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单词 federal reserve system
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Federal Reserve System


Federal Reserve

or Federal Reserve Systemn. The US central bank, a system of 12 Federal Reserve banks, each serving member commercial banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the credit structure.

Federal Reserve System

n (Banking & Finance) (in the US) a banking system consisting of twelve Federal Reserve Districts, each containing member banks regulated and served by a Federal Reserve Bank. It operates under the supervision of the Federal Reserve Board and performs functions similar to those of the Bank of England

Fed′eral Reserve′ Sys`tem


n. a U.S. federal banking system that is under the control of a central board of governors (Fed′eral Reserve′ Board`) with a central bank (Fed′eral Reserve′ Bank`) in each of 12 districts and that has wide powers in controlling credit and the flow of money.
Thesaurus
Noun1.Federal Reserve System - the central bank of the United StatesFederal Reserve System - the central bank of the United States; incorporates 12 Federal Reserve branch banks and all national banks and state-chartered commercial banks and some trust companies; "the Fed seeks to control the United States economy by raising and lowering short-term interest rates and the money supply"Federal Reserve, FRS, Fedcentral bank - a government monetary authority that issues currency and regulates the supply of credit and holds the reserves of other banks and sells new issues of securities for the governmentFederal Reserve Bank, reserve bank - one of 12 regional banks that monitor and act as depositories for banks in their regionnational bank - a commercial bank chartered by the federal governmentmember bank - a bank that is a member of the Federal Reserve System

Federal Reserve System


Federal Reserve System,

central banking system of the United States. Established in 1913, it began to operate in Nov., 1914. Its setup, although somewhat altered since its establishment, particularly by the Banking Act of 1935, has remained substantially the same.

Structure

The Federal Reserve Act created 12 regional Federal Reserve banks, supervised by a Federal Reserve Board. Each reserve bank is the central bank for its district. The boundary lines of the districts were drawn in accordance with broad geographic patterns of business, and the banks were placed in Boston, New York City, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. In addition some of the regional banks have one or more branch banks attached to them.

All national banks must belong to the system, and state banks may if they meet certain requirements. Member banks hold the bulk of the deposits of all commercial banks in the country. Each member bank is required to own stock in the Federal Reserve bank of its district and must maintain legal reserves on deposit with the district reserve bank. The required reserves are proportionate to the member bank's own deposits, the proportion varying according to the location of the member bank and the character of its deposits.

Each reserve bank is managed by a board of nine directors (three appointed by the Federal Reserve Board, six by the local member banks). The Federal Reserve System's Board of Governors designates one of the federally appointed directors as chairman and Federal Reserve agent; it is the chairman's duty to report to the Board. The board of directors appoints the bank's president and other officers and employees. The operations of the Federal Reserve banks, although not conducted primarily for profit, yield an income that is ordinarily sufficient to cover expenses, to pay a 6% cumulative dividend annually on the stock held by member banks, to make additions to surplus, and to provide the U.S. Treasury with over $1 billion a year in revenue.

The Board of Governors of the Federal Reserve System—the national supervisory agency—is composed of seven members appointed for 14-year terms by the President. A chairman and vice chairman, who serve four-year terms in those posts, are named by the President from among the seven members. The Federal Reserve Board's offices are in Washington, D.C. The Federal Open Market Committee, created later (1923) than the system's other divisions, comprises the seven members of the Board of Governors and five representatives of the Federal Reserve banks; it directs the purchases and sales by the reserve banks of federal government securities and other obligations in the open market. The Federal Advisory Council consists of 12 members, one appointed annually by the board of directors of each reserve bank; it confers from time to time with the Board of Governors on general business conditions and makes recommendations with respect to Federal Reserve affairs. In 1976, the Consumer Advisory Council was created; consisting of both consumer and creditor representatives, it advises the Board of Governors on consumer-related matters.

Function

The most important duties of the Federal Reserve authorities relate primarily to the maintenance of monetary and credit conditions favorable to sound business activity in all fields—agricultural, industrial, and commercial. Among those duties are lending to member banks, open-market operations, fixing reserve requirements, establishing discount rates, and issuing regulations concerning those and other functions. In a sense, each Federal Reserve bank is best understood as a bankers' bank. Member banks use their reserve accounts with the reserve banks in much the same way that a bank depositor uses his checking account. They may deposit in the reserve accounts the checks on other banks and surplus currency received from their customers, and they may draw on the reserve for various purposes, especially to obtain currency and to pay checks drawn upon them (see clearingclearing,
in banking, the periodic settling of bankers' claims against each other, for which local banks establish clearinghouse associations. Clearinghouses are said to have existed in Florence by A.D. 800.
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).

