FED – U.S. Federal Reserve in 2021-2022 year

FED - U.S. Federal Reserve in 2021-2022 year

U.S. Federal Reserve (also known as FED ) is the central banking system of the United States. It was created in 1913 year as a result of the adoption of the Federal Reserve Act, largely as a response to a series of financial panics or massive bank flaws, especially severe panic in 1907 year. Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has undergone changes.. Such events, like the great depression, were among the main factors, leading to changes in the system.

His duties today, according to official documents of the Federal Reserve System, are divided into four main areas:

  1. Carrying out the country's monetary policy by influencing the monetary conditions in the economy in order to ensure maximum employment, stable prices and moderate long-term interest rates.
  2. Supervision and regulation of banking institutions to ensure the safety and soundness of the national banking and financial system and the protection of consumer credit rights.
  3. Maintaining the stability of the financial system and containing systemic risk, which may arise in financial markets.
  4. Provision of financial services to depository institutions, to the US government and foreign official institutions, including the performance of an important role in the work of the country's payment system.

Federal Reserve System approves, that does not belong to anyone and is not a private commercial institution. He describes himself as “an independent structure in government, having as a public purpose, and private aspects ".

According to the Federal Reserve System, there are currently five different parts of the Federal Reserve:

  1. Appointed by the President Governing Council Federal Reserve System, government agency in Washington, Columbia region
  2. Federal Open Market Committee ( FOMC ), which supervises open market operations, the main instrument of the national monetary – credit policy.
  3. Twelve regional private Federal Reserve Banks, located in major cities across the country, who divide the country into 12 constituencies, acting as financial agents of the US Treasury, each with its own nine-member board of directors.
  4. Many other private member banks USA , who subscribe to the required number of non-transferable shares in their regional Federal Reserve Banks.
  5. Different advisory boards .

The structure of the central banking system in the United States is unique compared to other systems in the world in the sense, what currency is created by the entity, outside the central bank. This is a different legal entity – U.S. Department of the Treasury.

History

Central Bank in the United States

At the beginning 1781 G. Articles of Confederation and Perpetual Union were ratified, so Congress had the power to issue promissory notes. Later that year, a decree was adopted establishing a national bank with private subscription., who followed in the footsteps of the Bank of England. However, it was prevented from fulfilling its intended role as a nationwide central bank due to objections to "disturbing foreign influence and fictitious credit.", favoritism towards foreigners and unfair competition with less corrupt state-owned banks, issuing their own banknotes, so that the Pennsylvania legislature abolished its statute to operate under the Commonwealth in 1785 year.

Four years after the ratification of the US Constitution, the government approved another central bank, First Bank of the United States, but it was ultimately shut down by President Madison. Second Bank of the United States, i.e. the second central bank, suffered a similar fate, when his charter under President Jackson expired. Both banks were, yet again, based on the Bank of England [10] , but the strengthening of federal power, thanks to the constitution, gave them more control over the currency. Political opposition to the central bank was the main reason for the closure of banks, but there was also a significant level of corruption in the second central bank. Ultimately the third national bank was founded in 1913 year and still exists. Schedule the work of the central bank in the United States is as follows:[13]

  • 1791–1811
First Bank of the United States
  • 1811–1816
No central bank
  • 1816–1836
Second U.S. Bank
  • 1837–1862
Free Bank Era
  • 1846-1921
Independent treasury system
  • 1863–1913
National banks
  • 1913 – Present tense
Federal Reserve System.

Creation of the First and Second Central Bank

The first U.S. institution with central bank functions was the First Bank of the United States, Established by Congress and signed by President George Washington 25 February 1791 years at the insistence of Alexander Hamilton. That was done, despite strong opposition from Thomas Jefferson and James Madison, among many others. The charter was valid for twenty years and expired in 1811 year under President James Madison.

However, in 1816 year Madison revived it in the form of the Second Bank of the United States. Early renewal of the bank's charter became the main problem during the re-election of President Andrew Jackson. After Jackson's re-election, who was the opponent of the central bank, he pulled public funds from the bank. Nicholas Biddl, President of the Second Bank of the United States, reacted by reducing the money supply, to put pressure on Jackson, that he renew the charter of the bank, forcing the country into recession, in which the bank blamed Jackson's policies. The bank's charter was not renewed in 1836 year. With 1837 on 1862 year, in the era of free banking, there was no official central bank. With 1862 on 1913 year the system of national banks was established by the Law on National Banks 1863 of the year. Series of banking panics in 1873, 1893 And 1907 yy.

Creation of the Third Central Bank

Panic was the main motive for the creation of the third central banking system. 1907 of the year, which renewed demands for banking and currency reform. [14] During the last quarter 19 century and beginning 20 century, the United States economy has experienced a series of financial panics. [15] According to supporters of the Federal Reserve System and many economists, the previous national banking system had two main drawbacks: "Inelastic" currency and lack of liquidity. [15] The following year, Congress passed the Aldrich-Vryland Act., which provided for an emergency currency and established the National Currency Commission to study banking and currency reform. [16]The American public believed, that the Federal Reserve will provide financial stability, so panic, similar to, what was in 1907 year, will never happen again; but total 22 years later, in 1929 year, stock market collapsed again, and the United States went into the worst depression in its history – The great depression. Some economists, including Milton Friedman [17], Ben Bernanke [18], Robert Latham Owen and Murray Rothbard [19], Believe, that the Federal Reserve System helped trigger the Great Depression.

Federal Reserve Act

Федеральная резервная система

The head of the bipartisan National Monetary Commission was financial expert and Republican Senate leader Nelson Aldrich.. Aldrich established two commissions: one for an in-depth study of the American monetary system, and the other, led by Aldrich himself, to study and report on European central banking systems. [16] Aldrich went to Europe, opposing centralized banking, but after studying the German monetary system, he left, Believing, that a centralized bank is better, than the government bond system, which he previously supported.

Centralized banking met with strong opposition from politicians, who were suspicious of the central bank and who accused Aldrich of bias due to his close ties to wealthy bankers, such as J. P. Morgan and his daughter's marriage to John D. Rockefeller Jr.. for a private bank with little government influence, but admitted, that the government should be represented on the board of directors. Most Republicans supported the Aldrich plan [20], but he did not receive enough support in the bipartisan Congress., to accept it, because the rural and western states considered it favorable to the "eastern establishment". Instead, progressive democrats advocated a reserve system, owned and operated by and out of the control of the "money fund", which ended Wall Street's control over the supply of the American currency. [20] Conservative Democrats fought for private, but a decentralized backup system, which would still remain outside the control of Wall Street. [20] The Federal Reserve Act was passed by Congress at the end of the year. 1913 of the year [21] mainly on a party basis, when most Democrats supported him, while most Republicans – against. [23] Plan, which was passed as the Federal Reserve Act, resembled Aldrich's plan, but the balance of public and private control was changed. [1] [23]

1944-1971: Bretton Woods era

In July 1944 of the year 730 delegates from all 44 Allied countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, USA, to build a new international monetary system, which was in serious danger due to damage, inflicted during the Great Depression and during the Great Depression. growing debt of World War II. Their main goal was to develop trade, which relied on easy currency convertibility. Negotiators at the Bretton Woods Conference, just survived, what they saw as a disastrous floating rate experience in the 1930s, came to the conclusion, that serious monetary fluctuations could stop the free flow of trade. Planners fundamentally supported the capitalist approach, but preferred tight control over the value of the currency.

The agreement established the rules for trade and financial relations between the main industrial states of the world. The Bretton Woods system was the first example of a fully coherent monetary order, designed to regulate monetary relations between independent nation states. Its main feature was, to require each country to conduct monetary policy, which kept the exchange rate with gold within plus or minus one percent of the indicated value. To do this, they created a system of fixed exchange rates., using US dollar (which was itself the gold standard) as reserve currency. Planners established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (MBRR) to regulate the newly created system.

However, in the face of growing financial tensions, the Bretton Woods system collapsed in 1971 year after that, how the United States unilaterally stopped converting dollars into gold. This action has caused significant financial stress in the global economy and created a unique situation, when the US dollar became a "reserve currency" in states, signatories.

1971-present time: dollar reserve standard

According to the US dollar reserve standard, the US dollar was the most preferred currency for the countries of the world to use as reserves., and this trend continued for more than 30 years. [24] At the beginning of the application of the dollar reserve standard, the 1970s were a period of high inflation. [25] As a result, in July 1979 Paul Volcker was appointed Chairman of the Federal Reserve Board by President Carter. He cut the money supply, and to 1986 inflation fell sharply. [26] In October 1979 of the year the Federal Reserve announced a policy of "targeting" monetary aggregates and bank reserves in the fight against double-digit inflation. [27]

In January 1987 of the year, when retail inflation was only 1%, The Federal Reserve announced, that is no longer going to use money supply aggregates, such as M2, as a guide to controlling inflation, although this method was used, seemingly, with 1979 of the year. with great success. To 1980 interest rates were used as benchmarks; inflation was serious. Fed complained, that aggregates are confusing. Volker was chairman until August 1987 of the year, after which Alan Greenspan took the mantle, seven months after the change in monetary policy. [28]

Key laws

Basic laws, affecting the Federal Reserve, Were: [29]

  • Glass-Stigall Act
  • Federal Reserve Act
  • Banking Act 1935 of the year
  • Employment Act 1946 of the year
  • Agreement between the Federal Reserve and the Treasury Department 1951 of the year
  • Law on Bank Holding Companies 1956 G. and amendments 1970 G.
  • Federal Reserve Reform Act 1977 G.
  • International Banking Act 1978 G.
  • Law on Full Employment and Balanced Growth (1978)
  • Deregulation of Depository Institutions and Monetary Control Law (1980 G.)
  • Reform law, restoration and enforcement of financial institutions 1989 of the year
  • Federal Deposit Insurance Corporation Improvement Law 1991 G.
  • Gramm-Leach-Bliley law (1999)
  • Law on Emergency Economic Stabilization (2008 G.)

