Question

Discuss the role of each of the entities within the US Banking System.

Answer 1

Central Bank - Federal Reserve System

• Create, manage and control monetary policy
• Create banking regulations and supervise all the financial and banking institutions
• Maintain liquidity in the system, keeping it under control and create stability in the system
• Manage the currency fluctuation by maintaining enough reserves
• Assist and provide services to the U.S. government, depository institutions and foreign institutions

Federal Deposit Insurance Corporation - FDIC

• Provide deposit guarantee (only for member banks) to safeguard the investors interest upto 250000 in case of failure of a bank
• Supervise few financial institutes to oversee their financial health
• They make complex institutions resolvable and manage receiverships policies

Office of the Comptroller of the Currency

• Office of the Comptroller of the Currency regulate and supervise US banks and thrift institutions
• Improve the efficiency and effectiveness and reduce the regulatory burden on the system
• They also ensure equal access to financial services to all the citizens of America
• Supervision of federally licensed branches and agencies of foreign banks in the United States also comes under Office of the Comptroller of the Currency duties.
• Ensure safety of the financial system in US