More importantly, the required reserves also enable the Federal Reserve authorities to influence the lending activities of banks. So long as a bank has reserves in excess of requirements, it can enlarge its extensions of credit; otherwise it cannot increase its extensions of credit and may be impelled to borrow additional funds. Inasmuch as the Federal Reserve authorities have power to increase or decrease the supply of excess funds, they are able to exercise considerable influence over the amount of credit that banks may extend. By controlling the credit market, the Federal Reserve System exerts a powerful influence on the nation's economic life. Federal Reserve activities designed to expand bank credit may lead to an upswing in the business cycle, which tends to lead toward inflation; conversely, a restriction of credit generally results in decreased business growth and deflation.

The principal means through which the Federal Reserve authorities influence bank reserves are open-market operations, discounts, and control over reserve requirements. Open-market purchases of securities by Federal Reserve authorities supply banks with additional reserve funds, and sales of securities diminish such funds. Through the power to discount and make advances, the Federal Reserve authorities are able to supply individual banks with additional reserve funds. They may make the funds more or less expensive for member banks by raising or lowering the discount rate. Discounts usually expand only when member banks need to borrow. Raising or lowering requirements—within the limits imposed by law on the Board of Governors—concerning the reserves that member banks maintain on deposit with the reserve banks has the effect of diminishing or enlarging the volume of funds that member banks have available for lending. Such powers directly affect the volume of member bank funds but have no immediate effect in the use of those funds.

In the field of stock market speculation the Federal Reserve authorities have a direct means of control over the use of funds, namely, through the establishment of margin requirementsmargin requirement,
that part of a security's price that a buyer must pay for in cash. The balance of the price is met by the broker, who, in effect, is supplying a client with a loan. The smaller the margin, the greater the inducement to speculation.
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. Another of the important functions of the Federal Reserve System is furnishing Federal Reserve notes (now the chief element in the nation's currency) for circulation. Most economists and bankers agree that the Federal Reserve System has achieved marked improvements in American monetary and banking institutions.

Its efforts to preserve liquidity in the international financial system, facilitate lending by financial institutions, and otherwise revive the economy during the mortgage and credit crisis that began in 2007 are regarded by many as having helped prevent a worse financial crisis and economic downturn that could have approached the Great Depression in severity. Those efforts included included significant emergency loans to U.S. financial institutions as well as more than half a trillion dollars in currency swaps with foreign central banks. Beginning in late 2008 the Federal Reserve purchased billions of dollars of longer-term securities in an effort to pump money into the U.S. economy; it only ended its large-scale asset purchases in 2014. It also dropped (2008) its target short-term interest rate to 0.25%, holding it there until late 2015, when it began to raise the rate slowly. As a result of the crisis, the Federal Reserve's supervisory powers over banks were increased and it now also oversees nonbank financial companies that are considered to be systemically important financial institutions.

Bibliography

See S. W. Adams, The Federal Reserve System (1979); W. J. Davis, The Federal Reserve System (1982); D. R. Wells, The Federal Reserve System: A History (2004); U.S. Board of Governors of the Federal Reserve System, The Federal Reserve System (9th ed. 2005); S. H. Axilrod, Inside the Fed (2009); R. Lowenstein, America's Bank (2015).

Federal Reserve System

 

the central banking system of the USA, comprising the country’s 12 Federal Reserve banks. The Federal Reserve System was established in 1913. It is headed by a board of governors, which consists of seven members appointed for 14-year terms by the president of the United States. The Federal Reserve banks are situated in the main cities of the 12 Federal Reserve districts into which the country is divided; the board of governors is located in Washington, D.C. The Federal Reserve System derives its capital from the sale of shares to the private commercial banks that form its membership. At the end of 1975, it had 5,800 members, representing 39 percent of the 14,600 commercial banks in the USA and accounting for 73 percent of the country’s bank deposits.

