In the USA the central banking system is called the Federal Reserve System. It is alternatively termed as Federal Reserve or also abbreviated as Fed. It was these financial issues that gave rise to the need of creating such a body. With the advent of time, these events provoked to the establishment of both functionalities and accountabilities of the Federal Reserve System.
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Coming to the structural description of the organisation, it is presided over by the body FRB, rather Federal Reserve Board. The members of the same are called Governors. This in turn has members who are partially appointed by the president, by advisory councils also by some Federal Reserve banks, scattered all through the US.
The remuneration and other allowances of the members are decided by the federal government.Â The structure is voted to be unique amongst the central banks. It is an autonomous body, and has been formed in such a way that its decision is hardly influenced by the presence of any political body. Sometimes when you cannot understand these concepts you can take online help to complete assignments relating to federal reserve homework answers.
The uniqueness of the structure lies in the fact that it is both private and public in nature. It is also often described as autonomous within the boundaries of the government. It doesnâ€™t need fund from the public, and gets its fund from the sources as mentioned by the Federal Reserve Act.Â It has four parts the first one as mentioned is the board of governors, the federal Open Market Committee, regional Federal Reserve Banks, twelve of it, and finally the member banks spanning throughout the country.
Reduction in bank run
The Fractional reservation system is a solution that was coined so as to address the banking panic issues. As per this system the bank is supposed to hold a deposit that equals to a part of the amount of the banking deposit liabilities it owes to its consumers. Banks in general devote a major portion of the funds they have. The case of bank run is a rarity.
By bank run we intend towards those situations where many customers start to withdraw their deposits and the bank need to seek help from other institutions for want of fund for its operation. Bank run on the other hand can give rise to mass issues of social and economic importance. But with the formation of Federal Reserve Bank runs were reduced. This is because this bid would act as the lender of last resort when bank run occurs.
Federal Reserve as Central Bank
In the US, Fed is the central bank which has an implication of the fact that it is functional as the bank of all banks also as the bank for the government. To keep track of the incoming federal tax deposit and also about the outflow as government makes payments.
The Fed maintains the US governmentâ€™s reserves as notes, bills or even as bonds. Post currency notes reaches the FED, it is circulated to its respective centres through numerous means. A record is also maintained here about the value of money being circulated.
Interbank Lending Policy
Fed is the one who controls the policies based on money influencing the federal fund rate. The rate that banks demand for these loans are decided by interbank market. It makes use of tools for money policies. Letâ€™s now sneak peek into the methods in which Fed applies to determine the market rate. Directing open market processes, striking reserve necessities, authorizing banking institutions are some of the methods that Fed adopts.
The Federal Reserve when sets federal funds rate keeps in vision the monetary policy. Federal reserve homework answers helps students to complete their assignments related to these policies which are stated above.
About the functions
It helps in bringing about a balance in the financial framework of the nation. It pursues to reduce the risk that surrounds the system. It does so through active observation and analysis of the system. It also brings about security in the system, and plans to meet up the crisis.
There function also extends to making a check on the effect of the rate and its fiscal policies on the entire system. It nurtures payment and reimbursement scheme protection and efficacy by means of amenities to the banking industry.
It also stands for the consumer by means of its consumer protection policy. It also plans for development of the community by shifting its focus to the need and development of the consumer. It is the one who regulates and frames the consumer laws.
About the twelve federal Banks
There are twelve federal banks that are entrusted with the responsibility of implementing the fiscal policies that are laid by the Federal Reserve. The Federal Reserve System offers the government with a well-equipped giver of loans. It embodies as a secure reservoir of federal investments. It has been observed that it is a scheme for transfer of funds. It also is a cost effective instrument for resolving the payments of the government like salaries to officials and debts of the nation.
These are the working bodies to carry out the functionalities of the Fed. Federal reserve homework answers can you give the best services with their experts ready to help you any time.
Each of the twelve banks arranges for its own existence.Â The main source of this funding is from the interest of loans, and securities. A meagre part of the yearly income of the banks is spent out as dividends. As per the rules it is seen that the rest of the income is given away to the board of governors, which eventually reaches out to the treasury.
The banks also conducts audit from time to time so that the accounts are correct, and they also maintain parity with the rules and regulations of the Fed.
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