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Web Links. Federal Reserve System Bank of England European Central Bank Bank of Japan (English) Reserve Bank of Australia Reserve Bank of New Zealand Bank of Canada (English) Banco de Mexico (English). Functions of a Modern Central Bank. Other Objectives of a Modern Central Bank.

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  1. Web Links Federal Reserve System Bank of England European Central Bank Bank of Japan (English) Reserve Bank of Australia Reserve Bank of New Zealand Bank of Canada (English) Banco de Mexico (English)

  2. Functions of a Modern Central Bank

  3. Other Objectives of a Modern Central Bank Financial System Stability: • A stable financial system is a necessity for an economy to operate efficiently.

  4. Other Objectives of a Modern Central Bank Stable Interest Rates: • Interest rate volatility creates risk for both lenders and borrowers.

  5. Other Objectives of a Modern Central Bank Stable Exchange Rates: • Variable exchange rates make the revenues from foreign sales and the cost of purchasing imported goods hard to predict.

  6. Independent Central Banks – Free From Political Pressures – Are Better Able to Keep Inflation Low

  7. Principles of Central Bank Design Decision-making by Committee • Objective inputs by professional staff Accountability Transparency – Communicate intentions Policy Framework • Importance of various goals

  8. The Federal Reserve System Twelve Regional Banks

  9. The Federal Reserve System The Board of Governors • Seven Members appointed for 14 years by the President and confirmed by the Senate. • Chairman and Vice Chairman appointed by the President for four-year renewable terms. • Sets the reserve requirement • Sets the discount rate (on recommendation of a district bank)

  10. The Federal Reserve System Federal Open Market Committee (FOMC) • Twelve Voting Members • Seven Governors • President of the Federal Reserve Bank of New York • Four Reserve Bank President • Other Presidents & Staff participate FOMC Web Site

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