The Fed and Monetary Policy参考.ppt

2.5 Fed Control of the Money Supply MMDA (MMA)---a savings account that offers the competitive interest rate (real rate) in exchange for larger-than-normal deposits. MMDA place restrictions on the amount of transactions you can make in a month. Furthermore, you usually have to maintain a certain balance in the account to receive the higher interest rate. 2.6 Limiting Factors to Money Supply---Deposit Expansion Banks may not lend excess reserves Public may not re-deposit payments in expansion process (cash drains) Lowers deposit expansion multiplier Other fed functions impact member bank reserve level Federal Reserve Policy Emphasis Money Supply Growth Interest Rate Levels Price Level Changes Real Economic Activity 3. Monetary Control Act of 1980 To regain more control over the money supply the MCA required all depository institutions to Meet the same reserve requirements Hold noninterest-bearing reserves Promptly report deposit levels to the Fed Other provision of the MCA allowed all depository institutions To offer transaction accounts Access to the discount window 4. Global Monetary Policy Each country has its own central bank and often industrialized countries have banks with similar goals Integration in the global economy means the Fed must consider conditions in other countries when looking at the U.S. economy Central banks try to work together but conflicts of interest can make cooperation difficult at times Global Monetary Policy A single European monetary policy Euro replaced national currencies of 11 countries in January 1999 National currencies withdrawn and replaced by euro by June 1, 2002 Countries of the 15 in the European Union needed to meet economic criteria and chose to join Created a European Central Bank * CHAPTER 4 The Fed and Monetary Policy Chapter Objectives Identify the components of Fed and its role in monetary policy Describe the tools the Fed uses to influence monetary policy Explain how changes in regulation in the 1980s affected