Complexities of the U.S. Financial System

Topics: Federal Reserve System, Central bank, Finance Pages: 4 (1193 words) Published: May 12, 2013
Complexities of the U.S. Financial System

Professor Issar
FIN 100
May 5, 2013

The U.S. financial system has many complexities and it is impacted by several environmental influences, including federal regulations and the economy. These factors not only effect the economy, but also business and individuals. The U.S. Federal Reserve, the Federal Reserve Chairman, and Board, also play a direct role into the effectiveness of today’s economic environment. Some of the complexities that impact the U.S. also have a direct influence on the global financial environment. These complexities include the interest rates and the exchange rate. The U.S. financial market has a major impact the economy, businesses, and individuals. Financial markets help to skillfully direct the flow of savings and investment in the economy in ways that facilitate the increase of capital and the production of goods and services. The worth of credit and returns on investment provide signs to producers and consumers. These signs help direct funds from savers and businesses to the consumers, businesses, governments, and investor. Also, the existence of healthy financial markets and institutions also accelerates the international flow of funds between countries. In addition, efficient financial markets and institutions tend to lower search and transactions costs in the economy. By providing a large range of financial products, with fluctuating risk and pricing structures as well as maturity a well-built financial system offers products to participants that provide borrowers and lenders with a close match for their needs. Businesses, individuals, and governments in need of capital can easily discover which financial institutions or which financial markets may offer funding and what the cost will be for the borrower. This will allow investors to compare the cost of financing to their anticipated return on investment, so they can make the investment choice that best suits their needs. In this way,...

Bibliography: Federal Reserve 's Key Policies for the Provision of Financial Services. (2012, October 31). Retrieved from Board og Governors of the Federal Reserve System:
About the Fed. (2013, April 23). Retrieved from Board of Governors of the Federal Reserve System:
Melicher, R. W., & Norton, E. A. (2011). Introduction to Finance. Hoboken: John Wiley & Sons, Inc.
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