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Essay / Research Paper Abstract
This 10 page paper begins with an overview of the Federal Reserve Bank system, its duties and importance. The different monetary policy instruments the Fed uses are explained and discussed with examples, e.g., open market operations, reserve requirements and the discount window. Each is discussed. Examples include how the Fed used its options after the attacks of September 11, 2001 and again, how the Fed used its instruments following Katrina. The writer demonstrates that while monetary policy can expand or constrain economic growth, events in the economy also affect what the Federal Reserve Bank will do. Bibliography lists 12 sources.
Page Count:
10 pages (~225 words per page)
File: MM12_PGfedo5.rtf
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financial system (Public Information Department, 2005). The duties of the Federal Reserve are to: The United States Federal Reserve bank system has specific duties, which are to: 1.) conduct the
nations monetary policy; 2.) supervise and regulate banking institutions and protect the credit rights of consumers; 3.) maintain the stability of the financial system; and 4.) to provide certain financial
services to the U.S. government, the public, financial institutions, and foreign official institutions (Hummel, n.d.). There are twelve Federal Reserve Districts (Public Information Department, 2005). The 12 District banks are
the actual operating arm of the Federal Reserve System. Each performs numerous functions, such as distributing the nations currency and coin, supervising certain financial institutions, operating a nationwide payment system
and serving as a banker for commercial banks and the U.S. Treasury (Keleher, 1997). The Federal Reserve Bank is essential to the economy of the United States. It "monopolizes
the issuance of paper money, serves as banker for both the government and commercial banks, and acts as lender of last resort. The latter, in turn, calls for bank regulatory
responsibilities" (Keleher, 1997). In times of economic crisis, the Federal Reserve is the lender of last resort and in this position, the Reserve can stabilize the nations entire financial system
(Keleher, 1997). The Federal Reserve Banks Federal Open Market Committee (FOMC) conducts monetary policy (Public Information Department, 2005). The FOMC is comprised of 12 members that include the 7 members
of the Board, the President of the Federal Reserve Bank of New York and the presidents of four other Reserve Bank, who serve in rotation; they meet in Washington, D.C.
eight times each year to determine monetary policies (Public Information Department, 2005). The presidents of the rest of the Reserve Banks contribute their ideas to the committee (Public Information Department,
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