Econ+310+Fall+2010+Topic+2

Econ+310+Fall+2010+Topic+2 - Economics310 Money&Banking...

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Topic 2:   The Federal  Reserve Economics 310 Money & Banking
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2 Lecture 1 The Federal Reserve Banking  System – Some History Mid 19 th  century filled with bank failures System of state chartered banks Poorly regulated Undercapitalized Fraudulent Banknotes issued with insufficient gold reserves National banking system established in 1863  (National Bank Act) National banks faced stiffer regulations Spate of bank runs not abated Fed established in 1913 
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3 Lecture 1 The Fed Truly established as a system National banks required to join i.e. Banks are the shareholders/owners of the  Fed Banks hold reserve accounts with the Fed Fed is lender of last resort – insures banks  against failure in the face of bank run Decentralized system Twelve regional branches Overseen by the Board of Governors
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4 Lecture 1 The Federal Reserve Banks Twelve banks:  Boston
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Econ+310+Fall+2010+Topic+2 - Economics310 Money&Banking...

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