Anyone can start a bank operation but first you need permission from the government. What is...

Anyone can start a bank operation but first you need permission from the government. What is that permission called?

With respect to controlling money supply, the law requires the Federal Reserve to take orders from what part of the government?

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Expert Solution

The permission to start a bank operation from the Government is called banking license. The licensing of banking companies is the process of getting permission from Central bank ( on behalf of Government) to start a banking operation.
One among the methods adopted by the Federal Reserves to control money supply is Open Market Operaton; that is , the buying and selling of Government securities. When Congress approves an increase in the national debt, treasury department prepares a mix of securities that has to given to private dealers for trading. And federal reserve uses it for controlling money supply.

Rahul Sunny answered 1 year ago

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