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Pension Funds
Finance Companies
• Created In 1913
• Central bank of the United States
• Regulate commercial banks
• Perform banking-related activities for the
U.S. Department of Treasury
• Providing services for banks
• Setting monetary policy
• 12 Federal reserve districts
– Own federal reserve bank
• District banks are run by a nine-member board
of directors.
• The board of governors is the governing body.
• Politically independent
• Federal Open Markets Committee (FOMC)
sets most policies concerning monetary policy
and interest rates.
• Americans still write billions of paper checks.
• The process by which funds are transferred from
the check writer to receiver
• The multiple-step process is managed and
cleared by the FED.
• The Check Clearing for the 21st Century Act is
making this process more electronic.
• Supply of money and credit
• Measures of the money supply: M1 & M2
• The FED requires banks to maintain
reserves.
• Set the discount rate
• Open Market Operations
• Bank Regulation
• Government Regulation of the Financial
Markets
• Industry Self-Regulation
– Rules of conduct by professional
organizations like National Association of
Securities Dealers
– Market Surveillance
• The financial system is
more connected.
• Financial institutions are
more global.
• Only 3 of the 30 largest
banks in the world are US
institutions.
• Most nations have a
central bank.