Target

The main motivation for the creation of the Federal Reserve System was to solve the problem of banking panic.. Other purposes are specified in the Federal Reserve Act, such as "provide elastic currency, provide funds for the stocktaking of commercial papers, establish more effective supervision of banking in the United States and for other purposes ". [30] Prior to the founding of the Federal Reserve, the United States experienced several financial crises. A particularly severe crisis 1907 years forced Congress to 1913 year Federal Reserve Act. The Fed has broader responsibilities today, than just ensuring the stability of the financial system. [31]

The current functions of the Federal Reserve System include: [6] [31]

  • To solve the problem of banking panic
  • Serve as the central bank of the United States
  • Strike a balance between the private interests of banks and the centralized responsibility of the government.
    • For supervision and regulation of banking institutions
    • To protect consumer credit rights
  • Manage a country's money supply through monetary policy to achieve sometimes conflicting goals
    • maximum employment
    • stable prices, including preventing inflation or deflation [32]
    • moderate long-term interest rates
  • To maintain the stability of the financial system and contain systemic risk in the financial markets.
  • Provide financial services to depository institutions, to the US government and foreign official institutions, including playing an important role in the work of the country's payment system.
    • To facilitate the exchange of payments between regions
    • To meet local liquidity needs
  • To strengthen the position of the United States in the global economy

Solving the problem of banking panic

Bank raids happen because, that banking institutions in the United States are required to hold in reserve only a fraction of their depositors' money. This practice is called fractional reserve banking.. As a result, most banks invest most of their depositors' money. On rare occasions, too many bank customers will withdraw their savings, and the bank will need the help of another institution to continue working. Banks can lead to a variety of social and economic problems. The Federal Reserve System was conceived as an attempt to prevent or minimize the occurrence of massive withdrawals from banks and, maybe, act as lender of last resort, if there is still a massive withdrawal of funds from banks. Many economists, following Milton Friedman, Believe, that the Federal Reserve unreasonably refused loans to small banks during the massive withdrawal of money from them in 1929 year [18].

Elastic currency

Федеральная резервная система

One way to prevent mass withdrawals of money from banks – provide the money supply, which may increase, when money is needed. Term "Elastic currency" in the Federal Reserve Act means not only the ability to increase the money supply, but also to cut it. Some economic theories have been developed, supporting the idea of ​​increasing or decreasing the money supply depending on economic conditions. Elastic currency defined by the Federal Reserve as:

Currency, which may, as a result of the actions of the central monetary authority, increase or decrease in the amount of, economically justified.

The monetary policy of the Federal Reserve System is based in part on the theory that, that it is generally best to expand or contract the money supply as economic conditions change.

Check clearing system

As some banks refused to withdraw checks from others during times of economic uncertainty, a check-clearing system was created in the Federal Reserve System. This is briefly described in Federal Reserve System – goals and functions as follows: [34]

Creating the Federal Reserve, Congress set out to tackle serious financial crises, which periodically swept the country, especially financial panic, which happened in 1907 year. During this episode, payments were interrupted throughout the country., because many banks and clearinghouses refused clear checks, issued to some other banks, practice, which contributed to the bankruptcy of otherwise solvent banks. To address these concerns, Congress gave the Federal Reserve the authority to create a nationwide check-clearing system.. In this way, the system had to provide not only elastic currency, that is currency, the size of which will increase or decrease depending on economic conditions, but also an efficient and fair check collection system.

Lender of Last Resort

Emergencies

The Federal Reserve has the power to act as the lender of last resort, providing credit to depository institutions or other organizations in unusual circumstances, related to a national or regional emergency, when refusal to obtain a loan can have serious adverse consequences for the economy. [35]

Fluctuation

Reserve banks, through their discount and credit operations, provide banks with liquidity to meet short-term needs, arising from seasonal fluctuations in deposits or unexpected withdrawals. In exceptional cases, longer term liquidity can also be provided. Rate, which the Fed charges banks for these loans, is a discount rate (officially – basic credit rate).

By providing these loans, Fed serves as a buffer against unexpected daily fluctuations in supply and demand for reserves. This contributes to the efficient functioning of the banking system., reduces pressure on the reserves market and reduces the degree of unexpected fluctuations in interest rates. [36] For example, 16 September 2008 year, the Federal Reserve Board authorized the provision of a loan in the amount of 85 billion dollars, to prevent the bankruptcy of the international insurance giant American International Group ( AIG ). [37] [38] The Federal Reserve's role as lender of last resort has been criticized for shifting risks and responsibilities from lenders and borrowers to others in the form of taxes and / or inflation.

Central Bank

In its role as the central bank of the United States, The Fed acts as banker's bank And , how in Government Bank. Like a banker's bank, it helps to ensure the safety and efficiency of the payment system. As a state bank or fiscal agent, Fed handles trillions of dollars in financial transactions. Just, how an individual can have a bank account, The U.S. Treasury maintains a current account with the Federal Reserve, through which incoming federal tax deposits and outgoing government payments are processed. As part of this service relationship, the Fed sells and buys back U.S. government securities, such as savings bonds and treasury bills, notes and bonds. It also issues national coins and fiat currencies.. The U.S. Treasury, through its Bureau of Mint and Bureau of Engraving and Printing, actually produces the country's money supply and, in fact, sells it to the Federal Reserve Banks at cost. currently about 4 cents per banknote for paper money. The Federal Reserve Banks then distribute it to other financial institutions in various ways.[39]

Federal funds

Federal funds – these are reserve balances, which private banks keep at their local Federal Reserve Bank. [40] [41] These balances are the eponymous reserves of the Federal Reserve. The purpose of keeping funds with the Federal Reserve Bank is to create a mechanism, allowing private banks to lend funds to each other. This money market plays an important role in the Federal Reserve, as it was he who inspired its name and is used as the basis for monetary policy. Monetary policy works, influencing that, how much money private banks charge each other for providing these funds.

Balancing Private Banks with Government Responsibility

The system was developed on the basis of a compromise between competing philosophies of privatization and government regulation.. [39] IN 2006 year Donald L. Con, Vice-President of the Governing Council, summarized the history of this compromise: [42]

Agrarian and progressive interests, led by William Jennings Bryan, preferred a central bank under a public bank, not bank control. But the vast majority of the country's bankers, concerned about government interference in the banking business, opposed the structure of the central bank, run by political appointees. Legislation, which Congress ultimately adopted in 1913 year, reflected a bitter struggle to balance these two competing views and a hybrid public-private, centralized-decentralized structure, which we have today.

In the current system, private banks are commercial enterprises., but government regulation imposes restrictions on their actions. Federal Reserve System – it's part of the government, regulating the activities of private banks. The balance between privatization and state participation is also visible in the structure of the system.. Private banks elect members of the board of directors of their regional Federal Reserve Bank, and members of the Board of Governors are selected by the President of the United States and approved by the Senate. Private banks provide government officials with information about their economic situation, and these government officials use this information when making policy decisions of the Federal Reserve. Finally, private banking companies can run profitable business, while the U.S. government through the Federal Reserve,

State regulation and supervision

Федеральная резервная система

Governing Council the Federal Reserve System has a number of supervisory and regulatory responsibilities in the US banking system, but not full responsibility. A general description of the types of regulation and supervision in the US banking system is given by the Federal Reserve System. [43].

The Council also plays an important role in the supervision and regulation of the US banking system.. His responsibilities include supervising state-registered banks, who are members of the Federal Reserve System, bank holding companies (Companies, controlling banks), foreign activities of member banks, activities of foreign banks in the United States, as well as border laws and treaty corporations (with limited liability). -target institutions, engaged in foreign banking). The Board of Directors and in accordance with delegated powers, the Federal Reserve Banks control about 900 member banks of the state and 5000 bank holding companies. Other federal agencies also serve as the primary federal supervisory bodies for commercial banks.; The Office of the Foreign Exchange Controller supervises national banks, The Federal Deposit Insurance Corporation controls state banks, non-members of the Federal Reserve. Some rules, issued by the, apply to the entire banking industry, while others only apply to member banks, that is, to state banks, who decided to join her. Federal Reserve System and National Banks, who, by law, must be members of the System. The Council also issues regulations to enforce major federal laws., regulating consumer credit protection, such as "Truth in Lending", Equal Lending Opportunity and Residential Mortgage Disclosure Laws. Many of these consumer protection provisions apply to various lenders outside the banking sector., as well as to banks. state banks, who decided to join the Federal Reserve System, and national banks, who, by law, must be members of the System. The Council also issues regulations to enforce major federal laws., regulating consumer credit protection, such as "Truth in Lending", Equal Lending Opportunity and Residential Mortgage Disclosure Laws. Many of these consumer protection provisions apply to various lenders outside the banking sector., as well as to banks. state banks, who decided to join the Federal Reserve System, and national banks, who by law must be members of the System. The Council also issues regulations to enforce major federal laws., regulating consumer credit protection, such as "Truth in Lending", Equal Lending Opportunity and Residential Mortgage Disclosure Laws. Many of these consumer protection provisions apply to various lenders outside the banking sector., as well as to banks.

Members of the Board of Governors are in constant contact with other politicians in the government. They often testify before congressional economic committees., Monetary policy, Banking Supervision and Regulation, protection of consumer loans, financial markets and other issues.

The board maintains regular contact with members of the President's Council of Economic Advisers and other key economic officials. The President also meets occasionally with the President of the United States and meets regularly with the Secretary of the Treasury.. The chairman also has official duties in the international arena..

Preventing asset bubbles

The board of directors of each Federal Reserve Bank district also has regulatory and supervisory functions.. For example, participating bank (private bank) too many loans are not allowed to be given to people, who can't get them back. This is related to, that too frequent default on loan commitments will lead to fleeing from banks. If the board of directors has concluded, that the member bank is working or behaving badly, he will report this to the Board of Governors. This policy is described in the United States Code:

Each Federal Reserve Bank should keep itself informed of the general nature and amount of loans and investments of its member banks in order to establish whether, whether the misuse of a bank loan is being used for speculative carrying or trading in securities, real estate, or goods, or for any other purpose, incompatible with maintaining normal credit conditions; and when deciding whether to grant or refuse loans, rediscount or other credit benefits The Federal Reserve Bank should take into account such information. The Chairman of the Federal Reserve Bank shall report to the Board of Governors of the Federal Reserve System of any such inappropriate use of bank credit by any member bank along with his recommendation.. Whenever, according to the Board of Governors of the Federal Reserve System,

Punishment for false statements or messages, which inflate the value of the asset, also listed in the United States Code: [45]

Any, who knowingly makes a false statement or reports, or deliberately overstates the value of the land, property or security for the purpose of exerting any influence ... should be fined up to 1 000 000 US dollars or imprisoned for no more than 30 years, or even that, and other.

These aspects of the Federal Reserve are designed to prevent or minimize speculative asset bubbles., which ultimately lead to major market adjustments. Recent Bubbles and Energy Adjustments, grain, share capital, debt products and real estate call into question the effectiveness of these controls.

