The Federal Open Market Committee

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The Federal Reserve System has three branches: the Board of Governors, The Federal Open Market Committee, and Reserve Banks. The Federal Reserve System (Fed) supplies and regulates America’s money to all the banks. The Board of Governors is the main authority of the three branches of the Fed, and it supervises other banks. The Federal Open Market Committee is the most prominent policymaker of the three branches and regulates the supply of money in the economy. Federal Reserve Banks serve other banks, this is why they are called banker’s banks. There are twelve Federal Reserve Banks which represent different states and these “districts” share data for monetary policies. The future role of monetary policy is vital …show more content…

Without the Fed, closing of banks would be ordinary because they would not receive money from the System, allowing them to grant more loans and have more money in their reserves. Without the lending power of the Federal Reserve System, our economy would suffer from lack of investment and would not be the leading economic force it is today. The early American settlers had no need for a central banking system. Barter was the form of payment for many years in America. Without the Federal Reserve System, Americans today may still be using barter as a form of payment. Before there was a banking system Americans paid for goods and services by trading cows or corn, or another product that they grew from their land. Even on the prairies many pioneers used barter for payment as opposed to coins and banknotes. It was not until urbanization, industrialization, and an increase in population that the need for a larger quantity of money and and national banking system arose. The country already had one form of currency, the next step was to produce more money and establish more banks as to make these resources more readily available for all Americans. Many early banks did not have the reserves to supply the surplus of money that was demanded or needed to repay loans. When banks did not have this money they were forced to close and this created a crisis called a bank panic. A particularly severe bank panic in

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