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Banking and Financial Institutions



The modern global banking system is made of a variety of banking institutions, ranging from local commercial and investment banks to national central banks. Each country has its own banking system with its own criteria. Analyzing the operations and monetary processes of different central banks is important to the overall understanding of banking. Based on the actions of central banks and how they control money, economic growth can be stimulated or slowed both locally and globally. In the United States, the Federal Reserve is the central bank that sets monetary policy governing the country's economy, which trickles down to smaller banks through its actions and regulations.

At A Glance

  • Each country has its own banking system with its own controls for money supply, interest rates, and currency.
  • The Federal Reserve is the central bank of the United States, responsible for ensuring stable monetary policies.
  • The Federal Reserve is managed by the Board of Governors, which has the chair as its head.
  • The Federal Reserve uses, controls, and supplies money by setting a required reserve, changing short-term interest rates, and conducting an open market operation.
  • Banks are subject to several regulations, such as the Gramm-Leach-Bliley Act of 1999 and Regulation Z.
  • Every bank has internal processes, such as cash drawers and third-party audits, for controlling funds within the banking system.