US Financial System Term Paper

Pages: 3 (1007 words)  ·  Bibliography Sources: 3  ·  File: .docx  ·  Level: Master's  ·  Topic: Economics

USA Financial System

financial system is one of the most complex systems in the world. There are several environmental factors which have an impact on the U.S. financial system such as the economy and federal regulation. The paper will look at the impact of financial market on the economy, businesses and individuals. It will also explain the role of Federal Reserve clearly indicating its effectiveness in today's economic environment. It will further look at the influence of interest rates on the U.S. And global financial environment. Finally, it will look at the impact of exchange rates on a business decision to operate in foreign markets.

U.S financial market

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financial market comprises of financial transactions of any type that help in growth of businesses, and through which investors can make money. The financial markets affect the economy through stock and investing in stock. When the stocks of corporations are sold to investors, the companies will raise a lot of money, and it is the investors profits when a company increases its earning that keep the U.S. economy growing. Mutual funds enable the buying of a lot of stock at once hence creating a reduction in the volatility of the stock market resulting to a calming effect to the U.S. economy. The financial market affects businesses in that businesses can sell out their stock leading to an increase in investment in the business. This increase in investment means that the businesses will realize more profits. Individuals who have invested in shares will benefit if the company which they own shares is doing well. On the other hand they will be at a loss if the company is performing badly and might end up selling their shares. If share prices are falling, businesses will lack the ability to raise finances in the stock market (Amadeo, 2010).

The U.S. Federal Reserve

Term Paper on US Financial System Assignment

The U.S. Federal Reserve System is a central banking system found in the United States and was created in 1913.The structure of the Federal Reserve System comprises of a Board of governors appointed by the president. The role of the board of governors is the determination of reserve requirements within the statutory limits of member banks .They are also in charge of determining the discount rates that have been established by Federal Reserve banks. They review budgets that have been put in place by the reserve banks. The Federal Reserve System has a chairman who is the head of the board of governors and appointed by the president. The chairman is one of the most powerful people as they are at the top of the central banking authority. He is charge of directing monetary policies, and is the person that determines other activities that the Federal Reserve undertakes. He is also the head of the federal open market committee which is in charge of open market operations.

The Federal Reserve System is very effective in today's economic environment as it conducts the monetary policy of the United States, provides and maintains efficient and effective systems for… [END OF PREVIEW] . . . READ MORE

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US Financial System.  (2013, May 5).  Retrieved September 27, 2020, from https://www.essaytown.com/subjects/paper/financial-system/5036710

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"US Financial System."  5 May 2013.  Web.  27 September 2020. <https://www.essaytown.com/subjects/paper/financial-system/5036710>.

Chicago Style

"US Financial System."  Essaytown.com.  May 5, 2013.  Accessed September 27, 2020.
https://www.essaytown.com/subjects/paper/financial-system/5036710.