The Federal Reserve System has several functions. It issues Federal Reserve notes, which constitute almost 90 percent of all currency in the USA, and maintains custody of the reserves that member banks are required to hold; the established rate of such reserves depends on the size of the bank and fluctuates between 7.5 percent and 16.5 percent of the bank’s total demand deposits and between 3 percent and 6 percent of its total time deposits. The Federal Reserve System also issues loans to commercial banks and registers bills of exchange. In addition, it purchases government securities, provides financial services to federal government agencies, and regulates the clearing of accounts between banks. The Federal Reserve System furthermore conducts transactions with foreign currency and maintains gold reserves for foreign governments.

At the end of 1976, the total balance of the Federal Reserve System was $129.3 billion. Government bonds totaled $97 billion, gold certificates $11.6 billion, and issued bank notes $83.7 billion. Reserves of member banks held by the Federal Reserve System amounted to $25.2 billion, and the member banks’ own capital and reserves totaled $2.5 billion.

The Federal Reserve System is an important instrument of the federal government’s state-monopoly control and regulation of market conditions. The credit policy that it follows is aimed at mitigating critical drops in production and at overcoming inflation. Yet, its policy has proved unable to eliminate the disproportions and conflicts inherent in a capitalist economy.

V. M. USOSKIN

MedicalSeefedLegalSeeFederal Reserve Board

Federal Reserve System


Federal Reserve System

The monetary authority of the US, established in 1913, and governed by the Federal Reserve Board located in Washington, D.C. The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the US as well as to supervise Federal Reserve member banks, bank holding companies, international operations of US banks, and US operations of foreign banks.

Federal Reserve System

The central bank system of the United States. The Federal Reserve regulates the monetary policy of the United States, especially by setting the discount rate and the fed funds rate and by buying and selling U.S. Treasury securities. It consists of 12 regional banks that operate under the guidance of a Federal Reserve Board, whose seven members are appointed by the President of the United States. The Federal Reserve System has the authority to print money, a controversial measure both now and at the time it was founded. All federally-chartered banks must belong to the Federal Reserve System and purchase a certain amount of stock in the Federal Reserve bank in charge of their particular regions. The Federal Reserve System was established in 1913.

Federal Reserve System

The independent central bank that influences the supply of money and credit in the United States through its control of bank reserves. Federal Reserve actions have great impact on security prices. For example, restriction of bank reserves and lending ability in an attempt to restrain inflation tends to drive up interest rates and drive down security prices over the short run. Also called Fed. See also Federal Open Market Committee.

Federal Reserve System.

The Federal Reserve System, sometimes known as the Fed, is the central bank of the United States.

The Federal Reserve System, which was established in 1913 to stabilize the country's financial system, includes 12 regional Federal Reserve banks, 25 Federal Reserve branch banks, all national banks, and some state banks. Member banks must meet the Fed's financial standards.

Under the direction of a chairman, a seven-member Federal Reserve Board oversees the system and determines national monetary policy. Its goal is to keep the economy healthy and its currency stable.

The Fed's Open Market Committee (FOMC) sets the discount rate and establishes credit policies. The Federal Reserve Bank of New York puts those policies into action by buying and selling government securities.

Federal Reserve System

Often called “the Fed,”it is the central bank of the United States,created in 1913.It regulates credit through the interest rates it charges for short-term loans to financial institutions,supervises and regulates banking institutions,and provides advisory services to the government.Funding comes from interest on investments,fees for services to depository institutions,and interest on loans.The public usually comes into contact with the Fed in two ways:When the Federal Reserve chairman announces interest rate changes for loans to member financial institutions,almost all financial institutions change their interest rates within days afterward.In this way,the Fed controls the cost of credit to consumers.Additionally,it provides a central clearinghouse for checks drawn on different banks across the nation, making it possible for your bank in your home town to give you credit for a check drawn on another bank on the other side of the country.

AcronymsSeeFRS

Federal Reserve System


Related to Federal Reserve System: Board of Governors of the Federal Reserve System
  • noun

Synonyms for Federal Reserve System

noun the central bank of the United States

Synonyms

  • Federal Reserve
  • FRS
  • Fed

Related Words

  • central bank
  • Federal Reserve Bank
  • reserve bank
  • national bank
  • member bank
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