Respuesta :
The primary role of a central bank is creating monetary policy.
The three major functions of the central bank (Fed) of the United States are monetary policy, financial services and controlling affairs of other member banks (banks supervision)
Further Explanation
The Federal Reserve System is the central bank of the United States and it is also known as the Fed. The Federal Reserve System plays a major role in the Economy of the United States and the world. The US central bank is a single actor in the US economy and also controls the world’s money.
The Federal Reserve System is made of three major component and these include:
- The board of governors
- The staff economists
- The Federal open market committee
The board of governors is made of seven governors and their primary duty is to guide monetary policy action and analyze both domestic and international condition.
The staff economists provides semi –annual and beige brook monthly reports to the congress
The federal open market committee sets target for fed fund rate and controls the market operation.
Other functions of the Federal Reserve System include
- Manages inflation
- Controls other member banks
- Ensures the financial system is stable
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KEYWORDS:
- central bank
- federal reserve system
- inflation
- board of governors
- staff economists
- monetary policy
The main role of the central bank is to create monetary policy.
Further Explanation:
Central bank:
The central bank is a public entity that has authority over the production and distribution of money in a specific country. The formation of the monetary policy is an emerging function of the central bank. The central bank helps in straightening the economic condition of the country by easing or tightening the supply of money.
The primary role of the central bank:
The primary role of the central bank is to create a monetary policy. The central bank is liable for the liquidity in the financial system of the county. The central bank has three monetary tools.
Reserve requirement: It is the amount of cash that should be held by each commercial bank.
Open market operations: The central bank buys and sells securities with commercial banks.
Setting the interest rate: The central bank sets the interest rate that they charge from the commercial banks. The interest rate directly affects the dollar value.
Thus, the main role of the central bank is to create monetary policy.
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Answer details:
Grade: Middle school
Subject: Business
Chapter: Banking
Keywords: best, describes, centrals, bank, primary, role, monetary policy, currency, economy.
