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The Federal Reserve System And The United States ' Central Bank

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The Federal Reserve System (hereafter referred as the Fed) is the United States’ central bank (Federal Reserve.gov 1). Formed by the United States Congress in 1913 and signed into law by President Woodrow Wilson, the intention behind its creation was to offer a safer, more stable, and more flexible financial and monetary system for the United States (Federal Reserve.gov 1). Similar to other industrialized states, the United States’ Fed acts as a central bank designed to meet particular requirements of the country’s financial system and multifaceted economy. However, in contrast to a majority of other central banks, the United States’ Fed is a form of decentralized central bank. This paper provides a discussion on how the Fed work, the…show more content…
Additionally, the members of the Fed’s Board of Governors maintain their appointed positions for long, spread out period which in turn limits the impact of daily political concerns. In it, however, worth noting that the Fed functions within the US government in which it designs monetary policies meant to attain the general objectives set by the US President and Congress. Also in spite of the Fed’s freedom of not requiring approval from the executive branch or the President in some of its decisions, it is, nevertheless, mandated to report to the System’s founder, the US Congress (Federal Reserve.gov 3). The Congress possesses the authority to modify or eliminate the Fed at any time. Moreover, the Fed’s unique structure offers internal observations and balances to ensure its activities and decisions are not controlled an individual section of the system. Federal Reserve.gov indicates that the Feb comprises of four major components including the Board of Governors, Federal Reserve Banks, Advisory Committees and Federal Open Market Committee (2).
i. Board of Governors (BOG)
Situated in Washington DC, the BOG comprises of seven members assigned for a spread out the 14-year term with the chairman and vice chair a period of four years (Hennessy and Mace 4). The BOG makes semi-annual reports to Congress about Fed’s goals for money and credit growth and yearly reports on its functions (Federal Reserve.gov 2). Hennessy and Mace
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