Chapter 15 – The Federal Reserve System Section 1.
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Transcript of Chapter 15 – The Federal Reserve System Section 1.
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Chapter 15 – The Federal Reserve
System
Section 1
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Structure of the Federal Reserve
Private Ownership:
Privately owned by its member
banks- commercial banks that own shares
of Federal Reserve stocks
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Board of Governors• 7 members appointed by the
President• 14 year term ~ terms are staggered
so there is always a vacancy every 2 years
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District Banks
• Began as 12 independent and equally powerful banks
• Each region has its own president and board of
governors ~ but are supervised by the Federal Reserve Board
in D.C.
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Open Market Committee• Makes decisions about growth of the
money supply & interest rates
Advisory Committees• 3 advisory committees that advise the
Board of Directors• One representative from each district
• Advise on overall economic health, credit laws, and savings banks
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Responsibilities
1.Monitors reserves in state member banks
2.Monitors bank holding companies: companies that have stock but do not
take deposits
3. International supervision
4. Mergers
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Section 2
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Monetary Policy:
• The expansion and contraction of the money supply in order to influence costs
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Legal Reserves
• Consists of coins and currency that banks hold in their vaults
• A required percentage must be set aside for legal reserves
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How Banks Operate• Banks have Liabilities = debts
and obligations to others
• A Balance sheet helps report the liabilities and assets to show their net worth = the excess of assets over liabilities (measure of value of a business)
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Federal Spending
After the budget activity and the video, which federal program would you alter if you had the opportunity? In your opinion, does this program
deserve more or less federal funding? Why?