E.6.3


 * E.6.3: Explain the role of banks and other financial institutions in the economy of the United States.**

· The Treasury Department is the government’s banker. · The Fed’s duties are similar to a bank’s 1. Fed is the depository for federal revenues 2. Holds checking account for the Treasury for government payments. 3. Federal bookkeeper recording millions deposits and withdrawals of federal funds and the purchase and sale of government securities. 4. Financial advisor to the government for government programs. (O’Connor 1988)

Additional Roles of Federal Reserve:
 * 1) Supervise & regulate member banks.
 * 2) Monitors loans, investments, conducts audits.
 * 3) Regulates bank mergers & chartering of bank holding companies.
 * 4) Distributing paper Currency
 * 5) Prints & engraves new currency
 * 6) Regulating Money Supply
 * Most important function of the Federal Reserve
 * 1) Fed Reserve bank of New York buys and sells US government securities on the open market.
 * 2) Trading in securities allows the Fed to regulate the money supply and to provide the government with the cash it needs to finance public goods and services. (O’Connor 1988)

Overall Bank Role: Depository of money.

Bibliography: Unknown, (2007, April 24). Unit of Account. Retrieved May 9, 2007, from Wikipedia Web site: http://en.wikipedia.org/wiki/Unit_of_account

Miller, R (1991). //Economics Today and Tomorrow, 3rd ed.//. Mission Hills, CA: Glencoe/McGraw-Hill.

O'Connor, D (1988). //Economics: Free Enterprise in Action//. Orlando, FL: Harcourt Brace Jovanovich.