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FEDERAL RESERVE SYSTEM

FEDERAL RESERVE SYSTEM. FEDERAL RESERVE SYSTEM. FED Central banking system of the United States Federal Reserve Act (1913). Federal reserve system contains : Board of Governors Federal Open Market Committee 12 Federal Reserve Banks and their branches Three advisory councils.

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FEDERAL RESERVE SYSTEM

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  1. FEDERAL RESERVE SYSTEM

  2. FEDERAL RESERVE SYSTEM • FED • CentralbankingsystemoftheUnitedStates • FederalReserveAct (1913)

  3. Federalreservesystemcontains: • BoardofGovernors • Federal Open Market Committee • 12 FederalReserveBanksandtheirbranches • Threeadvisorycouncils

  4. FederalReserveDistricts

  5. CommitteeofGovemors • 7 members, electedfor 14 years (changeevery 2yrs) • formulatingmonetarypolicy, determinesrates, establishesrulesofregulationandsupervision, andestablishesrulesfortheprotectionof bank clients

  6. CommitteofGovemors

  7. FED Aims: • price stability • fullemployment • economicgrowth • ensurethe stability ofthefinancialsystemandreducesystem risk • providefinancialservicesfor deposit institutionandgovernment • strenghten U.S. position in worldeconomy

  8. Nationalpaymentssystem TheFederalReserveplaysanimportant role in the U.S. paymentssystem. ThetwelveFederalReserveBanksprovidebankingservices to depositoryinstitutionsand to thefederalgovernment. Fordepositoryinstitutions, theymaintainaccountsandprovidevariouspaymentservices, includingcollectingchecks, electronicallytransferringfunds, anddistributingandreceivingcurrencyandcoin

  9. Bankinglegislative in the U.S. NationalCurrencyAct (1863), National Bank Act (1864) • founding office to checkcurrency,centralizationbanknotes,introductionofmandatory minimum reserves FederalReserveAct (1913) • establishment oftheFederalReserve Systém (the systém performingthetaskscentralbanks) BankingAct (Glass-SteagallAct) (1933) • separatingtradeandinvestmentlaw, estabilishingofmandatory deposit insurance FullEmploymentandBalancedGrowthAct (1978) • monetarypolicyobjectives: price stability, fullemployment, economicgrowth FinancialServicesModernizationAct (1999) • allowingmergeinsurancecompaniesandinvestmentbanks -> creationof holding companies – cancelingGlass-SteagallAct EmergencyEconomicStabilizationAct (2008) • Rescueprogramsandchanges in troubledfinancialinstitutions WallStreetReformandConsumerProtectionAct (2009) • tighteningoversightofderivatetransaction, restriction on bank trader on itsownaccount • increase in clientprotectionagainst unfair practices

  10. Quantitativeeasing (QE) • „ quantitativeeasing“ • QE1, QE2, QE3 • increasing the quantity of money in circulation and improve their availability • loweringinterestrates

  11. QE3 and market reaction in pricesofGold

  12. Questions • What formulate Committeee of Governors? 2) How many districts have Federal Reserve Banks? 3) Fed aims?? 4) QE – is it good way how to solve problem?

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