Quiz 15: The Federal Reserve System
The 12 Federal Reserve Banks in the United States perform a variety of functions. They are clearing checks, supervising and examining state member banks and bank holding companies. Besides, tracking the banking statistics on deposits that are part of the monetary aggregates, supplying currency and coin to financial institutions, holding the reserves of financial institutions, serving as the fiscal agent of the U.S. Treasury department, essentially keeping the government's check book, and acting as a lender of last resort. The main functions related to Central Banking are economic research, supervision and regulation, discount window lending, monetary statistics, and consumer and community affairs. These functions are also performed by the Federal Reserve Banks.
An Economics professor in a college or university teaches to the students. Students have good knowledge in economics because they learn about economics from elementary stage. Whereas an Economist in the Federal Reserve System teaches about economic theories and data to the general public in a simple language. The economist at the Federal Reserve Banks learns about the issues that are of interest to the public. It is the part of his normal duties. He shares his expertise and knowledge with public through public speaking and by writing articles that are understandable to non-economists. He educates the public about economics. He is in a unique position to provide economic education to the public. He provides information to policy makers in many ways.
The Federal Reserve System's board of governors consists of seven governors. The chairperson of the board is the second most powerful person in the world. He is next to the president of the United States. The Chairman's power comes from the impact that monetary policy had on the U.S. economy and the importance of the U.S. economy in the world. On major issues, the Federal Reserve System speaks with one voice. That voice is the chairperson's. Behind closed doors, the governors may discuss and disagree. However, outside the Board's doors they support one position. They send clear signals about monetary policy. Both Congress and the President of United States ask the chairperson of the board of Governors to advise them on economic matters, not just those related to monetary policy. Thus, the chairperson wields tremendous power.