U.S Fed Reserve System

-Board of governors and Chair -12 Fed reserve districuts, each with its own Fed Rese bank -U.S monetrary policy is sety by the Fed Open Market Commitee (FOMC) -responsibilities include clearing interbank payments, controling money supply via open market operations, managing foreign exchange -Fed's major liabilities is dollar bills, major assets is government securities -A bank's reserve is asset, but the also the liability of Fed reserve -Banks borrow money from Fed at discount rate Open market operations -Treasury collect taxes and pay government bills. If there is deficits (spending exceed budget), Treasury must borrow to finance the deficit. BUT IT CAN NOT PRINT MONEY. -Treasury borrow money by issuing bills, bonds, and nots. Fed as a primary dealer, participating in the buying, and subsequently buy and sell in secondary market.