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54 Promoting Financial System StabilityFunctionPromoting Financial System StabilityThe Federal Reserve monitors financial system risks and engages at home and abroad to help ensure the system supports a healthy economy for U.S. households, communities, and businesses.4What Is Financial Stability? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56Monitoring Risk across the Financial System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Macroprudential Supervision and Regulation of Large, Complex Financial Institutions . . . . . . . . . . . . . . . . . . . . . . . . . .65Domestic and International Cooperation and Coordination . . . . . . .68
The Federal Reserve System Purposes & Functions 55
Figure 4.1. The financial system: key participants and linkagesKey participants in the U.S. and global financial system include the lenders and savers who are matched up with borrowers and spenders through various markets and intermediaries. The Federal Reserve monitors the financial system to ensure the linkages among these three entities are well-functioning and adjusts its policymaking or engagement with other policymakers to address any emerging concerns.
Source: Adapted from Frederic S. Mishkin and Stanley G. Eakins, Financial Markets and Institutions, 7th Edition (Boston:

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