National payment system

[46] The Federal Reserve plays an important role in the US payment system. Twelve Federal Reserve Banks Provide Banking Services depository institutions And the federal government . They maintain accounts and provide various payment services for depository institutions., including collection of cheques, electronic funds transfers, as well as distribution and receipt of currency and coins. For the federal government, reserve banks act as fiscal agents, paying treasury checks; electronic payment processing; and also release, transfer and redemption of U.S. government securities.

Enacting the Law on Deregulation of Depository Institutions and Monetary Control 1980 of the year, Congress confirmed its intention to do so., that the Federal Reserve should contribute to the creation of an efficient nationwide payment system. The law obliges all depository institutions, not just commercial member banks, comply with reservation requirements and provide them with equal access to the payment services of the Reserve Bank. It also encourages competition between reserve banks and private sector payment service providers., requiring reserve banks to charge fees for certain payment services, listed in the law, and reimburse the costs of providing these services in the long term.

Three things can be looked at forever….

The Federal Reserve plays a vital role in the system retail And wholesale country payments., providing a variety of financial services to depository institutions. Retail payments, usually, are produced for relatively small dollar amounts and are often associated with retail clients of the depository institution – individuals and small businesses. Reserve Banks retail services include currency and coin distribution, collection of checks and electronic transfer of funds through an automated clearing system. Against, wholesale payments are usually made in large amounts in dollars and often involve large corporate clients or counterparties of a depository institution, including other financial institutions. Reserve banks' wholesale services include wire transfers via Fedwire Funds Service.and transfer of securities, issued by the US government, its agencies and certain other organizations through the Fedwire Securities Service. Because of, that large amounts of funds pass through the reserve banks every day, the system has policies and procedures, limiting the risk for reserve banks, related to the inability of the depository institution to make or settle its payments.

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Federal Reserve Banks have embarked on a multi-year restructuring of their checking operations in 2003 year as part of a long-term strategy to respond to reduced consumer and business use of checks and increased use of electronics in check processing. Reserve Banks will reduce the number of full-service check processing points from 45 in 2003 year before 4 to the beginning 2011 of the year [47].

Composition

Independent in government

Федеральная резервная система

Central bank independence against inflation. This is the frequently quoted [48] study, published by Alesina and Summers (1993) [49] , is used for that, to show, why for the country's central bank ( i.e monetary authority) it is important to have a high level of independence. This graph shows a clear downward trend in inflation as the independence of the central bank increases.. Well-recognized reason, according to which independence leads to lower inflation, is that, that politicians tend to create too much money, if given the opportunity. [49] The US Federal Reserve is generally considered to be one of the more independent central banks.

Federal Reserve System – it is an independent public institution, having particular aspects. The system is not a private organization and does not work for the purpose of making a profit. [50] Banks own shares of regional federal reserve banks, operating in this region and being part of the system. [51] The system derives its authority and public purpose from the Federal Reserve Act, adopted by the Congress in 1913 year. As an independent institution, The Federal Reserve has the power to act on its own without prior approval from Congress or the President.. [52] Members of the Board of Governors are appointed for long terms, limiting the influence of day-to-day political considerations. [53]The unique structure of the Federal Reserve System also provides internal checks and balances, guaranteeing, that its decisions and operations will not be dominated by any part of the system. [53] It also generates income independently, without the need for funding from Congress. Congressional oversight and legislation, who can change the responsibilities and control of the Fed, allow the government to keep the Federal Reserve System under control. Since the System was designed so, to be independent, while remaining within the framework of the United States government, it is often called "independent within the government". [52]

Twelve Federal Reserve Banks Provide Funds for the Operation of the Federal Reserve. Each reserve bank works the same way, as a private corporation, so that it can provide the necessary income to cover operating expenses and meet the requirements of the board. Participating banks – these are private banks, who must buy a certain number of shares of the Reserve Bank in their region, to become a member of the Federal Reserve. These shares "cannot be traded, sold or pledged as collateral for a loan ", and all participating banks receive 6% annual dividends. [52] No shares of any Federal Reserve Bank have ever been sold to the public, foreigners or any US non-bank firm. [54]These member banks must maintain partial reserves as either vault currency, or on accounts with your Reserve Bank; participating banks do not receive interest on any of them. Dividends, paid by the Federal Reserve Banks to member banks, are considered to be a partial compensation for the absence of interest, paid on mandatory reserves. All profits after expenses are returned to the US Treasury or contributed to the additional capital of the Federal Reserve Banks (and since the shares, owned by the Federal Reserve Banks, redeemed only at par, nominal "owners" do not benefit from this surplus capital. ); The Federal Reserve contributed more than 31,7 billion dollars in 2008 year [55].

Circuit

Organization of the Federal Reserve System

The whole
[39]
  • Central bank of the country
  • Regional structure with 12 districts
  • Subordinate to the general authority and oversight of Congress
  • Works for his own earnings
Governing Council
  • 7 members serve a 14-year sentence in a staggered manner
  • Appointed by the President of the United States and confirmed by the Senate.
  • Monitors the operation of the system, makes decisions of regulatory bodies and sets reserve requirements
Federal Open Market Committee
  • Key organ of the system, monetary policymaker
  • The solutions are aimed at stimulating economic growth with price stability by influencing cash flows and credit flows..
  • Consists of 7 members of the Board of Governors and Presidents of the Reserve Bank, 5 of which are members with the right to vote on a rotational basis.
Federal Reserve Banks;
  • 12 regional banks with 25 branches
  • Each independent company has a board of directors, consisting of 9 members of, wherein 6 of which are elected by the member banks, and the rest 3 appointed by the Governing Council.
  • Set the discount rate subject to approval by the Governing Council.
  • Monitor economies and financial institutions in their areas and provide financial services to the US government and depository institutions.
Participating banks
[36]
  • Private banks
  • Hold shares in the local Federal Reserve Bank.
  • Elect six of the nine members of the Boards of Directors of the Reserve Banks.
Advisory Committees
  • Perform a variety of duties

Governing Council

Федеральная резервная система

Governing Council, seven-member, is the main governing body of the Federal Reserve System. He is tasked with overseeing 12 by the district reserve banks and to assist in the implementation of the national monetary policy. Governors are appointed by the President of the United States and confirmed by the Senate for a 14-year staggered term. [36] By law, appointments must ensure “fair presentation of financial, agricultural, industrial and commercial interests and geographical divisions of the country ", And, as stipulated in the Banking Law 1935 of the year, Chairman and Deputy Chairman of the Board – these are two of the seven members of the Board of Governors, who are appointed by the President from among the current governors. [56] [57] As an independent federal government agency, [58]The Board of Governors does not receive funding from Congress, and the terms of office of the seven members of the Council cover multiple presidential terms and the terms of office of Congress. After that, appointed by the President as a member of the Board of Governors, he or she acts mostly independently. The board must submit an annual report on its activities to the Speaker of the U.S. House of Representatives. [59] It also controls and regulates the operations of the Federal Reserve Banks and the US banking system as a whole..

Membership is usually limited to one term. but, if someone is appointed for the remainder of another member's unfinished term, he or she may be reappointed for an additional 14-year term. [60] And vice versa, a governor may serve the remaining term of another governor even after, how he or she completed the full term. The law provides for the removal of a Council member from office by the President "for good reason". [60]

The current members of the Board of Governors are [61]

  • I'm Bernanke, chairman
  • Donald Cohn, vice-chairman
  • Kevin Warsch
  • Elizabeth A. Duke
  • Daniel Tarullo
  • Vacancy *
  • Vacancy *

A list of all members with 1914 of the year. [62]

Federal Open Market Committee

Федеральная резервная система

Contemporary meeting of the Federal Open Market Committee in the Eccles Building, Washington, Columbia region

Federal Open Market Committee (FOMC), created in accordance with 12 USC § 263, consists of seven members of the Board of Governors and five representatives, selected from regional federal reserve banks. According to the law, The FOMC is responsible for overseeing open market operations, which are the main instrument of national monetary policy. These transactions affect the size of the balances of the Federal Reserve, available to depository institutions, thereby affecting general monetary conditions. FOMC also manages operations, conducted by the Federal Reserve System in the foreign exchange markets. The Second District of New York Representative is a permanent member of, while the rest of the banks change at intervals of two and three years. All presidents participate in FOMC discussions, contributing to the committee's assessment of economics and policy options, but only five presidents, who are committee members, vote for political decisions. In accordance with the law, the FOMC defines its internal organization and traditionally elects the chairman of the Board of Governors as its chairman., and the President of the Federal Reserve Bank of New York – his deputy. Formal meetings are usually held eight times a year in Washington DC, Columbia region. The presidents of the non-voting reserve banks also participate in the deliberations and deliberations of the Committee. The FOMC usually meets eight times a year for telephone consultations, and if necessary, other meetings are held. defines its internal organization and traditionally elects the Chairman of the Board of Governors as its Chairman and the President of the Federal Reserve Bank of New York as its Deputy. Formal meetings are usually held eight times a year in Washington DC, Columbia region. The presidents of the non-voting reserve banks also participate in the deliberations and deliberations of the Committee. The FOMC usually meets eight times a year for telephone consultations, and if necessary, other meetings are held. defines its internal organization and traditionally elects the Chairman of the Board of Governors as its Chairman and the President of the Federal Reserve Bank of New York as its Deputy. Formal meetings are usually held eight times a year in Washington DC, Columbia region. The presidents of the non-voting reserve banks also participate in the deliberations and deliberations of the Committee. The FOMC usually meets eight times a year for telephone consultations, and other meetings are held if necessary.[63]

Federal Reserve Banks

Федеральная резервная система

Federal reserve districts

Exist 12 regional federal reserve banks (not to be confused with "member banks") with 25 branches , which serve as the operating links of the system. Each Federal Reserve Bank is overseen by a Board of Governors. [64] Each Federal Reserve Bank has Board of Directors., whose members work closely with the president of their Reserve Bank, to provide grassroots economic information and contribute to governance and monetary policy decisions. These councils are formed from representatives of the general public and the banking community and oversee the activities of the organization.. They also appoint the presidents of the reserve banks with the approval of the Board of Governors.. The Board of the Reserve Bank consists of nine members: six – representatives of non-banking enterprises and the public (non-banking organizations) and three – banking sector representatives. Each branch of the Federal Reserve System has its own board of directors, three to seven members, which provides important information about the regional economy. [36]

Федеральная резервная система

The total assets of each Federal Reserve Bank with 1996 on 2009 year (in millions of dollars).

