The Federal Reserve System
1: How the Federal Reserve is organized
2: The Fed's major policy tools
3: How open market operations work
Monetary Policy: the use of money and credit controls to influence macroeconomic outcomes Pres Wilson, Fed Reserve Act, Dec. 1913
Federal Reserve System: 12 Fed Reserve Banks: each acts as central banker for private banks in region.
• Clearing checks between private banks
• Hold bank reserves - fraction of deposits in local banks, rest in fed reserve banks
• Providing currency -
• Providing loans
Fed's control of money supply is exercised by use of 3 policy tools:
• Reserve requirements
• Discount rates
• Open market operations