The basic principles of the Federal Reserve System are "independence" and "checks and balances". As far as checks and balances are concerned, as we all know, the seven directors (including the chairman and vice-chairman) of the Bureau are nominated by the President and subject to the consent of the Senate. For monetary policy resolutions such as raising or lowering the rediscount rate, the collegial voting system is adopted, with one person and one vote, which is a "secret ballot". The chairman's one-vote vote is often voted for the political party that already has a majority of seats. Although the president can master the nomination of directors, chairman and vice chairman, once approved by the Senate, his term of office is as long as 14 years, and he can serve as president for up to 5 times.
As for independence, the Fed is most praised for its personnel independence and budget independence. In addition to the board of directors, there is also the Federal Open Market Operation Committee (FOMC), which is responsible for making long-term monetary decisions and conducting foreign exchange operations according to foreign exchange guiding principles, authorized operations and foreign exchange operation procedures. Due to the strong position of the US dollar in the international currency market, the intervention of the Federal Reserve in the foreign exchange market has attracted special attention. When the Japanese yen appreciates sharply due to the trade surplus, the Bank of Japan had better get the assistance and cooperation of the Federal Reserve if it wants to successfully intervene in the foreign exchange market.
The Federal Reserve is also the main institution for formulating US monetary policy. 1since June, 1993, the economic prosperity of the United States has risen rapidly, which may lead to inflation. Thanks to Green Span, then chairman of the Federal Reserve Board of Directors, despite public opinion and political pressure,
Raising the discount rate seven times in a row has made the American economy soft landing successful and got rid of the threat of inflation.
The first bank of America and the second bank of America were the earliest institutions with the function of central bank, which were approved on 179 1 respectively. During the "free banking era" from 1837 to 1862, there was no formal central bank in the United States, but from 1862 to 19 13, a (private) national banking system played this role.
The Federal Reserve was established by the U.S. Congress on the basis of the passage of the Owen Glass Act (also known as the Federal Reserve Act), and was signed by President Woodrow Wilson on 19 13 12/23.