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Essay On The Role Of The Federal Reserve System

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ABSTRACT
Title - “The role of the Federal Reserve System in bank supervision and regulation in the context of financial crisis” (A report published by the Board of Governors of the Federal Reserve System, Washington, D. C, January 13, 2010). Board of Governors is a key entity and an independent agency of the federal government.
The narrative case study analysis encompasses the significance of the continued role of the Federal Reserve System in banking supervision and regulation in the context of financial crisis. The implications of the case study provide insights into the effectiveness of the system in developing the expertise and information for monetary policy that enables it to produce unique inputs to an essential regulatory arrangement in a system and the improvement in the performance of critical functions of the Federal Reserve as a central bank based on the results of supervising the banking system of the nation.
There are different dimensions, based on which the implication and analysis have been discussed; that includes the Dynamic environment of the economy and the Federal …show more content…

As individual institutions are largely interconnected to each other, a failure could severely affect the entire financial system. In order to address this matter a deep expertise is required in the areas of macroeconomic forecasting, payments etc and the federal reserve provides this necessary expertise. Second - The federal reserve significantly carries out its central banking functions as well. The federal reserve is effectively able to address financial issues mainly because it acts Both as a bank supervisor and as a central bank. The Federal Reserve is allowed to independently evaluate the financial condition of institutions and this helps to improve the safety and soundness of credit. This supervision helps to determine the appropriate stance of the monetary policy. The benefits proved important during the 2007

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