M26 Video Notes: The Federal Reserve System

3 parts

• board of governors, reserve banks, federal open market committee

failure of one bank usually led to other people withdrawing from other banks → economic recession

Federal Reserve Act of 1913

• emergency cash reserves so shortage o funds of one bank didn’t destroy the system → more economic stability

• easier and faster to make payments in different parts of the country

  • Board of governosr serves as a central national authority

  • regional independence is fostered through reserve banks

  • the FOMC sets the nation’s monetary policy

• 7 governors, write regulations to make commercial banks sound

  • also oversee 12 reserve banks

  • participate on the FOMC