The Role of the Federal Reserve

The Role of the Federal Reserve

The Federal Reserve System consists of the Federal Reserve Banks, the Federal Reserve Board of Governors, and the Federal Open Market Communities (Federal Reserve System, 2021, p. 2). The main role of the Federal Reserve Board is to oversee the operations of the Federal Reserve banks and regulate and supervise financial institutions. The Board also sets the sense of direction for the banks and guides and oversees the banks’ activities when the Federal Reserve banks loan depository monetary institutions and when they offer monetary services to the federal government and depository institutions. Also, the Board has extensive oversight responsibility for the activities and operations of the Federal Reserve banks (Federal Reserve System, 2021, p. 8). The responsibility includes oversight of the services offered by Federal Reserve banks to depository financial entities and the United States Treasury. The Board’s oversight also includes approving and reviewing budgets for every reserve bank. The Federal Reserve Board’s role extends to ensuring that the concerns and voices of communities and consumers are considered at the central bank. This is achieved by supervising consumers, conducting policy analysis research, and promoting transparent and fair consumer financial services.

The role of the federal bank includes various functions. One of the functions is examining and supervising state member banks, thrift holding companies, and non-bank financial institutions classified as systematically vital under the authority granted to them by the Federal Reserve Board. The second function is offering loans to depository financial entities to create liquidity in the financial framework. The third function is providing vital monetary services that strengthen the United States payment system and facilitate the distribution of the United States coin and currency to depository financial entities, operating automated clearing houses and the Fedwire, serving as a bank for the treasury in the United States and clearing checks. The fourth function is to examine specific financial entities to enforce and ensure they follow fair lending and federal consumer protection laws. The Federal Open Market Communities, on the other hand, focus on determining the appropriate policy stance and transmitting it to financial markets.

Notably, the role of the Federal Reserve is classified into monetary policy and supervision and regulation (Federal Reserve Board, 2022). The Federal Board of Governors formulates monetary policy to influence financial and credit conditions in the economy to achieve stable prices, maximum employment, and reasonable long-term interest rates. The Board of Directors also has regulatory and supervisory responsibilities that affect the banking system in the United States. The Board also promotes soundness and safety, fosters efficient and fair service delivery to customers, and ensures compliance with laws and regulations (Federal Reserve Board, 2022). The Board additionally coordinates its activities with other state and federal regulatory bodies. The Board is authorized to inspect the banks that have been acknowledged as Federal Reserve members and their affiliates and request their periodic reports. It is also in charge of supervising corporations used by the banks in the United States to conduct operations in other countries and the operations of United States banks in foreign countries.

Biblical Perspectives

Biblical principles are vital in guiding people on the right thing to do in various situations. Biblical principles also guide ethical decision-making and ensure that the interests of all parties affected by a decision are considered. The Federal Reserve Bank oversteps the biblical principles on wealth distribution. The Bible prohibits the unfair distribution of wealth through the teachings that warn wealthy and powerful individuals from using their wealth and influence to accumulate more wealth at the expense of the poor. One of the bible verses that demonstrates how the Federal Reserve Bank oversteps biblical perspectives is 1 Peter 5:2-3 which states, “Be shepherds of God’s flock that is under your care, watching over them—not because you must, but because you are willing, as God wants you to be; not pursuing dishonest gain, but eager to serve; not lording it over those entrusted to you, but being examples to the flock” (Bible Hub, 2023).

The Federal Reserve Bank pursues dishonest gains by distributing wealth to the rich at the expense of the poor. For example, the Federal Reserve is authorized to increase money supply to increase spending, leading to inflation and an increase in the cost of products. Unfortunately, not everyone can afford to buy the products at high prices, and the only people who benefit from the inflation are the wealthy, who can access the money provided by the Federal Reserve banks first before the banks close borrowing. In most cases, the rich get the money first because they have the collateral needed to take loans and have established a relationship with the bank, thus creating an unfair distribution of wealth. The poor are also disadvantaged during inflation because their savings are granted to the wealthy as loans. The poor may also be denied access to loans or receive a lesser amount than the rich, making it hard for them to sustain their businesses and maintain financial stability during inflation. Therefore, the Federal Bank Reserve needs to evaluate its financial regulation policies to create a more fair strategy for wealth distribution.

References

Bible Hub. (2023). 1 Peter 5:2 – instructions to elders. https://biblehub.com/1_peter/5-2.htm

Federal Reserve Board. (2022, August 24). Structure of the Federal Reserve System. https://www.federalreserve.gov/aboutthefed/structure-federal-reserve-system.htm

Federal Reserve System. (2021). The Fed explained – Federal Reserve Board. https://www.federalreserve.gov/aboutthefed/files/the-fed-

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Economics Analysis Assignment I instructions

Overview
For this assignment, you will write a 2–3-page paper (double-spaced, 1-inch margins) providing at least 1 example of how the government has overstepped biblical principles in some form of economic policy. Be sure to adhere to the format specified in the Course Style Guidelines document.

Options include the following topics:
• A specific piece of legislation relating to business regulation or taxation.
• The “party platform” of either the Republican Party or the Democratic Party (or both).
• The role of the Federal Reserve.
• The budget process.

In discussing one of these topics, incorporate clear references from the Learn material in the assigned Module: Week.

Instructions
Follow the below instructions to compose your assignment:
• Length of assignment – 2-3 pages.
• Make sure to include a bibliography page
• Format of assignment – Course Style Guidelines
• At least 2 sources
• Acceptable sources – Scholarly articles published within the last five years, the Bible, online articles given as assignments, and any other pertinent source that helps the student answer the assignment prompt.

Note: You may submit your assignment to the Economics Analysis: Draft Submission Assignment to check your paper for plagiarism. Your assignment will be checked for originality via the Turnitin plagiarism tool. After reviewing your Turnitin results, make any edits necessary and submit your Economics Analysis: Final Submission Assignment.