Question

In complete sentences, explain two reasons why the Federal Reserve is made up of system of banks spread across the country.

Answer 1

Answer :

The Reserve Bank of India (RBI) is the central bank of India, which was established on Apr. 1, 1935, under the Reserve Bank of India Act. The Reserve Bank of India uses monetary policy to create financial stability in India, and it is charged with regulating the country’s currency and credit systems.

KEY TAKEAWAYS

The Reserve Bank of India (RBI) is the central bank of India,

The RBI was originally set up as a private entity in 1935, but it was nationalized in 1949.

The main purpose of the RBI is to conduct consolidated supervision of the financial sector in India, which is made up of commercial banks, financial institutions, and non-banking finance firms.

The Federal Reserve System is the central bank of the United States. It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest. The Federal Reserve

conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy;

promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad;

promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole;

fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and

promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.

Answer 2

Answer:

Concept :

The American central bank is known as the Federal Reserve System. In order to give the country a more secure, adaptable, and stable monetary and financial system, Congress established it in 1913. Its impact on banking and the economy has grown over time. It carries out five general tasks to advance the well-being of the American economy and, more broadly, the public interest.

Explanation:

• The United States' central bank and monetary authority is the Federal Reserve System. The Fed offers a secure, adaptable, and stable monetary and financial system to the nation.
• The Federal Reserve System is made up of 12 regional Federal Reserve Banks, each of which is in charge of a particular region of the United States.
• The Fed's primary responsibilities include overseeing and regulating banks, implementing national monetary policy, preserving financial stability, and offering banking services.
• The Fed's monetary policy is decided upon by the Federal Open Market Committee, which also controls the nation's money supply.
• A financial organisation with exclusive authority over the creation and distribution of money and credit for a country or a group of countries is known as the central bank.
• In contemporary economies, the central bank is typically in charge of monetary policy formulation and member bank regulation.
• The Federal Reserve Act, which President Woodrow Wilson signed on December 23, 1913, created the Fed in reaction to the financial panic of 1907.
• The only major financial power without a central bank prior to that was the United States.
• The numerous financial panics that plagued the American economy over the previous century, resulting in devastating economic disruptions from bank failures and business bankruptcies, served as the catalyst for its creation.
• An organisation to control panics and disturbances was requested after a crisis in 1907.

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