Federal Reserve Board Of Governors Flashcards, test questions and answers

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What is Federal Reserve Board Of Governors?

The Federal Reserve Board of Governors, or the Federal Reserve, is the central banking system of the United States. It is responsible for setting and implementing monetary policy, regulating banks and other financial institutions, supervising and regulating certain financial markets, and providing certain services to consumers. The Board is made up of seven members appointed by the President and confirmed by Congress. Each Governor serves a 14-year term that can be extended if necessary. The primary responsibility of the Federal Reserve Board of Governors is to conduct monetary policy, which affects interest rates in the economy. This has an effect on employment levels as well as prices for goods and services. The Board sets annual goals for inflation rates, maximum employment levels, economic growth rates, and other measures that influence economic activity. To accomplish these goals they use tools such as open market operations (buying/selling government securities), adjusting reserve requirements (limits placed on deposit accounts), changing discount window lending (loans made to banks), influencing short-term interest rates through target rate changes (the federal funds rate), and setting margin requirements (limits placed on borrowing). In addition to conducting monetary policy decisions, the Federal Reserve Board also regulates banking institutions in order to ensure their safety and soundness. They monitor member bank capital ratios in relation to their assets risk exposures so that they can identify any potential problem areas before they become too serious. They also set rules regarding consumer protection from unfair or deceptive practices by financial institutions such as credit card companies or mortgage lenders; these rules are known as Regulation B & C respectively. Finally, the Federal Reserve provides an array of services for consumers including payment processing systems such as direct deposits/withdrawals from bank accounts or check verification; providing loans directly to businesses through its discount window lending program; acting as a clearinghouse for commercial paper transactions; operating a system whereby people can transfer money electronically between different banks through Automated Clearing House networks; providing information about foreign banking systems so that Americans can do business abroad safely; maintaining national payments system activities like check clearinghouses; offering depository institution supervision services including monitoring compliance with applicable laws like anti-money laundering regulations; issuing currency notes into circulation throughout America’s economy; coordinating with international finance organizations like IMF & World Bank on matters related to global economic stability & development etc.