The Federal Reserve System, known as 'the Fed,' is the central bank of the United States, crucial for economic management. Established in 1913, it aims to ensure monetary stability, regulate banks, and maintain financial stability. Comprising the Board of Governors, regional Federal Reserve Banks, and the FOMC, the Fed influences interest rates, money supply, and economic growth, playing a key role in achieving employment and price stability.
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The Federal Reserve System was established in 1913 by the Federal Reserve Act to create a more stable monetary and financial environment
Board of Governors
The Board of Governors, appointed by the President and confirmed by the Senate, sets interest rates and guides the growth of the money supply
Regional Federal Reserve Banks
The twelve regional Federal Reserve Banks execute policies and provide financial services within their respective districts
The FOMC, consisting of the Board of Governors and five Reserve Bank presidents, makes crucial decisions regarding interest rates and the money supply in the U.S
The Fed is not owned in the conventional sense but is an independent entity within the federal government, embodying both public and private characteristics
The Board of Governors, appointed by the President and confirmed by the Senate, ensures public accountability for the Fed's actions
The Federal Reserve System was created in response to financial panics and has adapted over time to the evolving needs of the economy
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Components of the Federal Reserve System
Board of Governors, 12 regional Federal Reserve Banks, FOMC.
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Primary functions of the Fed
Formulate monetary policy, regulate banks, ensure financial stability, provide banking services to government.
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Role of the Federal Open Market Committee (FOMC)
Makes key decisions on interest rates and growth of US money supply.
