The Federal Reserve
Grand Canyon University
January 15th, 2012
The Federal Reserve is a federal government department that is independent from political influence, so that they can regulate, and grant insurance to the people of the United States. It also functions as a backer of banks so that people do not lose their money. In addition they regulate the curricula ion of the money flow and set requirements that banks must follow. In the following we will explore the functions of the twelve Federal Reserve banks, and the reason that the Federal Reserve is considered the bankers bank. In addition the role of the Federal open Market committee will be explored in their role in economic policy. Also there will be exploration into why federal would want to decrease the money supply.
The twelve Federal Reserve banks have three main functions that they must do, to keep the economy and money flow correct. The first is inspection of local banks within their jurisdiction to ensure they are living up to the regulations set by the Federal Reserve. There second main function is to infuse or take out money from circulation so that the circular flow is maintained at a proper level. In addition they process thousands of checks, and ensure that debit and credit transaction goes through smoothly [ (smale, 2010) ]. These main actions are essential in ensuring the economy and money flow operates correctly without problems.
The reserve banks are considered the banker banks because; they store currency and make money available for the member banks. They also process the checks and debits from the member banks. They are king of banks and regulate the banking industry in the process. They also control the flow of money, so that the value of it stays consistent and does not drop. This is essential in controlling the money flow and economic prosperity of the United States Economy. [ (education.org, 2012) ]...