Federal Reserve I What is the Fed Reserve

Federal Reserve

I. What is the Fed Reserve? a. Created as an effort to stabilize the American financial system by creating a central bank for the US. b. Central Bank: the nation’s main monetary (relating to money) authority, which is able to conduct certain practices dealing with money. c. Federal Reserve System: the central bank of the US- called the Fed. It is an independent organization within the gov’t.

II. Duties of the Fed a. Supervisor: banking in the US by providing regulation and oversight to make sure that banks are operating correctly, without shady practices. b. Banker’s bank: provides banking services for private banks and the national gov’t. c. Responsible: has to finance US involvement in wars and emergencies. d. Currency: distributes $ and regulates the money supply.

III. Serving the Banking Serving System a. Check Clearing: banks record receipts and expenditure of their clients b. Lending Money: the banks often lend each other $ on a short-term basis c. Regulating/Supervising: each Fed bank supervises member banks

IV. Serving the Federal Government a. Paying Gov’t Bills: funds from tax revenue are deposited with the Fed, who then issues checks or makes electronic payments for programs like Social Security and Medicare. b. Selling Gov’t Securities: Fed provides info about securities to potential buyers, receives orders from customers, collects payments from buyers, credits funds to the Treasury’s account, and delivers the bonds to their owners. c. Distributing Money: issues a standard currency that is used throughout the economy. They make sure the bills are distributed to the banks in the amount that they need.