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Chapter 5 Federal Reserve System
Terms
Federal Reserve
System
Fed
monetary system
decentralization
Federal Reserve
Bank
Board of Governors
(BOG)
Federal Open Market
Committee (FOMC)
Section 5.2
Structure of the Federal
Reserve System
Objectives
After completing this section, you will be able to:
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Reserve Banks.
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Federal Open Market Committee.
Structure of the Federal Reserve
The Federal Reserve System, also known as the Fed, is the
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monetary system. A monetary system is the mechanism a nation uses
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monetary system is a lot of power. When an organization has so much
power, it must have controls in place. The structure of the Fed is meant to
safeguard against corruption. The location and organization of the Federal
Reserve System reflect this need. This setup made it different from its
predecessors in the US and central banks in other countries.
Location of the Federal
Reserve
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how the Fed would be organized and located. Decentralization
occurs when a central authority shares power with regional and
local authorities. The Fed is composed of 12 regional central
banks, which are known as Federal Reserve Banks. Multiple
Federal Reserve Banks were created to avoid establishing a
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designers did not want the Fed to be located only in New York.
New York was, and continues to be, the home of Wall Street and
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Fed would be affected by the needs of the stock market and
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