Federal Reserve

(proper noun)

The central banking system of the United States.

Related Terms

Examples of Federal Reserve in the following topics:

  • Structure of the Federal Reserve

    • The Federal Reserve (the Fed) was designed to be independent of the Congress and the government.
    • The Federal Open Market Committee (FOMC), composed of the seven members of the Federal Reserve Board and five of the 12 Federal Reserve Bank presidents, which oversees open market operations, the principal tool of U.S. monetary policy.
    • Twelve regional Federal Reserve Banks located in major cities throughout the nation, which divide the nation into twelve Federal Reserve districts.
    • The Federal Reserve Banks act as fiscal agents for the U.S.
    • Recall the structure of the Federal Reserve System of the United States

  • Introduction to the Federal Reserve

    • 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

  • The Federal Reserve Act

    • President Wilson secured passage of the Federal Reserve Act in late 1913.
    • President Wilson secured passage of the Federal Reserve Act in late 1913, as an attempt to carve out a middle ground between conservative Republicans, led by Senator Nelson W.
    • Moreover, Wilson convinced Bryan's supporters that because Federal Reserve notes were issued by the government, the plan met their demands for an elastic currency.
    • Wilson named Paul Warburg and other prominent bankers to direct the Federal Reserve.
    • Despite the fact that the Act intended to diminish the influence of the New York banks, the New York branch continued to dominate the Federal Reserve until the New Deal reorganized and strengthened the Federal Reserve in the 1930s.

  • The Changing Federal Role in the Economy

    • In the United States, the Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) serves as the central mechanism for understanding federal intervention (and de-entanglement) with the economy.
    • The central banking system of the United States, the Fed was created on December 23, 1913, with the enactment of the Federal Reserve Act.
    • Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved.
    • The Federal Reserve System acts as the central mechanism for federal intervention in the U.S. economy.
    • Explain the role and the historical origins of the Federal Reserve System in the early 20th century

  • The Lender of Last Resort

    • Federal Reserve as the "lender of last resort" extends credit to financial institutions unable to obtain credit elsewhere.
    • In the United States, the Federal Reserve serves as the lender of last resort to those institutions that cannot obtain credit elsewhere and the collapse of which would have serious implications for the economy.
    • 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"

  • The Reserve Requirement

    • 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.

  • Websites

  • The Federal Funds Rate

    • The Federal Funds rate is the interest rate at which depository institutions actively trade balances held at the Federal Reserve.
    • The Federal Funds rate (or fed funds rate) is the interest rate at which depository institutions (primarily banks) actively trade balances held at the Federal Reserve.
    • In the US, banks are obligated to maintain certain levels of reserves, either in the form of reserves with the Fed or as vault cash.
    • Banks do this by borrowing reserves from other banks with excess reserves, and the weighted average of these interest rates paid by borrowing banks determines the federal funds rate.
    • On the other hand, if the Federal Funds rate is high, banks will not borrow reserves in order to issue low-interest loans to the public.

  • The Fractional Reserve System

    • A fractional reserve system is one in which banks hold reserves whose value is less than the sum of claims outstanding on those reserves.
    • The fraction of deposits that a bank must hold as reserves rather than loan out is called the reserve ratio (or the reserve requirement) and is set by the Federal Reserve.
    • Any reserves beyond the required reserves are called excess reserves.
    • Excess reserves plus required reserves equal total reserves.
    • First, it can adjust the reserve ratio.

  • The 10th Amendment

    • The Tenth Amendment states the Constitution's principle of federalism by providing that powers not granted to the federal government by the Constitution, nor prohibited to the States, are reserved to the States or the people.
    • The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.