Ch 09 outline student - Chapter 9 Central Banks and the...

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Chapter 9: Central Banks and the Federal Reserve System Origins of the Federal Reserve System Fear of centralized power and distrust of moneyed interests guided central bank activities in the 19 th century With no central bank, banking _______became regular events, culminating in the _____________. Widespread bank failures and depositor losses convinced the U.S. that a ______ _______ was needed. Federal Reserve Act of 1913 There was a general fear of a “central banking authority” people worried that powerful Wall Street interests would manipulate the system Questions arose as to whether such a monetary authority would be ________ or a _________________ institution. The Federal Reserve Act of 1913 was a compromise that created the _________ ____________ _____________, including elaborate checks and balances. Structure of the Federal Reserve System Design was intended to distribute power along the following dimensions: Regions of the U.S. Government and private sector interests Needs of _________, __________, and the ________ The system as it exists now includes: Twelve ___________ __________ ________ ___________ ___ ____________ (BOG) of the Federal Reserve System ___________ _________ _________ __________ (FOMC) _________ ______ (around 2,000) Three policy tools of the Fed: Open market operations Discount rate _________ requirements Twelve Federal Reserve Banks Each of the twelve districts has a main Federal Reserve Bank and at least one branch office The banks are “quasi-public” Owned by member __________ ________ in the district Each branch has a board of directors which represent ____________ ___________, _________ __________ , and public interests Federal Reserve Bank Functions: General Clear checks Issue new __________ and remove damaged __________ Evaluate bank mergers and expansions 1
Lender to member banks Liaison between local community and the Federal Reserve System Perform bank ____________ Collect and examine data on local business conditions Conduct research into monetary policy Federal Reserve Bank Functions: Monetary Policy Determine which banks receive ________ _________

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