Title: Making Financial Policy in the Federal Reserve System
Abstract: As the political institution that serves as a central bank in the American system, the Federal Reserve is, in its essence, a bank. The Treasury pays the government's bills. A bureau of the Treasury, the Internal Revenue Service, collects taxes. The president and Congress control who the Treasury pays and taxes – and how much – when they negotiate the annual budget. But the Treasury's general account is at the Federal Reserve. At this time in American history, the notes of that bank are the legal tender for the country and, incidentally, most global financial transactions. Although it is not a branch of the government laid out in the Constitution, the Federal Reserve System plays a major role in financial politics because it determines monetary and some regulatory policy. It has been constructed over time through the political process, so it does not have the same structure as a commercial bank. Moreover, it handles many additional tasks that can seem to contradict each other outright. These contradictions result from the political compromises necessary to bring it into existence only a century ago.
Publication Year: 2013
Publication Date: 2013-01-14
Language: en
Type: book-chapter
Indexed In: ['crossref']
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot