1.7 The Federal Reserve - Click to edit Master subtitle...

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Unformatted text preview: Click to edit Master subtitle style 8/29/2010 H Toprac Gargantuan debts are nothing but indentured servitude Edward Ayoub Click to edit Master subtitle style 8/29/2010 H Toprac Foundations of Finance 1.7 The Federal Reserve 8/29/2010 H Toprac 8/29/2010 H Toprac 3 The Federal Reserve System Controlled by 7-member Board of Governors Appointed by the US President to staggered 14-year terms; confirmed by the Senate Former Chairman is Alan Greenspan Current Chairman is Ben Bernanke 8/29/2010 H Toprac 8/29/2010 H Toprac 4 Alan Greenspan, former Federal Reserve Chairman 8/29/2010 H Toprac 8/29/2010 H Toprac 5 Ben Bernanke, current Federal Reserve Chairman 8/29/2010 H Toprac 8/29/2010 H Toprac 6 Each Federal Reserve District has its own Federal Reserve Bank 8/29/2010 H Toprac 8/29/2010 H Toprac 7 Federal Reserve Bank of Dallas 8/29/2010 H Toprac Regulate depository institutions: to protect depositors from poor financial management Serve the banking industry: check clearing services, loans, worn bill replacement, etc. Hold US Treasurys checking account: tax receipts are deposited; expenses withdrawn 8/29/2010 H Toprac 8 Responsibilities of the Fed 8/29/2010 H Toprac Option 1: Change the reserve requirement The reserve requirement determines the percentage of deposits that banks are allowed to lend Reserve requirements are rarely changed By decreasing the reserve requirement, the Fed increases banks capacity to lend (thus to create money) 8/29/2010 H Toprac 9 How does the Fed conduct monetary policy? 8/29/2010...
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This note was uploaded on 12/30/2010 for the course MIS 302f taught by Professor Staff during the Spring '08 term at University of Texas at Austin.

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1.7 The Federal Reserve - Click to edit Master subtitle...

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