Essay: The Federal Reserve

Sample Essay

The Federal Reserve Act came into establishment in the 1913 when multiple attempts at organizing and controlling the banking sector of America had failed miserably. The Federal Reserve Act was the act which was used by the Congress and theUnited Statesgovernment to establish the Federal Reserve System of banking according to which all the baking operation in the country came under the Federal Reserve System.The structure of the Federal Reserve System is such that it includes the Federal Reserve Board of Governors which heads the system. The Federal Open Market Committee is the link between the governors and the Federal Reserve Banks. The Member banks in turn are controlled and monitored by the Federal Reserve Banks.

Initially the main operation of the banks was to provide money changing services. However with the passage of time the operation of the bank started to include managing deposits of money, and more recently provide monetary lending facilities (Frexias & Rochet, 1997).  The operations of the Federal Reserve Banking System however include the controlling of money supply in the economy. This is done by the system by employing analysis and identification of the specific money supply which is required in the economy. The repurchase agreements are developed by the Fed as well as the outright Tractions. The Federal Reserve is also responsible for implementing the monetary policy in the country and the controlling and the regulation of the financial and money trade in theUnited States of America.

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