Financial Markets and Institutions (2-downloads)

PART FOUR CENTRAL BANKING AND THE CONDUCT OF 

MONETARY POLICY

Chapter 9 Central Banks and the Federal Reserve System

191

Preview

191

Origins of the Federal Reserve System

192

■ INSIDE THE FED

The Political Genius of the Founders of the 

Federal Reserve System

192

Structure of the Federal Reserve System

193

Federal Reserve Banks

194

■ INSIDE THE FED

The Special Role of the Federal Reserve Bank of New York

195

Member Banks

196

Board of Governors of the Federal Reserve System

197

■ INSIDE THE FED

The Role of the Research Staff

198

Federal Open Market Committee (FOMC)

198

The FOMC Meeting

199

■ INSIDE THE FED

Green, Blue, Teal, and Beige: What Do These Colors 

Mean at the Fed?

200

Why the Chairman of the Board of Governors Really Runs the Show

200

■ INSIDE THE FED

How Bernanke’s Style Differs from Greenspan’s

201

How Independent Is the Fed?

202

Structure and Independence of the European Central Bank

203

Differences Between the European System of Central Banks and 

the Federal Reserve System

204

Governing Council

204

How Independent Is the ECB?

205

Structure and Independence of Other Foreign Central Banks

206

Bank of Canada

206

Bank of England

206

Bank of Japan

207

The Trend Toward Greater Independence

207

Explaining Central Bank Behavior

207

Should the Fed Be Independent?

208

The Case for Independence

208

■ INSIDE THE FED

The Evolution of the Fed’s Communication Strategy

209

The Case Against Independence

210

Central Bank Independence and Macroeconomic Performance 

Throughout the World

211

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Contents in Detail 

xv

Summary

212

Key Terms

212

Questions and Problems

212

Web Exercises

213

Chapter 10 Conduct of Monetary Policy: Tools, Goals, Strategy, 

and Tactics

214

Preview

214

The Federal Reserve’s Balance Sheet

214

Liabilities

215

Assets

216

Open Market Operations

216

Discount Lending

217

The Market for Reserves and the Federal Funds Rate

217

Demand and Supply in the Market for Reserves

218

How Changes in the Tools of Monetary Policy Affect the Federal Funds Rate

219

■ INSIDE THE FED

Why Does the Fed Need to Pay Interest on Reserves?

220

■ CASE

How the Federal Reserve’s Operating Procedures Limit Fluctuations

in the Federal Funds Rate 

223

Tools of Monetary Policy

224

Open Market Operations

224

A Day at the Trading Desk

225

Discount Policy

226

Operation of the Discount Window

226

Lender of Last Resort

227

Reserve Requirements

228

■ INSIDE THE FED

Federal Reserve Lender-of-Last-Resort Facilities During 

the 2007–2009 Financial Crisis

229

Monetary Policy Tools of the European Central Bank

230