Complexities of the Financial System Essay

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Complexities of the Financial System

The U.S. Financial system consists of markets, policy makers, financial institutions, instruments, services and regulations that interact to assist with the flow of financial capital from savings into investments. The three main components of the financial system are the monetary system, which creates and transfers money; the financial institution, which accumulates, lends and invests savings; and the financial market, which markets and transfers financial assets. The financial system has a major impact on the economy, businesses and individuals. Therefore, it is important to maintain a strong and effective system. The ability of individuals to make wise economic decisions related to their personal financial affairs, the successful operation of businesses and the economic activities of the country is what the effectiveness and preservation of our financial system rely on. The financial system and the affect it has on consumers, businesses and the economy is like an integrated cycle that each entity plays a major role in. The functions of the system generates money to invest in businesses or to loan individuals, which allows businesses to produce more goods and services and for individuals to have money to purchase those goods and services that in return stimulate the economy.
The Federal Reserve (Feds) is the central bank of the United States. The Feds dictate economic and monetary policies that have an impact on individuals in the U.S. and around the world. The Fed's duties is to promote sustainable growth, high levels of employment, maintain moderate long-term interest rates and stability of prices to help preserve the purchasing power of the dollar. The Board of Governors is composed of seven members that are responsible for setting monetary policies. The Chairman of the Board of Governors of the Federal Reserve System is the head of the central banking system of the United States and is recognized as the most powerful...

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"Complexities of the Financial System". Anti Essays. 22 Oct. 2014

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Complexities of the Financial System. Anti Essays. Retrieved October 22, 2014, from the World Wide Web: http://www.antiessays.com/free-essays/Complexities-Of-The-Financial-System-483008.html