A very informative set of videos about the Federal Reserve System can be found a
ID: 1224826 • Letter: A
Question
A very informative set of videos about the Federal Reserve System can be found at https://www.philadelphiafed.org/education/federal-reserve-and-you/segments These chapter videos have been further divided into smaller segments. When commenting on a particular segment or chapter, please tell us which one you are discussing. Post a comment IN YOUR OWN WORDS about one topic that catches your attention, or that enhances your understanding of the role of the Federal Reserve (the Fed) in the economy. Label your posting with a descriptive phrase and a reference to one of the videos such as, D5: Creation of the Federal Reserve (Segment 204) D5: Fractional Reserve Banking (Segment 305) ... Feel free to enhance your posting with research that you can do at the Fed's website: www.federalreserve.gov Make each post count towards building a strong understanding of this key policy making institution.
Explanation / Answer
Segment 102: Structure of Federal Reserve
The Federal Reserve has 12 regional reserve banks spread throughout the country It’s made of three major parts: Board of Governors, Reserve Banks, Federal Open Market Committee. Some of the parts are decentralized, and some parts are centralized
The Board of Governors oversees the Federal Reserve System. There are seven members including the Chairman. Members of the Board of Governors are appointed by the President of the United States and confirmed by the Senate. These are fourteen-year term of office. It is part of the process making monetary policy, part of the process for making regulations and supervisory decisions and strives to preserve a stable financial system, Each of the Reserve Banks are different and have branches too. Each Reserve Bank has a 9-member Board of Directors out of which three are directors who are bankers, six of them are citizens who work outside banking. The six members are elected by member-banks in the district. The other three directors are appointed by the Board of Governors.
The Federal Open Market Committee (FOMC) is the group within the Fed that sets monetary policy. The seven members of the Board of Governors and all twelve Reserve Bank Governors attend FOMC meeting. Only the serven members of the Board of Governors and five of the twelve Reserve Bank Presidents are voting members at any point of time. One of the five voting presidents is always the president of Federal Reserve Bank of New York. The Federal Reserve is part of government agency, but it is independent from the government. To keep the Fed from formidable pressures, members of the Board of Governors are appointed for a long term, they serve 14-year terms. The Fed is not funded by federal budget. Its funds mostly come from interests earned on government securities it holds and the fees it charges for the financial services it provides.
Monetary policy takes a long time to take it effects on the economy, actions taken today may not have its full effects for two or three years or more depending on the state of the economy, So it’s really important not be influenced by political considerations, but make decisions based only on what best for the US economy and what best in the longer term.
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