Examples of Federal Reserve System in the following topics:
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- The Federal Reserve System is the central banking system of the United States, which conducts the nation's monetary policy.
- The Federal Reserve System (also known as the Federal Reserve, or the "Fed") is the central banking system of the United States.
- Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved.
- Monthly changes in the currency component of the U.S. money supply as reported by the Federal Reserve
- Describe the primary function and objectives of the Federal Reserve System
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- The federal government is composed of three distinct branches: legislative, executive, and judicial, with powers vested by the U.S.
- Because some banks refused to clear checks from certain others during times of economic uncertainty, a check-clearing system was created in the Federal Reserve system.
- To address these problems, Congress gave the Federal Reserve System the authority to establish a nationwide check-clearing system.
- The system, then, was to provide not only an elastic currency—that is, a currency that would expand or shrink in amount as economic conditions warranted—but also an efficient and equitable check-collection system.
- Explain why a check clearing system was created under the Federal Reserve system
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- Federal Reserve as the "lender of last resort" extends credit to financial institutions unable to obtain credit elsewhere.
- This contributes to the effective functioning of the banking system, alleviates pressure in the reserves market and reduces the extent of unexpected movements in the interest rates.
- For example, on September 16, 2008, the Federal Reserve Board authorized an $85 billion loan to stave off the bankruptcy of international insurance giant American International Group (AIG).
- The Federal Reserve System's role as lender of last resort has been criticized because it shifts the risk and responsibility away from lenders and borrowers and places it on others in the form of inflation.
- Explain why the Federal Reserve serves as the "lender of last resort"
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- (Because primary credit is the Federal Reserve's main discount window program, the Federal Reserve, at times, uses the term "discount rate" to mean the primary credit rate. ) The discount rate on secondary credit is above the rate on primary credit.
- Discount rates are established by each reserve bank's board of directors, subject to the review and determination of the Federal Reserve System's Board of Governors.
- The discount rates for the three lending programs are the same across all reserve banks except on days around a change in the rate.
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- Monetary policy is exercised by the Federal Reserve System ("the Fed"), which is empowered to take various actions that decrease or increase the money supply and raise or lower short-term interest rates, making it harder or easier to borrow money.
- Even prior to the 1970s, the Bretton Woods system still ensured that most nations would form the two policies separately.
- In general, these institutions are called "central banks" and often have other responsibilities, such as supervising the smooth operation of the financial system.
- For example, in the case of the United States, the Fed targets the federal funds rate, the rate at which member banks lend to one another overnight; however, the monetary policy of China is to target the exchange rate between the Chinese renminbi and a basket of foreign currencies.
- Louis Federal Reserve's aggregate graph generator.
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- The Federal Reserve is in charge of setting reserve requirements for all depository institutions in the country.
- The Federal Reserve can adjust reserve requirements by changing required reserve ratios, the liabilities to which the ratios apply, or both.
- Nonetheless, reserve requirements play a useful role in the conduct of open market operations by helping to ensure a predictable demand for Federal Reserve balances and thus enhancing the Federal Reserve's control over the federal funds rate.
- Requiring depository institutions to hold a certain fraction of their deposits in reserve, either as cash in their vaults or as non-interest-bearing balances at the Federal Reserve, does impose a cost on the private sector.
- Unless it is accompanied by an increase in the supply of Federal Reserve balances, an increase in reserve requirements (through an increase in the required reserve ratio, for example) reduces excess reserves, induces a contraction in bank credit and deposit levels, and raises interest rates.
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- Generally, the Federal Reserve takes formal enforcement actions against the above entities for violations of laws, rules, or regulations, unsafe or unsound practices, breaches of fiduciary duty, and violations of final orders.
- If the Federal Reserve determines that a state member bank or bank holding company has problems that affect the institution's safety and soundness or is not in compliance with laws and regulations, it may take a supervisory action to ensure that the institution undertakes corrective measures.
- In some situations, however, the Federal Reserve may need to take an informal supervisory action, requesting that an institution adopt a board resolution or agree to the provisions of a memorandum of understanding to address the problem.
- If necessary, the Federal Reserve may take formal enforcement actions to compel the management and directors of a troubled banking organization, or persons associated with it, to address the organization's problems.
- The Federal Reserve may also assess a fine, remove an officer or director from office and permanently bar him or her from the banking industry, or both.
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- Prior to a franchisee signing a contract, the US Federal Trade Commission regulates information disclosures under the authority of The Franchise Rule .The Franchise Rule requires that a franchisee be supplied a Uniform Franchise Offering Circular (UFOC ) or Franchise Disclosure Document (FDD ) prior to signing a franchise agreement, a minimum of ten days before signing a franchise agreement.
- Once the Federal ten-day waiting period has passed, the Franchise Agreement becomes a State level jurisdiction document.
- The content of a franchise agreement can vary depending on the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator.
- Definitions, such as: Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license.
- Licensed Rights, such as: Territory, Rights Reserved, Term and Renewal, Minimum Performance Standard
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- In theory, the Federal Reserve could conduct open market operations by purchasing or selling any type of asset.
- For open market operations to work effectively, the Federal Reserve must be able to buy and sell quickly, at its own convenience, in whatever volume may be needed to keep the federal funds rate at the target level.
- The overall size of the Federal Reserve's holdings of Treasury securities depends principally on the growth of Federal Reserve notes; however, the amounts and maturities of the individual securities held depends on the FOMC's preferences for liquidity.
- This structure provides the Federal Reserve with the ability to alter the composition of its assets quickly when developments warrant.
- Treasury securities held in the Federal Reserve's open market account, December 31, 2004
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- Since then all reserve currencies have been fiat currencies, including the U.S. dollar and the euro.
- However, nearly all contemporary money systems are based on fiat money.
- For example, the U.S. government will replace mutilated Federal Reserve notes (U.S. fiat money) if at least half of the physical note can be reconstructed, or if it can be otherwise proven to have been destroyed.
- Currently, most modern monetary systems are based on fiat money.
- Commercial bank money is created through fractional-reserve banking, which is the banking practice where banks keep only a fraction of their deposits in reserve (as cash and other highly liquid assets).