central bank

Central Bank

National bank managing government monetary policy and currency.

Federal Reserve System

Central bank and monetary authority of the U.S.

Establishment Year

The Federal Reserve was established in 1913.

Panic of 1907

Crisis prompting the creation of the Federal Reserve.

Federal Reserve Banks

Twelve regional banks serving the central bank's operations.

Board of Governors

Seven-member board overseeing the Federal Reserve System.

Governor Term

Each governor serves a 14-year non-renewable term.

Federal Open Market Committee (FOMC)

Directs monetary policy through open market operations.

Monetary Policy

Fed influences economy by adjusting federal funds rate.

Supervision and Regulation

Ensures financial stability and safe banking practices.

Financial Services

Provides services to government and financial institutions.

New York Fed

Key player in implementing Fed's monetary policy.

Open Market Desk

Conducts bond transactions affecting banking system reserves.

Member Banks

Private banks holding stock in regional Federal Reserve Banks.

Reserve Requirements

Percentage of deposits member banks must keep as reserves.

Discount Rate

Interest rate for loans from the Fed to banks.

FOMC Responsibilities

Sets federal funds rate and conducts open market operations.

Federal Funds Rate

Interest rate on overnight loans between banks.

Economic Monitoring

FOMC reviews economic conditions in regular meetings.

Decision-Making Process

FOMC decisions require majority vote among members.

Federal Reserve Independence

Operates independently to avoid political pressures.

Long-Term Focus

Fed prioritizes economic health over short-term politics.

Bank for International Settlements (BIS)

International financial institution with which New York Fed collaborates.

Open Market Operations

Buying/selling securities to influence money supply.

Economic Conditions

Factors reviewed by FOMC to adjust monetary policy.

Major Central Bank Meetings

New York Fed president represents at BIS meetings.

Instrument Independence

Fed sets monetary policy instruments independently.

Goal Independence

Fed balances Congress-set goals based on conditions.

Theory of Bureaucratic Behavior

Institutions act to maximize their own welfare.

Maintaining Independence

Fed operates free from political pressures.

Expanding Jurisdiction

Fed broadens influence beyond traditional monetary policy.

Enhancing Resources

Fed secures funding and resources for operations.

European Central Bank (ECB)

Manages monetary policy for Eurozone countries.

ECB Price Stability Goal

Aims for inflation close to but below 2%.

ECB Structure

Includes Executive Board and Governing Council.

ECB Independence

Protected by Maastricht Treaty from political interference.

ECB Policy Operations

Uses interest rates and open market operations.

Bank of Canada

Maintains inflation stability and economic growth.

Bank of England Independence

Gained independence to set interest rates in 1997.

Bank of Japan Independence

Evolved since 1990s, collaborates with government.

Money Supply Process

Involves Central Bank, banks, and depositors.

Depository Institutions

Accept deposits and make loans to customers.

Currency in Circulation

Amount of currency held by the public.

Reserves

Deposits at the Fed plus physical currency held.

Securities

Fed's holdings of U.S. Treasury and other securities.

Loans to Financial Institutions

Fed provides reserves through loans to banks.

Borrowed Reserves

Loans taken out by banks from the Fed.

Quantitative Easing

Unconventional tool to stimulate economy at low rates.

Systemic Risk Oversight

Fed's role post-2008 crisis to regulate financial sector.

Fiscal Policies

Government spending and taxation affecting economic conditions.

Inflation Target

Government-defined goal for price stability.