The Depository Institutions Deregulation and Monetary Control Act of 1980 significantly reformed the banking industry by removing regulatory constraints and enhancing the Federal Reserve's control over monetary policy.
The Discount Window is a facility provided by the Federal Reserve where banks can borrow money at the discount rate. This facility is meant for financial institutions that are in need of short-term funding to meet reserve requirements.
Discretionary Policy refers to government economic policies that are not automatic or built into the system but require active intervention by policymakers to influence economic activities.
An Edge Act Corporation is a subsidiary of a U.S. bank that can offer international banking services across state and national borders, under the authority of the Federal Reserve.
Federal funds are reserve balances that private banks in the U.S. hold at Federal Reserve banks. These funds are used for various types of inter-bank transactions, including lending to other banks that have insufficient reserves.
The Federal Reserve Open Market Committee (FOMC) is a branch of the Federal Reserve Board that determines the direction of monetary policy specifically by directing open market operations.
FedWire is a high-speed, computerized communications network that facilitates electronic funds transfers between U.S. banks and the Federal Reserve System. It is essential for the transfer of reserve balances and customer transactions.
Inflation targeting is a monetary policy strategy where a central bank sets an explicit target rate for inflation and uses tools such as interest rate adjustments to achieve this target. This policy was first adopted by New Zealand in 1990 and has since been implemented by over 50 countries, including the UK and a more flexible approach by the USA.
A term characterized in a 1996 speech by then-Federal Reserve Chairman Alan Greenspan, referring to market optimism that may distort asset value and lead to an undue escalation followed by a prolonged contraction.
Moral suasion is a strategy used primarily by central banks like the Federal Reserve to influence financial institutions and markets through persuasion or appeal to ethical standards, rather than through direct action or legislation.
Open-Market Operations (OMO) are activities conducted by the securities department of the Federal Reserve Bank of New York, often referred to as the 'Desks', under the direction of the Federal Open Market Committee (FOMC). These operations involve the buying and selling of government securities to regulate the money supply within the economy.
Open-market rates refer to the interest rates on various debt instruments bought and sold in the open market, which are directly responsive to supply and demand. These rates differ from the discount rate set by the Federal Reserve Board.
Quantitative Easing 2, often abbreviated as QE2, was a controversial monetary policy program implemented by the U.S. Federal Reserve in 2010 to purchase $600 billion in U.S. Treasury bonds. The program aimed to reduce interest rates and stimulate economic growth but raised concerns about potential inflation.
Quantitative Easing (QE) is a monetary policy tool used primarily by central banks to stimulate the economy by purchasing long-term securities in the open market, thereby increasing the money supply and lowering interest rates to boost economic activity.
A funding facility under which the Federal Reserve Bank of New York lends up to $200 billion on a non-recourse basis to holders of certain AAA-rated asset-backed securities (ABS), aimed at promoting the flow of credit to businesses and households.
An economic condition in which credit is difficult to secure, usually due to actions taken by the Federal Reserve Board to restrict the money supply.
Vault cash refers to the currency that a bank keeps on hand in its vault and ATMs to meet its day-to-day transaction needs.
