The Federal Reserve was established in the year 1913 as a result of The Act of Congress 1913 and at its inception there were only seven members from the Board of Governors (Rabin and Stevens 308). Likewise, Fed was structured in a way that the people taking responsibility of the money supply would be kept independent from those governing the country, which is why it is deemed to be one of the most credible in the world.
Furthermore, there are three known features which facilitate the independent stance of the Federal Reserve. These are ‘appointment procedure for reserve bank presidents’, appointment procedure for governors’, and ‘funding’. The Fed is earns interest from the security portfolios which further facilitate the funding of operating expenses (Rabin and Stevens 308).
Secondly, as far as the appointment procedure for governors is concerned, the United State’s President appoints seven of them which happen to get confirm by the Senate. Thirdly, the Board of Directors elects the president to a five year term who then eventually gets confirmed by the Board of Governors.
The 12 member Federal Open Market Committee (FOMC) makes decisions about monetary policy which is then constantly viewed and discussed during meetings held eight times annually (Frank and Bernanke 626).
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