1. Federal Reserve Created in 1914 after a series of bank failures Central bank: bank that can lend to other banks in times of need

2. Ownership The Fed is privately owned by member banks. Member banks: privately owned banks who own shares of stocks in the Federal Reserve System

3. Board of Governors Elected by the President and approved by the Senate They serve 14 year terms and a new member is elected every 7 years Ben Bernanke is the chairman

4. District banks There are 12 district banks who accept the other banks deposits and make loans to banks

5. Districts

6. Standard SSEMA2c- Describe how the Federal Reserve promotes economic stability.

7. Monetary Policy This is how the Fed controls the money supply and it can also make loans to member banks Money = Inflation Money= deflation and falling production

8. Tools of Monetary Policy Open Market Operations Changes in the Discount Rate Changes in the Reserve Requirement

9. Regulatory Responsibilities All depository agencies must maintain reserves against their customer deposits The Federal Reserve uses the reserves to control the money supply

10. Open Market Operations The Fed sells or buys US government securities (bonds) to influence the money supply.

11. Changes in Discount Rate The discount rate is the interest the Federal Reserve charges on it’s loans to banks.

12. Reserve Requirement This is the minimum percentage of deposits that banks must keep on reserve to back up the checking types.