Reserve System or FRS is specially created on Decembers, 23, 1913 independent federal agency for implementation of functions of the monetary authority and realization of the centralized control over the commercial banking system of the United States of America. Founding for the creation is Law on Federal reserve. The state plays determining role in the management of the FRS, although the pattern of ownership of capital is private: joint-stock with the special status of shares of stock.
The college students interested in writing free sample research papers on Federal Reserve have to know current functions of the FRS:
- performance of duties of the US Federal Bank;
- maintenance of the balance between the interests of commercial banks and national interests;
- providing of supervision and regulation for bank institutions;
- protection of credit consumers;
- management by money creation (with quite often conflicting aims: minimization of unemployment, maintenance of stability of prices, providing of moderate interest rates);
- providing of stability of the financial system, control of system risks on financial markets;
- providing of financial services to the depositarys, including to the US government;
- participating in functioning of the system of international and internal payments;
- solution of liquidity problems at the local level.
From the management point of view, the FRS is an independent organ in the government of the USA. As the national central bank, the FRS gets plenary powers from the US Congress. The independence is provided by that the made decision about credit and monetary politics must not be approved by the president of the USA or by any other executive or legislative branch of power, the FRS does not get financing from Congress, term of office for the members of the Board of Governors of the Federal Reserve System is limited by a few terms of presidential appointments. At the same time, the FRS is controlled by the Congress, which often analyses activity of the Federal Reserve and can change its responsibility through legislation.
In July, 1979 the president of the USA Jimmy Carter appointed Paul Volcker as the chairman of the FRS. Volcker managed to restrain galloping inflation, reducing it to 1% by reduction of money creation and toughening monetary policy. On the post of the FRS chairman, Paul Volcker was replaced by Alan Greenspan in 1987. From February, 2006 the post of the Board of Governors of the Federal Reserve System chairman was occupied by Ben Shalom Bernarke. On December, 17, 2009 the Bank committee of the US Senate confirmed Ben Shalom Bernarke as the head of the FRS for the second term. 16 senators voted for his candidature, seven others was against him.
On January, 6, 2014, the Senate of the USA voted for the candidature of Janet Yellen proposed by the President Barack Obama. The last two years before the appointment, Yellen worked as the deputy of Ben Bernarke. Like Bernarke, Yellen has a reputation of “pigeon” among economists. It means that her priority is creation of new workplaces, but not the fight against inflation.
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