Running Head: FEDERAL RESERVE SYSTEMFederal Reserve SystemStudents NameInstitution Affiliation1FEDERAL RESERVE SYSTEM21. Why was the Federal Reserve System set up with 12 regional Federal Reserve banksrather than one central bank, as in other countries?Traditionally, America became hostile to a centralized bank and authority, therefore, the twelveregional banks were established with a purpose of diffusing power across the local lines to avoidconcentration of power to a single interest group or location (Herr, 2014).2. Which entities in the Federal Reserve System con- trol the discount rate? Reserverequirements? Open market operations?The Board of Governors controls both the discount rate as well as the reserve requirement.FOMC, on the other hand, sets the open market operation. Practically, however, FOMC extendsits role to assist in making critical judgments for both the discount rate as well as the reserverequirement.3. Compare the structure and independence of the Federal Reserve System and theEuropean System of Central BanksThe two organizations are relatively similar. The Federal Reserve System (FRS) comprise ofBoard of Governors and the twelve ...
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