The Federal Reserve Essay Example | Topics and Well Written Essays - 2000 words

The national Reserve - Essay ExampleThose initiatives should arrive at cheeseparing results for the greater majority, including Small Business Enterprises and private individuals, although there seems to be a need to determine the sentencetable for much(prenominal) an achievement. As of May 2013, only large businesses were discovered to be realizing better credit facilities. Employment set out remains high although previous quarters had higher unemployment grade. However, the most recent initiatives reported in February 2013 by the Board of Governors gave some hope for changes along a better direction. In that report, full employment was make a commitment. And until the time when full employment is realized while low inflation rate at 2% is maintained, the Fed will continue to accommodate further infusion of money supply into the economy. Roles & potential of the US federal Reserve Founded in 1913, the US Federal Reserve System was meant to serve as the countrys Central Bank under the supervision of Congress. Its roles were (1) to formulate the monetary policy that defines the communitys monetary and credit conditions so that maximum employment of the people, price stability, and moderate, long-term interest rates can be realized (2) to supervise and regulate banks and other financial institutions for a safe and heavy financial remains that protects the credit rights of consumers (3) to maintain a stable financial system and control the risks congenital in the financial markets and (4) to serve the local and foreign governments with the facilitations for transactions, including services in connection with the payment system (BoG 2005, p.1). Over the years, it has evolved into influencing the demand and money supply situation of a country, using the four (4) standard message. The offset is known as the convey through Open Market Operations whereby the Federal Bank whitethorn reduce or increase money supply by limiting the amount and/or intensiven ess of purchases or sale of US Treasury securities. When the Federal Bank purchases securities from the open market, more cash is do available in the economy. When the Fed sells Treasury securities to cash-rich investors for them to have a stable income source at an harming interest rate, the country will have less money supply circulating. A 2nd means would be through the issuance of a directive for all banks to maintain a certain nurse requirement. These are in the form of cash in amounts determined by the percentage of deposits by consumers. militia are then deposited with the Federal Reserve Bank. To increase money supply, the Fed can simply get down the required militia for all deposits. To decrease the level of money supply, reserve requirements may be change magnitude so that there would be less lending operations on the part of banks and therefore decline money supply available in the economy. The 3rd way is by adding the requirement to have reserves in the form of C ontractual Clearing Balance (BoG 2005, p. 3). Some transactions with payments that take some time to clear between two banks can be secured by additional reserves at the Federal Bank. Such amounts are on top of the 2nd means which is the reserve requirements by the Fed. These additional deposits with the Federal Bank may be stipulated by the Federal Reserve Bank (FRB) governing body. The 4th means of influencing the level of money