Federal Reserve Bank Flashcards, test questions and answers

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What is Federal Reserve Bank?

The Federal Reserve Bank (also known as the Fed) is America’s central bank. It is the most powerful financial institution in the United States and arguably the most powerful in the world. The Fed was created by Congress in 1913 to provide stability and liquidity to the American financial system, and it has since served as a critical part of our nation’s economy.The Federal Reserve has five primary functions: conducting monetary policy, supervising and regulating banks, providing services for other financial institutions, maintaining payment systems, and protecting consumer credit. The most important of these functions is conducting monetary policyinfluencing money supply through different tools such as open-market operations or setting interest ratesto reach economic goals such as full employment or stable prices. Through its regulatory authority, the Fed also works to ensure that banks are safe from systemic risk so that consumers can have confidence when they deposit their money into an institution. Additionally, the Fed provides services for other financial institutions like international banking organizations or government agencies with payment needs beyond what normal commercial banks can offer. Finally, consumer protection is another essential role of the Fed; it works to ensure that consumers are being treated fairly by banks when they take out loans or apply for accounts. The Federal Reserve Bank has been instrumental in helping our country stay afloat during times of economic duress such as recessions or stock market crashes; its actions have helped stabilize markets while protecting customer deposits at financial institutions. In addition to this stabilizing role, over time it has gained even more power over fiscal decisions made by Congress and presidential administrations; this power helps keep our economy on an even keel so that all Americans benefit from growth opportunities over long period of time periods rather than short cycles based on political whims alone. It’s clear why many consider it one of America’s strongest assets.