1. Bell Ringer 1.What type of financial institution offers full financial services and forms the largest part of the financial system? 2.What type of financial institutions is often formed by people who work in the same industry? Hint- there are 3 types of financial institutions to choose from

2. Chapter 21 Section 2

3. Structure and Organization Central Bank of the United States is the Federal Reserve System. - AKA the “FED” - Banker’s bank - 12 Federal Reserve Districts Board of Governors - 7 members - President appointed/senate ratified - President selects one to chair for a four year term.

5. Advisory Council The Fed has several advisory council.  Federal Open Market Committee (FOMC)- A major policy-making group which makes decisions that affect the economy as a whole by manipulating, or controlling the money supply. Functions of the FED The Fed as Regulator  Oversees and regulates large commercial banks

6. Functions of the FED Continued  Acting as the Government’s Bank - Holds the government’s money - Sells U.S. government bonds and Treasury Bills - Manages the nation’s currency. How Monetary Policy Works  Monetary Policy- The controlling the supply of money and cost of borrowing the money- credit- according to the needs of the economy.

7. How Monetary Policy Works Continued Changing the Supply of Money Monetary Policy Tools  Discount Rate- The rate the fed charges member banks for loans.  Reserve- Requirement for member banks must keep a certain percentage of their money in a Federal Reserve Banks as reserve against their deposits  Open Market Operations-The purchase or sale of U.S. government bonds and Treasury bills

8. Federal Reserve System Regulate financial System – Rules written that other banks must follow Maintain Currency – Coins printed and distributed Government Bank – Tax $ goes here and Social Security comes from here

9. Exit Slip Identify and evaluate benefits and disadvantages from eliminating all coin money.