macro notes 3 - SECTION 31 STRUCTURE OF THE FEDERAL RESERVE...

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SECTION 31: STRUCTURE OF THE FEDERAL RESERVE SYSTEM
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FEDERAL RESERVE SYSTEM 1. The central bank of the United States 2. Created in 1913 in response to banking crises 3. Not mentioned in the Constitution Fear of a strong central bank having too much power
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FUNCTIONS OF THE OF FEDERAL RESERVE SYSTEM 1. Conducts the nation’s monetary policy; Influences the money supply and interest rates to promote economic goals 2. Clearinghouse for check collection 3. Serves as the banker for the Federal government 4. Supervises and regulates the banking system (and S&L’s since 1980) 5. Helps banks in distress by acting as a lender of last resort 6. Issues paper currency
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The Fed is a non-profit organization The FED earns interest from holding Treasury securities After paying its bills, the Fed returns the excess interest back to the Treasury
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ORGANIZATION OF THE FED: 1. The Board of Governors (7 members) 2. The 12 Federal Reserve District Banks 3. The Federal Open Market Committee (12 members)
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THE BOARD OF GOVERNORS 1. 7 members 2.
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