Econ 102 1st Edition Lecture 18Outline of Last Lecture I. Final Exam InfoI. Chapter 13 Money and BankingII. How Banks Create MoneyOutline of Current LectureI. “In Plain English” Federal ReserveCurrent LectureI. “In Plain English” Federal Reservea. Videoi. Most Complex but effective institutions in USii. The whole is the sum of the 3 parts1. Board of Governors2. Reserve Banksa. 12 Buildings3. Federal Open Market Committee iii. Complex Design tied to how it was created1. Structurea. Step back 100 yearsi. Bank Failures in 1880sii. domino effects of paniciii. serious recessionsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.iv. Establish confidence in banking system and stability of economyv. Centralized National Authority1. Board of Governorsvi. Regional Independence1. reserve banksvii.Setting the Nation’s Monetary Policy1. Federal Open Market Committeeiv. Washington DC: Board of Governors1. 7 Governors appointed by US President and con-firmed by the US Senate2. write regulations3. make nation economically strong4. study trends and make forecasts5. oversee Reserve Banks6. participate on FOMC7. FOMCa. chief body for monetary policy makingb. meet 8x/year to discuss how to promote eco-nomic growthc. only voting members can vote on US’s money supplyi. how much money banks have to lendv. Reserve Bank1. branches2. 3 main responsibilitiesa. Providing financial servicesi. “Bankers Bank”ii. Safe and efficient money transfersiii. payment services to all financial institu-tionsiv. EX: high speed machine sorting checks and bundlesvi. Conducting monetary policy1. keep the economy healthy2. hold firmly to their opinions debate points of view with one another3. agree that economy performs well with low and sta-ble inflation4. Prepare Reserve president for FOMC meetinga. Set Target Interest Ratesi. on overnight loansii. influence rates of other loansiii. how much money banks have available5. Supervising commercial banksa. safe sound and competitive practicesb. regulates and supervises system and institu-tionsi. these types include state-chartered member banks; Bank holding companies—which are the companies that own banks; and international organizations that do banking business in the United States.ii. Regulation1. written rules defining acceptable behavioriii. Supervision1. enforcement of these rules carried out by staff at federal reserve banks2. evaluate assets and internal con-trols3. you care because your money is here!!!4. must comply with federal and state laws5. give bank a rating 6. Help banks respond to all types of crisesa. gives short term loans to stopdomino affectiv. Hopefully complex yet effective design ismore clearb. http://www.stlouisfed.org/education_resources/in-plain-english-video/ c.
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