Reserve banks opened to work 16 november 1914 of the year. Federal Reserve notes were created as part of legislation to secure the supply of currency. Banknotes were to be issued to reserve banks for subsequent transfer to banking institutions. Different components of the Federal Reserve System have different legal statuses.

Legal position

Federal Reserve Banks have an intermediate legal status with some characteristics private corporations and some features state federal agencies . Each member bank owns non-negotiable shares of its regional Federal Reserve Bank. However, owning Fed stock is not like owning stock, publicly traded. Fed shares cannot be traded or sold, and they do not control the Fed as a result of owning these shares. However, they elect six of the nine members of the boards of directors of the Reserve Banks.. Besides, the charter of each Federal Reserve Bank is established by law and cannot be changed by member banks. [36] In business Lewis v. U.S. , [65] The United States Court of Appeals for the Ninth Circuit stated, what:

Reserve banks are not federal instruments for the purposes of the FTCA [Federal Lawsuit Act], but are independent, private and locally controlled corporations.

The opinion also stated, what:

Reserve banks were properly considered federal instruments for some purposes..

Other solution – a business " Scott vs. Federal Reserve Bank of Kansas City " [58] , which distinguishes between the Federal Reserve Banks and the Board of Governors.

Board of Directors

Nine members of the board of directors of each district consists of 3 -x classes, designated as Classes A, B, and C . Term of office of directors – 3 of the year. The composition of the boards of directors is described in the US Code, partition 12, chapter 3, subsection 7:

Class A
  • three members
  • was also elected as a representative of the shareholder bank.
  • Participating banks are divided into 3 groups depending on the size – large, medium and small banks. Each group chooses one member of Class A.
Class B
  • three members
  • Class B director cannot be an officer, director or employee of a bank.
  • represent the public with due, but not exclusively considering the interests of agriculture, Trade, industry, services, labor and consumers.
  • Participating banks are divided into 3 groups depending on the size – large, medium and small banks. Each group chooses one member of Class B.
Class C
  • three members
  • Class C director cannot be an officer, director, an employee or shareholder of any bank.
  • appointed by the Board of Governors of the Federal Reserve System. They must be selected for public presentation and with due, but not exclusively considering the interests of agriculture, Trade, industry, services, labor and consumers.
  • Must have lived in the county for at least two years, to which they are assigned, one of which shall be appointed by the said council as Chairman of the Board of Directors Federal Reserve Bank and as Federal Reserve Agent .

List of all members of the Boards of Directors of Reserve Banks published by the Federal Reserve System. [67]

The president

The Federal Reserve Act provides, that the President of the Federal Reserve Bank should be the chief executive officer of the Bank, appointed by the Board of Directors of the Bank with the approval of the Board of Governors of the Federal Reserve System for a period. five years. [68]

The term of office of all presidents of the twelve district banks is carried out simultaneously and ends on the last day of February with numbers 6 And 1 (for example, 2001, 2006 And 2011). Appointment of the President, who takes office after the beginning of the term of office, ends after this period. The President of the Reserve Bank may be reappointed after full or partial term. [68]

Reserve Bank presidents are subject to mandatory retirement upon reaching 65 years. However, the presidents, originally appointed after 55 years, may, on discretion board of directors, be admitted to work until ten years of office or age 70 years, depending on, what comes first. [68]

List of banks of the Federal Reserve System

The Federal Reserve Counties are listed below along with their identification letters and numbers. They are used in Federal Reserve bonds to identify the issuing bank of each note.. Also listed 25 branches. [69]

Federal Reserve BankLetterNumberbranchesWebsiteThe president
BostonBUT1http://www.bos.frb.org/Eric S. Rosengren
New YorkB2Buffalo (closed 31 October 2008 G.), New York [70]http://www.newyorkfed.org/William S. Dudley
PhiladelphiaC3http://www.philadelphiafed.org/Charles I. Plosser
ClevelandD4cincinnati, Ohio / Pittsburgh, Pennsylvaniahttp://www.clevelandfed.org/Sandra Pianalto
richmondAS WELL AS5Baltimore, Maryland / Charlotte, North Carolinahttp://www.richmondfed.org/Geoffrey M. Laker
AtlantaF6Birmingham, Alabama / Jacksonville, Florida / Miami, Florida / Nashville, Tennessee / New Orleans, Louisianahttp://www.frbatlanta.org/Dennis P. Lockhart
ChicagoG7Detroit, Michigan / Des Moines, Iowahttp://www.chicagofed.org/Charles L. Evans
Saint LouisTIME8Little Rock, Arkansas / Louisville, Kentucky / Memphis, Tennesseehttp://www.stlouisfed.org/James B. Bullard
MinneapolisI9Helena, Montanahttp://www.minneapolisfed.org/Narayana R. Kocherlakota
Kansas CityJ10Denver, Colorado / Oklahoma City, Oklahoma / Omaha, Nebraskahttp://www.kansascityfed.org/Thomas M.. Hyunig
DallasK11El Paso, Texas / Houston, Texas / San Antonio, Texashttp://www.dallasfed.org/Richard W. Fisher
San FranciscoTHE12Los Angeles, California / Portland, Oregon / Salt Lake City, Utah / Seattle, Washingtonhttp://www.frbsf.org/Janet L. Yellen

Primary Dealers

Primary dealer is a bank or securities broker-dealer , who can trade directly with the US Federal Reserve. [71] They are required to place bids or offers, when the Fed conducts operations on the open market, provide information to the Fed's open market trading department and actively participate in US Treasury auctions. [72] They consult both with the US Treasury, and with the Fed on financing the budget deficit and conducting monetary policy. Many former employees of primary dealers work in the Treasury because of their experience in public debt markets, although the Fed avoids such a revolving door policy. [73] [74]

However,, these dealers buy the vast majority of US Treasury securities (treasury bills, treasury bonds and treasury bonds), sold at auction, and resell them to the population. Their activities go far beyond the treasury market, for example, according to Wall Street Journal Europe (2/9/06, page. 20), all ten leading dealers in the foreign exchange market are also primary dealers, and in between for almost 73% Forex trading volume. Maybe, members of this group are the most influential and powerful nongovernmental organizations in the global financial markets.

Primary dealers form a worldwide network, which distributes new US government debt. For example, Daiwa Securities and Mizuho Securities Distribute Debt to Japanese Buyers. BNP Paribas, Barclays, Deutsche Bank и RBS Greenwich Capital (division of the Royal Bank of Scotland) distribute debt among European buyers. Goldman Sachs and Citigroup make up many American buyers. Nevertheless, most of these firms compete internationally and in all major financial centers.

Current list of primary dealers

As of 27 July 2009 G., according to the Federal Reserve Bank of New York, the list includes: [75]

  • BNP Paribas Securities Corp.
  • OOO “Bank of America Securities”
  • Barclays Capital Inc.
  • Cantor Fitzgerald & Co..
  • Citigroup Global Markets Inc.
  • Credit Suisse Securities (USA) LLC
  • Daiwa Securities America Inc.
  • Deutsche Bank Securities Inc.
  • OOO “Dresdner Kleinworth Securities”.
  • Goldman, Sachs & Co.
  • Greenwich Capital Markets Ink.
  • HSBC Securities (USA) Inc.
  • Jefferies & Company, Inc.
  • JP Morgan Securities Inc.
  • Mizuho Securities USA Inc.
  • Morgan Stanley & Co. Incorporated
  • Nomura Securities International, Inc.
  • РБК Capital Markets Corporation
  • RBS Securities Inc.
  • OOO “UBS Securities”.

A list of major dealers is available on the Federal Reserve Bank of New York website. Changes are available in the section "Changes in the list of main dealers".

IN 2008 year, there were five notable changes to the list. 15 July Countrywide Securities Corporation was dropped due to its acquisition by Bank of America. Lehman Brothers Inc. was eliminated 22 September due to bankruptcy. Bear Stearns & Co. Inc. was removed from the list 1 October in connection with the acquisition of JP Morgan Chase. 11 February 2009 года Merrill Lynch Government Securities Inc. was delisted in connection with its acquisition by Bank of America.

Participating banks

Everyone member bank is a private bank (for example, private corporation), which owns shares in one of the twelve regional banks of the Federal Reserve System. All commercial banks in the US can be divided into three types in depending on, which government agency established them and whether they are members of the Federal Reserve System [76].

A typeDefinition
national banksThey, which are chartered by the federal government (through the Office of the Comptroller of the Ministry of Finance); they are legally members of the Federal Reserve System.
member states banksThey, which are chartered by the states, who are members of the Federal Reserve System.
state banks, non-membersThey, which are chartered by the states, who are not members of the Federal Reserve.

All nationally registered banks hold shares in one of the Federal Reserve banks. Banks, established by the state, can become members (and own shares of the regional Federal Reserve Bank) subject to certain standards.

However, holding shares in the Federal Reserve Bank – it is not the same, that shareholding, publicly traded. Shares cannot be traded or sold. Member banks receive a fixed 6 percent dividend annually on their shares, and they do not directly control the respective Federal Reserve Bank as a result of their ownership of these shares. However, they elect six of the nine members of the boards of directors of the Reserve Banks.. [36] Federal law provides (partially):

Each national bank in any state shall, after the commencement of activity or within ninety days after joining the Union of State., in which it is located, become a member bank of the Federal Reserve System by subscription and payment for shares in the Federal Reserve Bank of its district in accordance with the provisions of this chapter and in this regard must be an insured bank in accordance with the Federal Law on Deposit Insurance [. . . .]

Other banks may decide to become member banks. According to the Federal Reserve Bank of Boston:

Any state-registered bank (share or joint stock) may become a member of the Federal Reserve System. Twelve Regional Reserve Banks oversee member banks as part of the Federal Reserve's mandate to ensure the strength and stability of national markets and the banking system. The Reserve Bank is supervised in partnership with government regulators, providing a consistent and uniform regulatory environment. Regional and local banking organizations account for the largest number of banking organizations, under the supervision of the Federal Reserve System.
[78]

For example, as of October 2006 G. member banks in New Hampshire included Community Guaranty Savings Bank; Lancaster National Bank; National Bank of Plymouth “Pemigewasset”; and other banks. [79] In California, the number of participating banks (as of September 2006 G.) included Bank of America California, National association; The Bank of New York Trust Company, National association; Barclays Global Investors, National association; and many other banks. [80]

List of participating banks

Most U.S. banks are not members of the Federal Reserve.

