Chapter 5 Federal Reserve System

Central Bank

is the organization that oversees a nation's monetary system.

Era of free banking

period of time from 1837 to 1863. All bank functions were handled by state banks.

National Currency Act

created the Office of the Comptroller currency in 1863

Office of the Comptroller of the Currency

created a uniform national currency and a system of national banks

National banking act

allowed the federal government to charter private banks.

Bank note

are intended to be used as currency and
promise immediate payment by the bank that issued the note

Bank panic

occurs when there is a widespread worry that banks do not have enough money to cover customer demands for withdrawals.

bank run

is when depositors fear their money is
not safe in the bank in which it was deposited

bond

represents money the federal government has borrowed from the bondholder

Federal Reserve System

The central bank for the US that is responsible for the country’s monetary system. Also known as the Fed

Fed

the central bank for the United States

Monetary System

is the mechanism a nation uses to provide and manage money for itself.

Decentralization

occurs when a central authority shares power with regional and local authorities

Federal Reserve Bank

One of the twelve regional branches of the Federal Reserve System that were created to avoid establishing a central bank in a single location.

Board of Governors

The seven member board that oversees the Federal Reserve System

Federal Open Market Committee

Makes key decisions about interest rates and decide whether to increase or decrease the money supply

Monetary Policy

The actions the Fed takes to control the money supply and the rate of inflation in the economy

Discount rate

Rate the Fed charges for loans to commercial banks

Prime rate

Rate of interest banks charge on short term loans to their best customers

Reserve requirement

is the amount of money a bank must keep and not invest or loan out.