Question

Conduct a SWOT analysis on The Federal Reserve System. What are the strengths, weaknesses, opportunities, and threats of The Federal Reserve System?

Answer 1

The greatest strengths of the Federal Reserve system is that it is in charge of the monetary policy in the economy and thus can control interest rates and the money supply. The Fed also has the ability to control the amount that banks will lend and also the reserve requirements of the banking system. This controls the liquidity flow and the inflation levels in the economy. The weaknesses of the Federal Reserve system is that it is often controlled exclusively by the government and so this compromises the authenticity of the policy. The Federve Reserve chairman is politically appointed and so this can pose a problem. The opportunities of the Federal Reserve system is that they can help the economy stabilize through the use of their policies and also they control the level of inflation and also the unemployment levels of the economy with their policies. They should do so wisely. The threats to the Federal Reserve system includes the possibility that the system will get politicized and be governed by the ruling political party. This is something that needs to be avoided.