Structure Of The Federal Reserve System
i) Explain the structure of the Federal Reserve System is the central bank of the United States? Do you agree? Explain your answer.
I agree that the Federal Reserve System is the central bank of the United States. Its decentralized structure compromises three primary elements. There are twelve regional Federal Reserve Banks, which are distributed throughout the country. Each of the banks have its own board of directors that serve as the government’s bank, issuing currency, maintaining the U.S. Treasury’s bank account, and handling the Treasury’s securities. This also serves as the banker’s bank in which they hold deposits, operating a payments system, make loans, and evaluate the safety and soundness of financial institutions in their districts. …show more content…
The Reserve Banks can serve as both the government’s bank and the banker’s bank. A few of the function the Reserve Bank does as the government’s bank is the issuing on new currency and destroying the old and worn currency. The Reserve Bank maintains the U.S. Treasury’s bank account and process the electronic payments. It also manages the U.S. Treasury borrowings. In other words, they issue, transfer, and redeem the U.S. Treasury bonds, notes, and bills. However, in regards to the functions of the Reserve Bank as the banker’s bank, they hold deposits for the banks in their districts. For example, I know that when Mid America Bank holds deposits we send them to St. Louis. From there, we only have a few days to figure out what we are going to with the deposit. Another function of Reserve Banks is to operate and ensure the integrity of a payments network for transferring funds. They also make funds available to commercial banks within the district through discounted loans, in which they charge interest at the discounted rate. The Reserve Banks also supervise and regulate the financial institutions in the district to ensure their safety and soundness, as well as evaluating the proposed bank mergers and new operations. Lastly, they collect and make available data on business conditions. iii) Open market operations an important activity of the Federal Reserve. Do you agree? Explain your
I agree that the Federal Reserve System is the central bank of the United States. Its decentralized structure compromises three primary elements. There are twelve regional Federal Reserve Banks, which are distributed throughout the country. Each of the banks have its own board of directors that serve as the government’s bank, issuing currency, maintaining the U.S. Treasury’s bank account, and handling the Treasury’s securities. This also serves as the banker’s bank in which they hold deposits, operating a payments system, make loans, and evaluate the safety and soundness of financial institutions in their districts. …show more content…
The Reserve Banks can serve as both the government’s bank and the banker’s bank. A few of the function the Reserve Bank does as the government’s bank is the issuing on new currency and destroying the old and worn currency. The Reserve Bank maintains the U.S. Treasury’s bank account and process the electronic payments. It also manages the U.S. Treasury borrowings. In other words, they issue, transfer, and redeem the U.S. Treasury bonds, notes, and bills. However, in regards to the functions of the Reserve Bank as the banker’s bank, they hold deposits for the banks in their districts. For example, I know that when Mid America Bank holds deposits we send them to St. Louis. From there, we only have a few days to figure out what we are going to with the deposit. Another function of Reserve Banks is to operate and ensure the integrity of a payments network for transferring funds. They also make funds available to commercial banks within the district through discounted loans, in which they charge interest at the discounted rate. The Reserve Banks also supervise and regulate the financial institutions in the district to ensure their safety and soundness, as well as evaluating the proposed bank mergers and new operations. Lastly, they collect and make available data on business conditions. iii) Open market operations an important activity of the Federal Reserve. Do you agree? Explain your