The Federal Reserve System, (aka US. Federal Reserve, Federal Reserve, or simply The Fed) is the central banking system of the United States of America and was established by Congress in 1913 through the Federal Reserve Act 1913 to provide the United States with a safe, flexible and stable monetary system. This was made due to many previous bank panics throughout the 19th century and provided a strong demand to establish a centralized banking system.
The main role and responsibility of the US. Federal Reserve includes:
1. The conducting of monetary policy by influencing the conditions of the US. economy to chase the goals of maximum employment, stable prices and moderate long-term interest rates.
2. Maintenance of the US Dollar and the American economy and also to contain system risk in the financial markets.
3. Regulation of banking institutions to ensure safety of the United States banking and financial system and also the protection of credit rights to its consumers.
4. Provision of services towards the US. Government, depository institutions, foreign official institutions and also the assistance in the operation of United States’ payment system.
This banking system is composed of a Board of Governors (presidentially appointed), the Federal Open market committee, and 12 Federal Reserve banks in major US. Cities and also other member banks. The 7 members of the Board of Governors are appointed by the President and confirmed by the Senate. The Federal Open market committee (FOMC) comprises of the 7 members of the board of governors and also 5 representatives selected from the Federal Reserve banks.
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