how is the role of the Federal Reserve System changing in modern economy, modern markets?

Question

Question

Answer 1

Answer #1

Federal reserve system is a central banking system in USA. It was created in 1913. It is also referred as "FED".

Role of the Federal Reserve System changing in modern economy- We can very well see the role of federal reserve system by following points:

Fed makes the monetary policy through which it keeps control over inflation by controlling supply of money. It keeps changing the monetary policy based on the economic conditions.
It regulates the commercial banks and also provide them cover and safety in bad times.
Fed purchases and sales Government securities through open market operation so as to adjust the supply of reserve.
It provides loan to commercial banks and other financial institutions, it makes sure fine liquidity in the system.
Fed keeps the price stable, it ensures the economic growth, it protects customers' rights. It increases the credibility of other policies and action plans.
It makes sure that international payments are secured, it also lays a major role in operating national payment system.
It maintains stability in the whole financial system in USA.

Answer 2

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