The Federal Reserve

1. The Federal Reserve

2. The Federal Reserve

4. 12 FOMC 7- appt 14 yrs Boardof Governors 12 Bankers Federal Advisory Council Chairman 12 Federal Reserve Banks 1913 24 Branches 3000 Member Banks

5. Money

6. What Gives Something Value?

7. People Agree Something has Value!

8. Definition3 Characteristics

9. Medium of Exchange- Stuff used to exchange for other goods and services.

10. Standard of Value- agreed upon by all.

11. Store of Wealth- a way to keep wealth and store your work.

12. Gold • Worldwide value • Durable • Divisible

13. Paper Currency • Receipts for Gold

14. The Anatomy of a Dollar Bill

16. Dollar Bill Facts • US currency bills are 2.61 inches wide and 6.14 inches long; they are .0043 inches thick and weigh 1 gram. (All US currency was made smaller in 1928) • All US Bills are cloth, not paper – 25% Cotton, 75% Linen with red and blue synthetic fibers distributed throughout. • Currency is printed by the Bureau of Engraving and printing. Each bill, regardless of denomination costs 4.2 cents to make. The BEP prints 16,650,000 $1 bills each day. • The $1 bill has an average lifetime of 18-22 months. Damaged bills are returned to the Fed and shredded. Last year, the Fed destroyed around $7.5B worth of currency

17. Seal of Issuing Federal Reserve District B = New York City Issuing Federal Reserve District 2 = New York City Serial Number Engraving Plate Serial Number Design Date Seal of US Treasury Engraving Plate Identifier and Bill Location Identifier Signatures of Treasurer and Treasury Secretary

19. Great Seal of the US “In God We Trust” added by Eisenhower in 1957

21. The Great Seal (Front) • 13 leaves in the Olive Branch (Right Talon) • 13 arrows in left talon • 13 stars overhead • 13 Stripes on Shield (Blue Bar represents congress) • E Pluribus Unum: “From Many Comes One”

22. The Great Seal (Back) • The Pyramid had 13 steps • MDCCLXXV1 = 1776 • The Pyramid is unfinished (the US is an ongoing project) • The western face is dark (the western US had yet to be explored • The deity watches over us • Annuit Coeptus = “God Has Favored our Undertakings” • Novus Ordo Seclorum = “A New Order Has Begun”

24. The Federal Reserve-Answers

25. What is our nation’s central bank? • The Federal Reserve System

26. When was the Federal Reserve system founded? • 1913

27. Name the body that provides the leadership for the Federal Reserve? • The Board of Governors, located in Washington, D.C.

28. How many members are on the Board of Governors? • 7

29. How long does a governor serve? • 14 Years

30. How does the chairman get his/her job? • Appointed by the President, Confirmed by the Senate

31. Who is the current chairman of the Board of Governors? (look up this answer) • Jerome Powell

32. How long does the chairman serve? • The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term limitations.

33. How many Federal Reserve banks are there? • A network of 12 Federal Reserve Banks and 24 branches make up the Federal Reserve System under the general oversight of the Board of Governors. Reserve Banks are the operating arms of the central bank.

34. List the Federal Reserve banks: The Banks are named after the locations of their headquarters - Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco.

35. How many branches make up the Federal Reserve? • 24

36. What is our closest Federal Reserve bank • Philadelphia

37. How does the Federal Reserve serve the… • Commercial Banks- storing currency and coin, and processing checks and electronic payments. Reserve Banks also supervise commercial banks in their regions. • US Treasury and Government- As the bank for the U.S. government, Reserve Banks handle the Treasury's payments, sell government securities and assist with the Treasury's cash management and investment activities.

38. What percentage of commercial banks are members of the Federal Reserve system? • Approximately 38 percent

39. Approximately how many member banks are there? • 3000

40. What is the Fed’s main monetary policy making body? • The Federal Open Market Committee, or FOMC, is the Fed's monetary policymaking body. It is responsible for formulation of a policy designed to promote stable prices and economic growth. Simply put, the FOMC manages the nation's money supply.

41. How many times does the FOMC typically meet in one year? • 8

42. Define Monetary Policy – • The term "monetary policy" refers to what the Federal Reserve, the nation's central bank, does to influence the amount of money and credit in the U.S. economy.

43. Define Inflation according to the handout- • Inflation is a sustained increase in the general level of prices, which is equivalent to a decline in the value or purchasing power of money. If the supply of money and credit increases too rapidly over time, the result could be inflation.

44. List three goals of Monetary Policy: • The goals of monetary policy are to promote maximum employment, stable prices and moderate long-term interest rates.

45. List the three tools of Monetary Policy. • The Federal Reserve’s three instruments of monetary policy are open market operations, the discount rate and reserve requirements. • Open Market Operations • Reserve Requirement • Discount Rate

46. Define Open Market Operations- • The Fed uses open market operations as its primary tool to influence the supply of bank reserves. This tool consists of Federal Reserve purchases and sales of financial instruments, usually securities issued by the U.S. Treasury, Federal agencies and government-sponsored enterprises

47. Define Discount Rate- • The discount rate is the interest rate charged by Federal Reserve Banks to depository institutions on short-term loans.

48. Define Reserve Requirement- • Reserve requirements are the portions of deposits that banks must maintain either in their vaults or on deposit at a Federal Reserve Bank.

49. What is the role of the Federal Open Market Committee? • The FOMC formulates the nation’s monetary policy. The voting members of the FOMC consist of the seven members of the Board of Governors (BOG), the president of the Federal Reserve Bank of New York and presidents of four other Reserve Banks who serve on a one-year rotating basis.

50. How often are Open Market Operations conducted? • …open market operations are conducted on a daily basis