In: Finance
Please discuss the independence of the Fed.
The federal reserve system is typically known as the (Federal Reserve or can also be said as the FED), the federal reserve system is the central banking system of the United State of America. It was established on the month on 23 December 1913, with the enactment of the Federal Reserve Act. When the nation was in series of panic financial crises in 1907 it desired to the central control of the monetary system in order to alleviate the financial crises of the economy. When the nation was in huge depression in year 1930 and the Great Depression during the 2000s have led to expan the roles and responsibilities of the Federal Reserve System.
The U.S. Government established the three key objectives for the monetary policy in the Federal Reserve Act. Which will help the nation to maximise the employment and stabilizing the prices and moderating on the long term interest rates. The first two objectives which is referred to the Federal Reserve System for dual mandate. The duties have expanded over the years and currently also includes the supervising and regulating the banks and maintaining the stability of the financial system, and also provides the financial services to the depository institutions.
The main motive for creating the Federal Reserve System was to address the panics of banks of the U.S. Other purpose which are stated in the Federal Reserve Act, Such as to furnish an elastic currency to afford the rediscounting the commercial papers, to establish the more effective supervision banking in the United State. Before the Federal Reserve was established the US nation was under the great financial crises. Which particularly serves the crisis of 1907 which led the congress to enact the Federal Reserve Act in 1913. Today the Federal Reserve system has the many responsibilities in addition to the ensuring the stability of the financial system.
Current functions of the Federal Reserve System are as follows.