Stephanie Armstrong
ECO 203
George Murphy
June 12, 2012
The national shyness Bank
The Federal Reserve Bank is the main source for all banks in the United States. The Federal Reserve Bank implements monetary policies that atomic number 18 necessary for the parsimoniousness. In order to understand how the Federal Reserve Bank ope reckons, you must understand the order in which it operates. indoors the Federal Reserve Bank, there is a group, who is responsible for ambit the monetary policy, and that group is the Federal Open Market charge. This mission plays a major role in the Federal Reserve Bank because the decisions they make ar important to the functioning of the economy and monetary supply. The Federal Open Market committee consists of 12 members and seven of those members are Board of Governors, the Board of Governors is responsible for the drop rate and the modesty requirements. The Federal Open Market committee overall responsibility is the open market operations.
There are three spears of the monetary policy that the Federal Reserve Bank use, and the first one is the open market operations, this operation buys and sells U.S. treasury securities, which attentions in determining the federal funds rate.
The second tool is the discount rate, which is the rate that the Federal Reserve charges financial institutions for loans they baffle from them. The Federal Reserve uses a discount window, and according to the Federal Reserve Bank (n.d.), The Discount Window functions as a safety valve in relieving pressures in reserve markets; (Discount Rate, para. ). The discount rate that is hardened by the Federal Reserve can be higher to discourage banks from borrowing and it can be set low which would allow banks to borrow more, which in turn would help with the expansion of the banks assets . The last tool is the reserve requirement and this requirement is the amount of funds that banks must direct in reserve against deposit liabilities, this...If you want to get a full essay, order it on our website: Ordercustompaper.com
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