Федеральная резервная система

Banks, FDIC insured. N (national banks) And SM (Member States) are members of the Federal Reserve System, while other banks, FDIC insured, are not members. Each type of charter is defined as follows: [81] * N = commercial bank, National (federal) Charter and member of the Fed, supervised by the Financial Controller's Office (OCC) – Treasury * SM = commercial bank, charter staff and Member of the Fed, controlled by the Federal Reserve (FRB) * NM = commercial bank, state charter and not a member of the Fed, FDIC-supervised * HEY = insured branch of a foreign charter institution in the United States (IBA) * TO= savings associations, state or federal charter, supervised by the Savings Supervision Authority (OTS) * SB = savings banks, State Charter, controlled by the FDIC Although the categories HEY , TO And SB are not members of the system, they sometimes treat them that way., as if they were members under certain circumstances. [82]

A list of all member banks can be found on the FDIC website (FDIC). Most commercial banks in the United States are not members of the Federal Reserve., but the total value of all banking assets of member banks significantly exceeds the total value of bank assets of non-members. [81]

Advisory Committees

The Federal Reserve System uses advisory committees to carry out its varied responsibilities. Three of these committees directly advise the Board of Governors: [83]

  • Federal Advisory Council
  • Consumer Advisory Board
  • Advisory Board of Charities

From these advisory committees, maybe, the most important are the committees (one for each Reserve Bank), who advise banks on agricultural issues, small business and labor. Twice a year, the Board asks for the views of each of these committees by mail..

Monetary policy

The term "monetary policy" refers to actions, by the central bank, such as the Federal Reserve, with the aim of influencing the availability and cost of money and credit to help achieve national economic goals. That, what happens to money and credit, affects interest rates (loan cost) and indicators of the US economy. Federal Reserve Act 1913 gave the Federal Reserve System responsibility for setting monetary policy. [84] [85]

Interbank lending – Policy framework

The Federal Reserve System Implements Monetary Policy, affecting interbank lending of excess reserves. Rate, which banks charge each other for these loans, market driven, but the Federal Reserve influences this rate through three monetary policy instruments, described in the "Tools" section below. This is a short term interest rate, which the FOMC focuses directly on. This rate ultimately affects long-term interest rates throughout the economy.. A summary of the framework and implementation of the Federal Reserve's monetary policy is outlined as follows:

The Federal Reserve System implements US monetary policy, influencing the conditions in the balance market, which depository institutions keep with the Federal Reserve Banks ..., introducing reserve requirements, allowing depository institutions to hold clearing balances on contracts and providing credit through a discount window, The Federal Reserve exercises significant control over the supply and demand of the Federal Reserve balances and the federal funds rate. Controlling the federal funds rate, The Federal Reserve is able to maintain financial and monetary conditions, consistent with the objectives of its monetary policy.
[86]

It affects the economy., because it affects the number of reserves, which banks use to issue loans. Policy measures, which increase the reserves of the banking system, encourage lending at lower interest rates, thereby stimulating the growth of money, credit and economy. Policy actions, absorbing reserves, work in the opposite direction. The Fed's challenge is, to provide enough reserves to support enough money and credit, avoiding surplus, which lead to inflation and shortages, constraining economic growth. [87]

Objectives

Monetary policy objectives include: [6] [85]

  • maximum employment
  • stable prices
  • moderate long-term interest rates
  • promoting sustainable economic growth

Instruments

There are three main instruments of monetary policy, which the Federal Reserve System uses to influence the size of reserves in private banks: [84]

ToolDescription
open market operationsbuying and selling securities of the US Treasury and federal agencies – the main instrument of the Federal Reserve System in conducting monetary policy. The Federal Reserve's Objectives for Open Market Operations Have Changed Over the Years. During the 1980s, the focus gradually shifted towards reaching a certain level of the federal funds rate. (rates, which banks charge each other for overnight loans from federal funds, which represent banks' reserves at the Fed), process, which was largely completed by the end of the decade.
discount rateinterest rate, levied on commercial banks and other depository institutions, which they receive from a line of credit from their regional Federal Reserve Bank – discount window. [89]
reserve requirementsamount of funds, which the depositary institution must hold in reserve for certain deposit liabilities. [90]

Open Market Operations

Open market transactions bring in money and withdraw money from the banking system. It does this by selling and buying US government Treasury securities. When the U.S. government sells securities, it receives money from banks, and the banks receive a piece of paper (IOU), which says, that the US government owes money to the bank. It drains money from banks. When the US government buys securities, it transfers money to banks, and banks return IOUs to the US government. It returns money to banks. The Federal Reserve Education website describes open market operations as follows: [85]

Open market operations include the purchase and sale of U.S. government securities (federal agencies and mortgage-backed agencies). The term "open market" means, that the Fed does not decide on its own, which securities dealers she will do business with on a specific day. Quicker, the choice stems from the "open market", on which various securities dealers, with whom the Fed does business, – primary dealers – compete on the basis of price. Open market operations are flexible and therefore the most commonly used monetary policy instrument. Open market operations are the main instrument, used to regulate the supply of bank reserves. This instrument consists of purchases and sales of financial instruments by the Federal Reserve, usually securities, issued by the US Treasury, federal agencies and enterprises, state-sponsored. Open market operations are handled by the Internal Trade Department of the Federal Reserve Bank of New York under the direction of the FOMC. Transactions are made with primary dealers.

The Fed's Objective in Securities Trading – affect the federal funds rate, rate, on which banks borrow reserves from each other. When the Fed wants to boost reserves, she buys securities and pays for them, making a deposit to an account, primary dealer opened in the Federal Reserve Bank. When the Fed wants to reduce reserves, she sells securities and collects money from these accounts. In most cases, the Fed does not want to constantly increase or decrease reserves, therefore usually carries out operations, canceled within a day or two. It means, that today's reserve injection may be terminated tomorrow morning, but after a few hours resumed at some level. These short-term transactions are called repurchase agreements. (REPO) – the dealer sells the security to the Fed and agrees to buy it back later.

A simpler description is given in The Federal Reserve in Plain English : [91]

How Open Market Operations Really Work? The FOMC currently sets a target federal funds rate (at the rate banks charge each other overnight loans). Buying Government Securities on the Open Market Increases Reserve Funds, which banks can provide on credit, which puts downward pressure on the federal funds rate. Selling government securities does the exact opposite – they cut reserve funds, available for granting loans, and tend to raise the funds rate. Focusing on the federal funds rate, FOMC is committed to providing monetary incentives, necessary for the development of a healthy economy. Target fund rate is announced to the public after each FOMC meeting.
Buyback agreements

To smooth out temporary or cyclical changes in the money supply, department enters into repurchase agreements (REPO) with their primary dealers. REPO – this, in fact, short-term loans secured by the Federal Reserve System. On the day of the transaction, the Fed deposits the money in the primary dealer's reserve account and receives the promised securities as collateral. When the deal is due, the process unfolds: The Fed returns the collateral and charges the primary dealer's reserve account of principal and accrued interest. Repo term (time between settlement and repayment) can range from 1 of the day (called repo overnight) to 65 days. [92]

How a businessman can insure himself against currency surges

Federal Funds Rate and Discount Rate

The Federal Reserve System Implements Monetary Policy, mainly focusing on the federal funds rate. This is the bet, under which banks charge each other for overnight loans from federal funds, which represent banks' reserves at the Fed. This rate is actually determined by the market and is not directly prescribed by the Fed.. Therefore, the Fed is trying to bring the effective federal funds rate in line with the target rate., adding or subtracting money supply through open market transactions. The late economist Milton Friedman has consistently criticized this inverse method of controlling inflation by finding the ideal interest rate and enforcing it by influencing the money supply., since nowhere in the widely accepted money supply equation are there interest rates. [93]

The Federal Reserve also directly sets the "discount rate", which is the interest rate for "discount lending", overnight loans, which member banks borrow directly from the Fed. This rate is usually set at, close to 100 basis points above the target federal funds rate. The idea is, to encourage banks to seek alternative financing, before using the "discount rate" option. [94] The equivalent operation of the European Central Bank is called the "margin lending facility". [95]

Both of these rates affect the base rate, which is usually about 3 percent higher federal funds rate.

Lower interest rates stimulate economic activity, reducing the cost of borrowing, making it easier for consumers and businesses to buy and build, but by stimulating an increase in the money supply and, hence, higher inflation. Higher interest rates could slow the economy due to higher borrowing costs. (For a more detailed explanation see. In monetary policy.)

The Federal Reserve usually adjusts the federal funds rate by 0,25% or 0,50% for once.

The Federal Reserve may also try to use open market operations to change long-term interest rates., but its "purchasing power" in the market is much lower, than private institutions. The Fed may also try to "nudge" the markets towards the desired rates., but it's not always effective..

Redundant requirements

Another tool for adjusting monetary policy, used by the Federal Reserve, is the partial reservation requirement, also known as reserve requirement. [96] The required reserve ratio strikes a balance, which the Federal Reserve requires a depository institution with the Federal Reserve Banks [86] , which depository institutions trade in the federal funds market, mentioned above. [97] Required reserves are set by the Board of Governors of the Federal Reserve System. [98] Reserve requirements have changed over time, and some stories of these changes are published by the Federal Reserve.

Reserve Requirements at the United States Federal Reserve [90]
Type of responsibilityRequirement
Percentage of liabilitiesEffective Date
Net Transaction Accounts
From 0 to 10,3 million. dollars01/01/09
More than 10.3-44.4 million US dollars301/01/09
More 44,4 US$ million1001/01/09
Non-personal term deposits12/27/90
Liabilities in euro currency12/27/90

NOTE. In response to the financial crisis 2008 The Federal Reserve now pays interest on mandatory and surplus reserve balances of depository institutions. Paying interest on excess reserves gives the central bank more options to tackle problems in the credit market, while maintaining the federal funds rate, close to the target rate, established by the FOMC. [100]

New objects

To solve problems, related to the subprime mortgage crisis and the US housing bubble, several new instruments have been created. First new tool, dubbed Term Auction Facility , was added 12 December 2007 of the year. It was first advertised as a temporary tool [101], but there have been speculations, that this new tool can stay in place for a long period of time. [102] About creating a second new tool, named Term Securities Lending Facility , it was announced 11 Martha 2008 G. [103]The main difference between these two mechanisms is, that the mechanism of urgent auctions is used to inject money into the banking system, whereas the Securities Lending Facility is used to inject Treasury securities into the banking system. [104] About creating a third instrument, named Primary Dealer Credit Facility (PDCF) , it was announced 16 Martha 2008 of the year. [105] The PDCF was a fundamental change in Federal Reserve policy, since the Fed can now lend directly to primary dealers, what was previously against the Fed's policy. [106] The differences between these three new sites are described by the Federal Reserve: [107]

The Fast Auction Program offers depository institutions fast financing through a two-week auction for fixed loan amounts. The Securities Lending Facility will be an auction to provide a fixed amount of Treasury general collateral in exchange for eligible OMOs rated AAA / Aaa Residential Securities, secured by mortgage. The Primary Dealer Credit Line now allows eligible primary dealers to borrow at the current discount rate for up to 120 days.

