SOLUTION
ASPECTS OF THE FEDERAL
SYSTEM ALLOW MISHKIN TO CONSIDER THE FEDERAL RESERVE BANKS
SEMI-PUBLIC ENTITIES
The Federal Reserve system is the
central bank of the United states. It generally performs five
general aspects to promote the effective operation of the economy
and more generally, the public interest. The Federal Reserve
Conducts the nation's monetary
policy to promote maximum employment, stable prices and moderate
long term investment in the economy.
- Promotes the stability of the
financial system and seeks to minimize and contain systematic risks
through active monitoring and engagement in the U.S and abroad
- Promotes the safety and soundness
of individuals financial institutions and monitors their impact on
the financial system as a whole
- Fosters payment and settlement
system safety and effeciency through the services to the banking
industry and the U.S government that facilitate U.S dollar
transactions and payments
- Promotes consumer protection and
community development through consumer-focused supervision and
examination, research and and analysis of emerging consumer issues
and trends, community economic developement activities and the
administration of consumer laws and regulations.
- These aspects also includes
influencing the supply of money and credit, regulating the
supervising financial institutions, serving as a banking and fiscal
agent of the United States government and supplying payment
services to the public through depository institutions like
banks.
- Mishkin says, Changes in the
ability to process information more effectively have allowed a lot
of lending to be move out to the opaque into the more transperent.
This has meant that the importance of banks in the futher financial
system in terms of lending has decreased
- Futher he added, One thing the
Federal Reserve system has done is to create LGBO( large complex
banking organization) program where we do special monitoring of the
largest finacial institutions, because there is recognition thnat
if one of these institutions fails, it can have much more
systematic implifications for the economy.