Question

what is the federal reserve responsibilities on its domestic scale vs international scale

Answer 1

Meaning of Federal Reserve :

The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the monetary system in order to alleviate financial crises.

Bank rate: 3.00%

Chairperson: Jerome Powell

Interest rate target: 1.75% to 2.00%

Interest on reserves: 1.80%

Founder: United States Congress

Subsidiary: Federal Open Market Committee.

Responsibilities of the Federal Reserve  

The Federal Reserve include influencing the supply of money and credit; regulating and supervising financial institutions; serving as a banking and fiscal agent for the United States government; and supplying payments services to the public through depository institutions like banks, credit .

The intention is to control the stream of cash and credit in the nation. The 1913 Federal Reserve Act was a U.S. enactment that made the present Federal Reserve System.

Fall into four general areas: conducting the nation's monetary policy; supervising and regulating banking institutions and protecting the credit rights of consumers; maintaining the stability of the financial system.

It is based on a federal system that comprises a central governmental agency (the Board of Governors) in Washington, D.C., and 12 regional Federal Reserve Banks that are each responsible for a specific geographic area of the U.S. The Federal Reserve is considered to be independent because its decisions do not have to be ratified by the president or any other government official. However, it is still subject to Congressional oversight and must work within the framework of the government’s economic and financial policy objectives. Often known simply as “the Fed."

Understanding the Federal Reserve System

The Federal Reserve’s creation was precipitated by repeated financial panics that afflicted the U.S. economy over the previous century, leading to severe economic disruptions due to bank failures and business bankruptcies. A crisis in 1907 led to calls for an institution that would prevent panics and disruptions.
The 12 regional Feds are based in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
The Federal Reserve’s duties can be categorized into four general areas:

• Conducting national monetary policy by influencing monetary and credit conditions in the U.S. economy to ensure maximum employment, stable prices and moderate long-term interest rates.
• Supervising and regulating banking institutions to ensure safety of the U.S. banking and financial system and to protect consumers’ credit rights.
• Maintaining financial system stability and containing systemic risk.
• Providing financial services – including a pivotal role in operating the national payments system – to depository institutions, the U.S. government and foreign official institutions.

Dual Mandate

The Federal Reserve’s main monetary policymaking body is the Federal Open Market Committee (FOMC), which includes the Board of Governors, president of the Federal Reserve Bank of New York, and presidents of four other regional Federal Reserve Banks who serve on a rotating basis.

The committee is responsible for monetary policy decisions, which are categorized into three areas; maximizing employment, stabilizing prices and moderating long-term interest rates. The first two are know as the Fed's dual mandate.

Income

The Fed’s main income source is interest on a range of U.S. government securities it has acquired through its operations. Other income sources include interest on foreign currency investments, interest on loans to depository institutions, and fees for services (such as check clearing and fund transfers) provided to these institutions. After paying expenses, the Fed transfers the rest of its earnings to the U.S. Treasury.