Some measures, adopted by the Federal Reserve to resolve this mortgage crisis, not used since the Great Depression. [108] The Federal Reserve gives a summary of what, what are these new objects: [109]

Since the economy has slowed down over the past nine months, and credit markets became volatile, The Federal Reserve has taken a number of steps, to help fix the situation. These steps included the use of traditional monetary policy instruments at the macroeconomic level., as well as measures at the level of specific markets to provide additional liquidity. The Federal Reserve's response has continued to evolve since then., how pressure on credit markets started to show last summer, but all these measures stem from the Fed's traditional open market operations and discount window instruments by extending the duration of trades., type of collateral or relevant borrowers.
Urgent auction platform

Term Auction Program – it's a program, under which the Federal Reserve transfers funds to depository institutions at auctions. [101] The creation of this mechanism was announced by the Federal Reserve System 12 December 2007 G. and was made jointly with the Bank of Canada, Bank of England, European Central Bank and Swiss National Bank to address increased pressures on short-term finance markets. [110] The reason for its creation is, that banks did not lend funds to each other, and banks, in need of funds, refused to go to the discount window. Banks did not lend money to each other, because there were fears, that loans will not be repaid. Banks refused to enter the "discount window", because it is usually associated with the stigma of bankruptcy. [112] [113] [114] In accordance with the mechanism of urgent auctions, information on banks, those in need of funds, protected, to avoid the stigma of bankruptcy. [115] Currency exchange lines were opened with the European Central Bank and the Swiss National Bank, so that banks in Europe can access US dollars. [115] Federal Reserve Chairman Ben Bernanke summarized this opportunity in the US House of Representatives 17 January 2008 G .:

The Federal Reserve recently introduced a mechanism for urgent auctions, or TAF, through which predetermined amounts of the discount window loan can be auctioned to eligible borrowers. The purpose of the TAF – reduce the incentive for banks to accumulate cash and increase their willingness to lend to households and companies … TAF auctions will continue until then., as long as it is necessary to remove the increased pressure in the short-term financing markets, and we will continue to work closely with other central banks to address market tensions., which may interfere with the achievement of our broader economic goals. [116]

This is also described in FAQ about urgent auctions [101]

TAF – this is a line of credit, which allows a depository institution to apply for an advance from the local Federal Reserve Bank at an interest rate, which is determined as a result of the auction. Allowing the Federal Reserve to enter term funds through a wider range of counterparties and against a wider range of collateral, than open market operations, this mechanism can help ensure the efficient diffusion of liquidity reserves even in the face of stress in unsecured interbank markets. Shortly speaking, TAF will auction fixed-term funds with maturities of approximately one month. All depository institutions, whose financial condition is assessed by their local Reserve Bank as good and who are eligible to borrow within the discount window, also eligible to participate in TAF auctions. All TAF credits must be fully collateralized. Depositaries can provide a wide range of collateral, which is accepted for other Federal Reserve lending programs to secure a TAF loan. The same values ​​of collateral and margin, which are applicable to other Federal Reserve lending programs, will also apply to TAF.
Term credit line

Securities lending program – this is a 28 day line of credit, which will offer general Treasury collateral to the major dealers of the Federal Reserve Bank of New York in exchange for other eligible collateral. It is designed to increase liquidity in the financial markets for Treasuries and other collateral, and, thus, to facilitate the functioning of financial markets in general. [117]As well as the mechanism of urgent auctions, TSLF was created jointly with the Bank of Canada, Bank of England, European Central Bank and Swiss National Bank. The resource allows dealers to switch less liquid debt to US government securities, which are easy to bargain. Federal Reserve officials expect, that the main dealers, including Goldman Sachs Group, are. Inc., Bear Stearns Cos. И Merrill Lynch & Co. lend treasury bonds to other firms in exchange for cash. This will help dealers fund their balance sheets. [118] Currency swap lines have been increased with the European Central Bank and the Swiss National Bank.

Credit line of the primary dealer

Credit line for primary dealers (PDCF) – this is an overnight line of credit, which provides financing to primary dealers in exchange for a range of acceptable collateral and is designed to facilitate the functioning of financial markets in general. [107] This new mechanism marks a fundamental change in Federal Reserve policy., since now primary dealers can borrow directly from the Fed, although it was previously forbidden.

Interest on reserves

From October 2008 G. [update] Federal Reserve Banks Will Pay Interest On Reserve Balances (mandatory and redundant), held in depository institutions. Rate set at the lowest federal funds rate during the institution's reserve maintenance period, minus 75 b.p.. [119] As of 23 October 2008 G. The Fed lowered the spread to 35 b.p.. [120]

Asset-backed liquidity fund of a mutual investment fund in the money market

Mechanism of liquidity of the mutual fund of the stock market, secured by commercial paper money (ABCPMMMFLF), also called AMLF. Borrower right:

All US depository institutions, bank holding companies (parent companies or branches of US brokerage companies) or branches and agencies of foreign banks in the United States may borrow under this line of credit at the discretion of FRBB.

Acceptable security:

Security, to be pledged under the Credit Line, must meet the following criteria:

  • was acquired by the Borrower 19 September 2008 G. or after that date with a registered investment company, which positions itself as a money market mutual fund;
  • was acquired by the Borrower at the cost of acquiring the Fund, adjusted for amortization of premium or increase in ABCP discount prior to the date of its purchase by the Borrower;
  • has a rating, assigned by FRBB, not lower than A1, F1 or P1, at least, two major rating agencies, or, if the rating is assigned by only one major rating agency, ABCP must be rated within the highest rated category by that agency ;
  • was released by the organization, established under the laws of the United States, or its political unit within the program, acting on 18 September 2008 G .; as well as
  • has a stated maturity, which does not exceed 120 days, if the Borrower is a bank, or 270 days for non-bank Borrowers.
Commercial Paper Financing Fund

Commercial paper financing facility also called CPFF. 7 October 2008 G. The Federal Reserve System has further expanded the size of the collateral, under which he will provide a loan, including commercial paper. This action made the Fed an important source of credit for non-financial enterprises in addition to commercial banks and investment companies.. Fed officials said, that they will buy so much debt, how much will it take, to make the market work again. They refused to report, how much it can be, but noted, that commercial paper worth about 1,3 trillion dollars will meet the requirements. According to the latest data from the Fed, on 1 October 2008 G. on the market were issued commercial securities in the amount of 1,61 Trillion USD Seasonally Adjusted. This is below 1,70 trillion dollars in the previous week. Since summer 2007 the market shrank from more than 2,2 trillion dollars.[121]

Mechanism of financing investors in the money market

Money Market Investor Financing Mechanism Also Called MMIFF. 21 October 2008 G. The Federal Reserve System has introduced a mechanism, whereby money market mutual funds can create a structured investment vehicle for short-term assets, guaranteed by the Federal Reserve Bank of New York. [122] The program will run until 30 April 2009 G., if the FRB does not extend it.

Quantitative policy

Another policy, which can be used, – it is a little-used tool of the Federal Reserve (US central bank), known as quantitative policy. At the same time, the Federal Reserve System actually buys out corporate bonds and mortgage-backed securities, owned by banks or other financial institutions. This effectively returns money to financial institutions and allows them to provide loans and conduct normal business.. The Federal Reserve Board used this policy in the early nineties., when the U.S. economy was experiencing a savings and loan crisis.

Uncertainty

Some of the uncertainties, related to monetary policy decisions, described by the Federal Reserve: [123]

  • Although these policy options seem simple enough., faces, determining monetary policy, usually face certain notable uncertainties. Firstly, the actual state of the economy and the growth of aggregate demand at any given time are only partially known., since key information on expenditures, production and prices becomes available only with a delay. Consequently, faces, policy-setting, should rely on estimates of these economic variables to assess appropriate policy, knowing, that they may act on misleading information. Secondly, it is not known exactly, how this adjustment to the federal funds rate will affect the growth of aggregate demand – in terms of as a total, and the timing of its impact. Economic models can contain rules of thumb for how the economy responds, but these rules of thumb are prone to statistical error. Thirdly,
  • On practice, as noted earlier, faces, determining monetary policy, do not have the latest information on the state of the economy and prices. Useful information is limited not only by delays in the construction and availability of key data, but also later versions, which can significantly change the picture. In this way, although faces, determining monetary policy, will eventually be able to compensate for the consequences, which negative demand shocks have on the economy, some time will pass, before the shock is fully acknowledged, And – given the lag between political action and its impact on aggregate demand – even more time before it is satisfied. Add to this the lack of confidence, how the economy will respond to a weakening or tightening of policies of a certain size,
  • Statutory goals of maximum employment and stable prices are easier to achieve, if the public understands these goals and believes, that the Federal Reserve will take effective measures to achieve them.
  • Although the objectives of monetary policy are clearly stated in the law, there are no means to achieve these goals. FOMC Federal Funds Target Rate Changes Takes Some Time, to influence the economy and prices, and is often far from obvious, whether the chosen level of the federal funds rate will be able to achieve these goals.

Measuring economic variables

Much data is recorded and published by the Federal Reserve. Multiple websites, on which data is published, are on the page “Economic data and research by the Board of Governors” [124], on the pages “Statistical releases and historical data of the Board of Governors” [125], and also on the FRED page (Federal Reserve Economic Data) St. Louis Fed. page. [126] Federal Open Market Committee (FOMC) studies many economic indicators, before setting monetary policy. [127]

Equity of households and non-profit organizations

Собственный капитал домашних хозяйств и некоммерческих организаций США 1945-2007.gif

The net worth of households and nonprofits in the United States is published by the Federal Reserve in a report titled “ Flow of funds» . [128] As of the end 2008 fiscal year this amount was 51,5 trillion dollars.

