The Federal Reserve's role in financial markets and payment system integrity

Federal Reserve pays a key role in it's involvement in financial markets. It does have limitations for how involved the Reserve can get, for being to much involved can result in a monopoly threatening smaller institutions and inflating the market, which could eventually cause a recession or a decline in the market. What many people see is the most important role of the Federal Reserve is it's backing of payment promises from smaller institutions all over the country. The Reserve backs these payments in order to "promote the integrity and efficiency of the payments mechanism and to ensure the provision of payment services to all depository institutions on an equitable basis, and to do so in an atmosphere of competitive fairness," (Federal reserve Bulletin 1990). Through it's backing of payments, the Federal Reserve has not only protected thousands of individuals and their money, but has also helped stimulate financial growth all over the nation as well.

Question 2.

There are several interesting factors regarding the structure and purpose of the United States Federal Reserve. One is that it is split between a privately held, and publicly held institution, meaning that the public has a say in the future of the bank. It might seem strange that despite its central role in government affairs, that it is still somewhat privately owned. There are also regional branches, located in 12 states. This allows the Federal Reserve to protect and stimulate regional economies all over the nation. The Federal Reserve was created in a very unique way which sets it apart from the control of Congress and the Senate.