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Explain the functions of the U.S. Federal Reserve System

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Please explain the functions of the U.S. Federal Reserve System ('The Fed'), and describe how 'The Fed' controls, influences and manipulates the Monetary Policy of the U.S.

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Solution Summary

Functions of the U.S. Federal Reserve System are determined.

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The Federal Reserve acts as the banker for the U.S. government. In this role, the Federal Reserve maintains the Treasury Department's checking account and clears U.S. Treasury checks. The Fed processes a wide range of electronic payments for the government, such as Social Security and payroll checks. The Fed also issues, transfers, and redeems U.S. Treasury securities and conducts Treasury securities auctions. Depository institutions send food stamps to the Federal Reserve for processing and redemption.

The Federal Reserve and state ...

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