Money supply

Components of the U.S. money supply (currency, M1, M2 and M3) with 1959 G.

The most common measures are called M0 (the narrowest), M1, M2 and M3. In the United States, they are defined by the Federal Reserve System as follows:

MeasureDefinition
M0The total amount of all physical currency plus central bank accounts, which can be exchanged for physical currency.
M1M0 + those parts M0, which are held as reserves or cash + amount on demand accounts ("current" or "current" accounts).
M2M1 + most savings accounts, money market accounts and term deposits of small denomination (certificates of deposit for less than 100 000 US dollars).
M3M2 + all other CDs, Eurodollar deposits and repo agreements.

The Federal Reserve stopped publishing M3 statistics in March 2006 of the year, explaining it by, that data collection is expensive, but does not provide substantially useful information. [129] The remaining three measures of the money supply are still described in detail..

Consumer price index

US consumer price index for 1913-2006.

Федеральная резервная система

The consumer price index is used as one of the indicators of the value of money. This is defined as:

A measure of the average price level of a fixed basket of goods and services, purchased by consumers, as defined by the Bureau of Labor Statistics. Monthly CPI Changes Reflect Inflation Rate. Core CPI does not include volatile components, for example, food and energy prices.
[127]

The data consists of average consumer prices in a US city and can be found at Bureau of Labor Statistics, United States Department of Labor [130].

The CPI itself is not a complete measure of the value of money.. For example, cash value of shares, real estate and other goods and services, classified as investment instruments, not reflected in the CPI. It is difficult to get a complete picture of the cost of the entire cost of living range, therefore the CPI is usually used as a substitute. In this way, The CPI has strong political ramifications, and administrations on both sides were inclined to change the basis for calculating it, gradually underestimating the true rate of decline in purchasing power. [131]Controversial method, used in the calculation of the CPI, – this is a "hedonic adjustment". The basic concept provides for a discount on the perceived increased utility of products (ie. faster CPU processing speed of computers). However, consumers rarely make decisions, based on the price of a computer processing cycle. It can be argued, that such hedonic adjustments contribute significantly to lowering true inflation, faced by consumers, buying everyday goods and services. [132]

One of the main functions of the Fed – maintain price stability. It means, that the change in the consumer price index over time should be as small as possible. The ability to keep inflation low is a long-term indicator of the Fed's success. [133] Although the Fed usually tries to keep the annual change in the CPI within 2-3 percent, [134] there is a debate among politicians about, Should the Federal Reserve have a specific inflation targeting policy. . [135] [136] [137]

Inflation and economy

There are two types of inflation, which are closely related to each other. Monetary inflation – this is an increase in the money supply. Price inflation – this is a steady rise in the general price level, which is equivalent to a decrease in the value or purchasing power of money. If the supply of money and credit increases too quickly for many months (monetary inflation), the result will usually be price inflation. Price inflation does not always increase in direct proportion to monetary inflation.; it is also influenced by the speed of circulation of money and other factors. With price inflation, the dollar is bought less and less over time. [85]

The effects of monetary and price inflation include: [85]

  • Price inflation worsens workers' plight, if their income is not growing as fast, as prices.
  • Fixed income pensioners will be worse off, unless their savings grow faster, than prices.
  • Lenders lose, because dollars will be returned to them, which do not cost much.
  • Investors are losing, because for a dollar, which they put off today, they won't buy that much, how much will they be willing to spend.
  • Companies and people will find it harder to plan, and therefore they can reduce investment in future projects.
  • Owners of financial assets suffer.
  • Industries, interest rate sensitive, such as mortgage companies, suffer, since monetary inflation drives up long-term interest rates, and the tightening of the Federal Reserve System leads to higher short-term rates.

Unemployment rate

Федеральная резервная система

US unemployment rate for 1950-2005 yy.

Unemployment statistics are collected by the Bureau of Labor Statistics. Since one of the stated objectives of monetary policy is maximum employment, the unemployment rate is a sign of the success of the Federal Reserve. [ opinion needs balancing ]

Like the CPI, the unemployment rate is used as a barometer of a nation's economic health and, thus, as a measure of the success of the administration's economic policy. With 1980 years, both sides have made progressive changes to the basis for calculating unemployment, so the numbers now quoted cannot be directly compared with those of previous administrations or with the rest of the world. [138]

Budget

The Federal Reserve System is self-financed. Overwhelming majority (more 90%) the Fed's revenue comes from open market operations, in particular, interest on a portfolio of treasury securities, as well as “growth / loss of capital ", that may arise as a result of the purchase / sales of securities and their derivatives as part of open market transactions. The remainder of the income consists of sales of financial services (processing checks and electronic payments) and discount window credits. [139] Governing Council (Federal Reserve Board) prepares a budget report for Congress once a year. There are two reports with budget information. The one, which lists complete balance sheets with income and expenses, as well as net profit or loss, is a large report with a simple title Annual report.. It also includes system-wide employment data.. Another report, which explains in more detail the costs of various aspects of the entire system, called Annual report: budget review . These are comprehensive reports with a lot of detail., which can be found on the website of the Board of Governors under " Reports for Congress» [140].

Net worth

Balance sheet

One of the keys to understanding the Federal Reserve System is its balance sheet (or balance sheet). In accordance with section 11 Of the Federal Reserve Act The Board of Governors of the Federal Reserve System publishes once a week a "Consolidated Statement of the State of All Federal Reserve Banks" showing the status of each Federal Reserve Bank and a summary report for all Federal Reserve Banks.. The Governing Board requires, that the excess profits of the reserve banks are transferred to the Treasury as interest on the notes of the Federal Reserve System. [141] [142]

Looked and understood, what ….

Below is the balance for 22 April 2009 G. (in millions of dollars):

RESOURCES:
Account with a gold certificate11,037
Certificate of Special Drawing Rights Act.2,200
Coin1,870
Securities, buyback agreements, urgent auction loans and other loans1,525,857
Directly held securities967,070
U.S. Treasury534,969
Accounts18,423
Notes and bonds516,546
Federal agency debt securities64,511
Mortgage-backed securities367,590
Buyback agreements
Urgent auction loan455,799
Other loans102,988
Net portfolio of Commercial Paper Financing Mechanism LLC242,431
LLC net portfolios, financed through the Money Market Investor Financing Facility
Maiden Lane LLC net portfolio assets26,481
Maiden Lane LLC II net portfolio assets18,253
Maiden Lane LLC III net portfolio assets27,429
Items in the process of collecting1,147
bank premises2,191
Central bank liquidity swaps282,863
Other assets56,855
Total Assets2,198,613
OBLIGATIONS:
Federal Reserve banknotes in circulation1,048,136
Minus: notes, stored in FR Banks185,176
Federal Reserve banknotes, net862,960
Reverse repo agreements64,681
Deposits1,211,172
Depository institutions915,773
U.S. Treasury, general account93,533
US Treasury, additional funding account199,929
foreign official1,594
Another343
Deferred Availability Cash Positions4,107
Other liabilities and accrued dividends9,693
Total commitment2,152,613
CAPITAL (he is net capital)
Paid up capital22,611
surplus21,181
Other capital2,209
General capital46,000
MEMO (off-balance sheet items)
Negotiable securities, held on official and international accounts in foreign countries2,646,833
U.S. Treasury1,838,342
federal agency808,491
Securities, provided to dealers47,980
Accommodation4,430
Validity43,550
  We buy cheap, we sell dearly.

 

Analysis of the balance sheet of the Federal Reserve System reveals a number of facts:

  • The Fed has more than 11 billion dollars, which is a holdover from those days, when the government backed U.S. and Federal Reserve bonds with gold. . The value quoted here is based on statutory valuation in 42 2/9 dollar per troy ounce of pure gold. As of March 2009 year the market value of this gold is about 247,8 billion dollars.
  • The Fed owns more than 1,8 billion dollars, but not as a liability, but as an asset. The Treasury Department is actually responsible for the creation of US coins and banknotes.. The Fed then buys coins from the Treasury, increasing commitments, assigned to the Treasury account.
  • The Federal Reserve's public debt is at least 534 billion dollars. The value of "net securities" was used to directly represent the Fed's share of government debt, but after creating new mechanisms in winter 2007-2008 yy. This number has been reduced, and the difference is shown with values ​​from some of the new objects.
  • Fed has no assets under overnight repo agreements. Buyout agreements are the main asset, which the Fed chooses when operating on the open market. Repo assets are purchased by creating liabilities of a "depository institution" and sent to the bank, which the primary dealer uses when selling on the open market.
  • Federal Reserve bond liabilities in excess of 1 trillion dollars represent the total value of all existing dollar bills; more 176 billion dollars is at the disposal of the Fed (out of circulation); and the "clean" figure in 863 billion dollars represents the total par value of the Federal Reserve Notes in circulation.
  • Deposit liabilities of depository organizations in the amount of 916 billion dollars show, what dollar bills – not the only source of public money. Banks can swap FRS deposit liabilities for Federal Reserve notes back and forth as needed, to meet customer demand, and the Fed can instruct the Bureau of Engraving and Printing to create paper notes as needed., to match the demand from banks for paper money. The amount of money printed has nothing to do with the growth of the monetary base (M0).
  • Liabilities of the Treasury in the amount of 93,5 billion dollars show, that the Treasury does not use private banks, and uses it directly by the FRS (the only exception to this rule – treasury taxes and loans, as the government is concerned about, that too much money is withdrawn from the private banking system during taxation. time can be devastating).
  • External obligation in the amount 1,6 billion dollars represents the amount of foreign central bank deposits with the Federal Reserve.
  • 9,7 billion US dollars in “other liabilities and accrued dividends” represent part of the amount of money, due for the year to member banks for 6% dividends from 3% their net worth, which they must deposit in exchange for the non-voting shares of their Regional Reserve Bank, to become a member. Member banks also subscribe to additional 3% of their net worth, which may be claimed at the discretion of the Federal Reserve. All banks, nationally registered, must be members of the Federal Reserve Bank, and banks, established by government agencies, have the right to choose, become members or not.
  • Total capital represents profit, received by the Fed, which mainly comes from assets, which they buy for deposit and promissory notes, which they create. The surplus capital is then transferred to the Treasury and Congress for federal inclusion as "Other Income".

Besides, the balance sheet also indicates, what assets are held as collateral for Federal Reserve bonds.

