The Structure And Functions Of The Federal Reserve System In Maintaining Economic Stability

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The Structure and Functions of the Federal Reserve System in Maintaining EconomicStabilityIn an essay of at least 3 paragraphs outline the structure of theFederal Reserve Systemandthe function it serves in keeping the economy stable.What is the structure of the Federal Reserve System, and how does it function to maintaineconomic stability?Answer:Federal ReserveSystem is the central banking system of the United States of America.It is composed ofthe followingparts:a)TheBoardofGovernorsoftheFederalReserve:TheFederalReserveSystemisoverseen by the Board of Governors of Federal Reserve.The seven members of theBoard of Governorshave a staggering term of 14-year. Theyare appointed by thePresident and confirmed by the Senate.b)The Federal Open Market Committee(FMOC):The FOMC is composed of the sevenmembers of the Board of Governors and five Reserve Bank presidents. The president ofthe Federal Reserve Bank of New York serves on a continuous basis; the presidents ofthe other Reserve Banks serve one-year terms on a rotating basis.The committee meetseight times a year in private to discuss the cost and availability of credit, for businessand consumers, across the country.c)Twelve DistrictReserve Banks:According toFederal ReserveAct United States is dividedinto twelve Federal Reserve district.Each Federal Reserve Bank monitors and reports oneconomic and banking condition in its district.d)Member Banks: All nationally chartered banks are required to join the Federal ReserveSystem. The remaining members are state chartered banks that join voluntarily.TheFederal Reserve Systemhas several key functions to keep the economy stable. Some ofthem are:a)The supply ofcurrency to the economyis controlled by Federal Reserve.Only FederalGovernment has the authority to issue currencyunder the Federal Reserve System.Thedistrict Federal Reserve Banks issue paper currency.The federal reserve replaces theworn and torn bills with fresh ones.b)The Federal Reserve provides a system of check collection and clearing.The fed clearsabout 20 billion checks per year.

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