The Federal Reserve

Paper Summary:

This paper describes the history and function of the Federal Reserve, one of the two most important central banks in the world, along with the Bank of Japan. The paper explains the real policy-making body for the Federal Reserve is the Federal Open Market Committee (FOMC), which fixes the federal-funds rate, or the rate at which banks lend to one another, and decides monetary growth targets. The author states that the Federal Reserve is an independent entity, though there are those who doubt that it is as politically insulated as it is supposed to be.

From the Paper:

"The Federal Reserve System was formed by an act of Congress in 1913 and was to function as a central bank for the government and the people of the United States. In these functions, the Federal Reserve remains one of the most powerful institutions in American society, influencing the growth of the money supply, affecting interest rates, and playing a large roll in the pace and direction of spending by every citizen and every business. In addition to the 12 district banks, there are some 5,500 private member banks in the Federal Reserve System. Member banks elect six of the nine directors of their district bank, and they in turn recommend some of the people who sit on the two committees in Washington to make or advise on policy for the entire system."

More papers on The Federal Reserve:

• Essay # 72108 : "The Federal Reserve"
• Analytical Essay # 142236 : "The Structure of the Federal Reserve"
• Analytical Essay # 142590 : "The Impact of the Federal Reserve"
• Persuasive Essay # 105444 : "The Federal Reserve Bank Today"

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