risk of rising unemployment. The Fed carefully balances these variables to keep the economy on an even keel. The Fed can also increase the money supply by increasing the reserves held by banks that loans are drawn against.

This will make more money available. By reducing the reserves, it tightens the money supply. They also regulate the currency supply that has a minimal effect on the economy. The Federal Reserve Board is headed by the Federal Reserve Chairman, currently Ben Bernanke. The Chairman has considerable influence on the direction of the board and the economy. Their individual philosophies on inflation and the best ways to control the economy can have a great effect on the working class. Even their outlook on the economy can move the stock market by several percentage points.

The previous Chairman, Alan Greenspan, warned about a possible recession on Feb. 26 and the market fell. The current Chairman Bernanke was more upbeat and helped the market recover just a few days later (Hogan ). The Fed meets several times a year to adjust the interest rate. The Fed commented this week that, ".the economy seems likely to continue to expand at a moderate pace" (Felsenthal). They had the option of lowering the rate, which some were speculating on, but they feared it would cause inflation.

It's these types of decisions that make the Fed one of the most powerful economic bodies in the world. Differences in opinion on inflation, tax cuts, and unemployment can stimulate or retard economic activity. Investors pay close attention to the actions of the Fed and they look for the slightest clues in the words of the chairman for signs of economic health. Works Cited "Fed Leaves Interest Rates Unchanged for 6th Time." New York Times 21 Mar. 2007. Felsenthal, Mark. "UPDATE 2-Fed Holds US Rates Steady, Leaves Options Open.

" Rueters 21 Mar. 2007. Hogan, Marc . "Greenspan vs. Bernanke: Hold Your Bets." BusinessWeek Online 1 Mar. 2007.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Federal Reserve Board Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1532360-the-federal-reserve-board
(The Federal Reserve Board Essay Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/macro-microeconomics/1532360-the-federal-reserve-board.
“The Federal Reserve Board Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/macro-microeconomics/1532360-the-federal-reserve-board.
  • Cited: 0 times

CHECK THESE SAMPLES OF The Federal Reserve Board

Financial Markets Under Different Economic Situations

As if that was not enough, the Federal government had declared intentions of raising the interest rates through The Federal Reserve Board.... This was a momentous lesson to The Federal Reserve Board, other governments, and the financial institutions at large to collaborate in putting in place policies that would prevent the interest rates from soaring.... lthough the federal reserve had committed itself to easing the market crisis, it was skeptical about the possibility of the market to stabilize without further fluctuations, as these significantly depended on the prevailing economic conditions....
3 Pages (750 words) Essay

Community Reinvestment Act

The designation and duties of Governors of the federal reserve System, the Officer of the Comptroller of Currency, Office of Thrift Supervisors, and Federal Deposit Insurance Corporation (just to name of few) comprise of so much detail and responsibilities.... Bylsma (1997) included comments from interagency letter that was forwarded to him this implication: "Examiners will presume that an activity revitalizes or stabilizes a low- or moderate-income geography if the activity has been approved by the governing board of an Although the four financial regulatory agencies neither endorse nor certify particular lending or investment products, this implication keeps businesses that are applying for credit accountable to the banking institutions....
5 Pages (1250 words) Essay

Federal Reserve Board

The bank will also act as an assisting agent for foreign and international accounts maintained in the bank for short-term investments (The Federal Reserve Board, 2007).... In United States the Monetary policy matters relate to it are all conducted by the federal reserve System which is the central bank of America and the form of influences it makes on demand is mainly by raising and lowering of short-term interest rates (Dennisy, 2007).... The FOMC comprises of 12 members out of which the seven members are from the board of Governors; the President of the federal reserve Bank of New York and the rest four are the other Reserve Bank Presidents who occupy the seat in rotation....
5 Pages (1250 words) Essay

Federal Reserve Policy in the USA

The purpose of this paper is to examine the policies of The Federal Reserve Board during the period of 2006-2009 in light of the current financial crisis.... The paper will find that The Federal Reserve Board policies during this period were prudent and appropriate, but failed to exert the political will necessary to address the problems that have arisen in the financial system that was due to factors that are beyond the Board's authority.... Yet, could The Federal Reserve Board (FRB) have taken steps beginning several years ago to address theses causes of system-wide failure Bernanke (2008) is very clear that the problem was "declining house prices, delinquencies, and foreclosures, and strains in mortgage markets"....
8 Pages (2000 words) Term Paper

Federal Reserve System

The twelve regional banks are made up of regions listed below: Another component of the Federal Reserve System is The Federal Reserve Board of Governors.... The Federal Reserve Board of Governors is appointed by the President of the United States of America, but confirmed by the Senate.... Mishkin (The Federal Reserve Board).... The Federal Open Market Committee (FOMC) is a committee made up of the Federal Reserve Bank of New York, The Federal Reserve Board of Governors, plus four other Federal Reserve Regional Bank presidents that serve on a alternate schedule....
4 Pages (1000 words) Essay

The Monetary Policy in the U.S.and the UK

In February 1997, the federal reserve became very concern about the risk of inflation because of the sudden appreciation of the U.... The paper 'The Monetary Policy in the U.... .... nd the UK' presents monetary policy which is used by the governments, central banks, or monetary authorities that manages the supply of money in order to control inflation or deflation, fluctuations in the exchange rate....
10 Pages (2500 words) Term Paper

Federal Reserve Bank

Hence the main reason for just one branch is due to the 'need bases' (The Federal Reserve Board).... The Federal Reserve only works on putting the notes and coins in circulation (The Federal Reserve Board).... the federal reserve Bank has three main responsibilities.... hellip; The author states that the federal reserve District boundaries were decided based on the geographic distribution of the population in the US during 1913....
2 Pages (500 words) Essay

Federal Reserve Policy

This paper "Federal Reserve Policy" discusses The Federal Reserve Board policies that were prudent and appropriate but failed to exert the political will necessary to address the problems that have arisen in the financial system that was due to factors that are beyond the Board's authority.... The purpose of this paper is to examine the policies of The Federal Reserve Board during the period of 2006-2009 in light of the current financial crisis.... Yet, could The Federal Reserve Board (FRB) have taken steps beginning several years ago to address theses causes of system wide failure?...
8 Pages (2000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us