Federal Reserve notes and collateral
Federal Reserve banknotes in circulation1,048,136
Minus: notes in FR banks185,176
Federal Reserve notes will be secured by collateral862,960
Collateral for Federal Reserve Bonds862,960
Account with a gold certificate11,037
Special Drawing Rights Certificate Account2,200
US Treasury, agency debt and securities, secured by mortgage, pledged849,723
Other pledged assets

Critics

The Federal Reserve has been criticized throughout its existence. Initially, opponents were primarily concerned about, that the system will give preference to the "eastern establishment", mostly centered around New York. This applied the old central bank criticism to the new central bank: opposing the creation of the First Bank of the United States, one of the first predecessors of the Fed, Thomas Jefferson thought, that people in New York will use the central banking system to dominate the United States. [143] Andrew Jackson closed the Second Bank of the United States in the 1800s for similar reasons., Believing, that it was used to pump wealth northeast from the rest of the country. [144]Similar criticism is repeated to this day., as people state, that the Federal Reserve is benefiting Wall Street, but not "Main Street".

Transparency was another issue. For example, transactions with foreign central banks are not published in Congressional records, and many of the assets and liabilities of the Federal Reserve Banks are not published anywhere. Some blame the Fed, along with other Western central banks, in containing the price of gold, secretly lending their huge gold reserves in the markets, never asking debtor banks to pay them back (it allegedly supports confidence in the US Dollar). [ who? ] This, in its turn, led to accusations against US Army and Marine officials of, that they don't keep a close eye on gold at Fort Knox.

Other criticism has to do with economic data, collected by the Fed. Some argue, that these values ​​are misleading, exaggerated or completely falsified in order to achieve any political advantage. [ who? ] The Fed sponsors most of the monetary economics research in the US, and Lawrence X. White objects, that this reduces the likelihood of researchers publishing results, questioning the status quo. [145] Other criticisms are controversial: some say, that the Fed is not accountable, others claim, that the Fed is not independent, following the instructions of the President of the United States, other influential politicians or well-established think tanks, such as the Council on Foreign Relations, bilderberg group, CATO, PNAC etc.. D. [ Who? ] Adherents of the Austrian school of economics blame the current economic crisis on the policy of the Federal Reserve System, in particular the Fed policy under the leadership of Alan Greenspan, on credit expansion due to historically low interest rates, beginning with 2001 of the year, what, according to them, allowed the United States State housing bubble.

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  108. Fed Announces Emergency Measures To Ease Credit Crisis – Economy * USA * News * Plot – CNBC . lump
  109. Federal Reserve Bank of Atlanta – Exploring New Measures of the Federal Reserve's Liquidity
  110. "Announcement on the creation of a mechanism for urgent auctions – FRB: Press release – Federal Reserve and other central banks announce action, aimed at eliminating the increased pressure on the short-term financing markets ". Federalreserve.gov. 12 December 2007 . http : // www . federal reserve . gov / newsevents / press / monetary / 20071212a . htm .
  111. "US banks borrow $ 50 billion through a new credit line from the Fed ". Financial Times. 18 February 2008 . http : // www . feet . with / cms / s / 66db756a – de5d – 11dc – 9de3 – 0000779fd2ac . html . “Before its introduction, banks either had to collect money on the open market, or use the so-called "discount window" in case of emergencies. However, in the past year, many banks refused to use the discount window., even though, that it was difficult for them to raise funds in the market, because it was due to the shame of the bank's bankruptcy ".
  112. “The Fed increases the next two special auctions to 30 billion dollars ". Bloomberg . with . 4 January 2008 . http : // www . Bloomberg . ru / apps / news ? pid = 20601103 & refer = news & sid = aBPbErlft9cI ."The Board of Governors of the Federal Reserve System established in December a temporary expedited auction mechanism, dubbed TAF, to provide funds after, how interest rate cuts failed to break banks' reluctance to lend amid fears of losses, associated with substandard mortgage-backed securities. The program will make funding from the Fed available in addition to 20 authorized primary dealers, trading with the central bank ".
  113. economist . with – dirty job, but someone has to do it: http : // www . economist . with / displaystory . cfm ? story _ id = 10286586 Quote from article:
    For example, Fed discount window, through which he lends directly to banks, practically not implemented, despite the rapidly growing spreads in the interbank market. For a decrease in the federal funds rate and discount rate by a quarter point 11 December was followed by a sharp sell-off in the stock market … There is hope, that by extending the maturity of central bank money, expanding the range of collateral, under which banks can borrow and move from direct lending to auction, then central banks will reduce spreads by one- and three-month money markets. There will be no net increase in liquidity. That, what central bankers add on longer maturities, they take out the overnight market, but there are risks. Firstly, despite all the hype, the central banks plan will change little. After all, he does not do anything, to eliminate the fundamental reason, on which investors are worried about lending to banks. It is uncertainty about potential losses from subprime mortgages and products, based on them, And – given this uncertainty – banks' own desire to accumulate capital in case, if they have to strengthen their balance sheets.
  114. economist . with – system cleaning: http : // www . economist . ru / daily / news / displaystory . cfm ? story _ id = 10278482 & top _ story = 1
  115. a b The Fed and leading central banks will flood the markets with cash
  116. Chairman Ben C. Bernanke – Economic Outlook before the U.S. House of Representatives Budget Committee 17 January 2008 G .: http : // www . federal reserve . gov / newsevents / testimony / bernanke20080117a . htm
  117. Term securities lending mechanism: FAQ: http : // www . Newyorkfed . org / markets / TSLF _ faq . html
  118. Bloomberg . with —Fed to provide loans for 200 billion dollars, acceptance of mortgage-backed securities: http : // www . Bloomberg . ru / apps / news ? pid = 20601087 & sid = a6LLuTru5Sio & refer = main
  119. "Interest on required reserve balances and excess balances". Federal Reserve Board. 2008-10-06 . http : // www . federal reserve . gov / monetarypolicy / reqresbalances . htm . Checked out 14 October 2008 .
  120. "Press release – 22 October 2008 G.". Federal Reserve Board. 2008-10-22 . http : // www . federal reserve . gov / newsevents / press / monetary / 20081022a . htm . Checked out 22 October 2008 .
  121. Fed actions
  122. "Press release – 21 October 2008 G.". Federal Reserve Board. 2008-10-21 . http : // www . federal reserve . gov / newsevents / press / monetary / 20081021a . htm . Checked out 21 October 2008 .
  123. BoG 2005, pp. 18-21
  124. FRB: Economic research and data
  125. Federal Reserve Board – Statistics: issues and historical data
  126. St. Louis Fed: economic data – FRED
  127. a b Federal Reserve System of Education – economic indicators
  128. FRB: Release Z.1 – Cash flow accounts in the United States, date of issue See. PDF documents for 1945-2007. The value for each year is indicated on the page 94 each document (99-I'm a pdf page) and is duplicated on the page 104 (109-I'm a page in a PDF viewer). It gives total assets, total liabilities and net worth. This chart shows the net worth.
  129. End of M3 production
  130. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
  131. Go ↑ Kevin Phillips: Numbers Racket – Why is the economy worse, than we know, Harper’s, May 2008 G.
  132. [2]
  133. BoG 2006, pp. 10
  134. “These definitions clearly show the commitment to low inflation. But they leave the question open, does it match, for example, prevailing inflation rate today – about 2-1 / 2 percent for the consumer price index of the core consumer price index (IPC) – this definition ". http : // www . federal reserve . G / boarddocs / speech / +2001 / +20010717 / default . htm
  135. Fed Bernanke Speech - Inflation Targeting Perspective, 25 Martha 2003
  136. IN than the fuss about inflation targeting?
  137. Bernanke, Ben S .: The inflation targeting debate
  138. Kevin Phillips: Numbers Racket – Why is the economy worse, than we know, Harper’s, May 2008 G.
  139. Fed Chicago – demonstration of knowledge about the Fed: http : // www . Chicago . org / education _ resources / files / Demonstration of _ knowledge . ppt
  140. Federal Reserve Board – reports to Congress
  141. http : // www . federal reserve . gov / boarddocs / rptcongress / Annual08 / pdf / AR08 . pdf Annual Report Page. 466 (o) Federal Reserve Bonds Interest Rate
  142. "Factors, affecting the reserve balances of depository institutions and the statement on the state of the federal reserve banks " (HTML, with PDF file). Federal Reserve System . http : // www . federal reserve . G / releases / h41 / Current / . Checked out 20 Martha 2008 .
  143. http : // ru . wikisource . org / wiki / Opinion _ versus _ in _ constitutionality _ of _ _ National _ Bank opinion against the constitutionality of the Thomas Jefferson National Bank
  144. http : // avalon . law . Yale . edu / XIX _ век / ajveto01 . жерех
  145. White, Lawrence X. 2005. Impact of the Federal Reserve System on Research in Monetary Economics. Econ Journal Watch 2 (2): 325-354. [3]

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  • BoG (2005 G.), Federal Reserve System: goals and functions , Governing Council , http : // www . federal reserve . гов / pf / pf . htm
  • BoG (2006), Federal Reserve System in Plain English , Governing Council , http : // www . frbsf . org / publications / education / plain English / index . html
  • Epstein, Lita and Martin, Preston (2003). The Complete Idiot's Guide to the Federal Reserve . Alpha books. ISBN 0-02-864323-2.
  • Grader, William (1987). Secrets of the Temple . Simon and Schuster. ISBN 0-671-67556-7; non-technical book, explanatory structure, functions and history of the Federal Reserve, focusing on the tenure of Paul Volcker
  • RW Hafer. Federal Reserve System: encyclopedia . Greenwood Press, 2005. 451 page, 280 articles; ISBN 4-313-32839-0.
  • Melzer, Allan H.. History of the Federal Reserve, Volume 1: 1913-1951 (2004) ISBN 9780226519999 (the cloth) и ISBN 9780226520001 (paper)
  • Melzer, Allan H.. History of the Federal Reserve System, Volume 2: Book 1, 1951-1969 (2009) ISBN 9780226520018
  • Melzer, Allan H.. History of the Federal Reserve System, Volume 2: Book 2, 1969-1985 (2009) ISBN 9780226519944; In three volumes, published so far, Meltzer describes in great detail the first 70 years of the Fed.
  • Meyer, Lawrence H (2004). Deadline at the Fed: inside view . HarperBusiness. ISBN 0-06-054270-5; focuses on the period from 1996 on 2002 year, highlighting Alan Greenspan's chairmanship during the Asian financial crisis, stock market boom and financial impact of attacks 11 September 2001 of the year.
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