Macroeconomics › Section O · Monetary policy and bank regulation › Topic O.1
The Federal Reserve and central banks
Every major economy has a central bank: a public institution that manages its money, watches over its banks and steps in when finance panics. The US version, the Federal Reserve, has an unusual structure built to balance national control, regional voices and protection from short-term politics.
In this topic
- What a central bank is
- Why the Fed was created
- The Board of Governors
- Twelve regional banks and the FOMC
- Worked example: counting votes and appointments
- Job 1: monetary policy and the dual mandate
- Job 2: keeping the financial system stable
- Job 3: banking services
- Worked example: which job is the Fed doing?
- Why independence matters
- Common mistakes to avoid
- Key takeaways
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