The Organization of the Federal Reserve System

The Federal Open Market Committee (FOMC) and the Federal Advisory Council assist the Federal Reserve System's Board of Governors. The 12 regional Federal Reserve district banks and their 25 branches implement broad policies affecting the money supply.   EXHIBIT 1

On the left side of the organizational chart in Exhibit 1 is the very important Federal Open Market Committee (FOMC). The FOMC directs the buying and selling of U.S. government securities, which are major instruments for controlling the money supply. The FOMC consists of the seven members of the Board of Governors, the president of the New York Federal Reserve Bank, and the presidents of four other Federal Reserve district banks. The FOMC meets to discuss trends in inflation, unemployment, growth rates, and other macro data. FOMC members express their opinions on implementing various monetary policies and then issue policy statements known as FOMC directives. A directive, for example, might set the operation of the Fed to stimulate or restrain Ml in order to influence employment.

As shown on the right side of the chart, the Federal Advisory Council consists of 12 prominent commercial bankers. Each of the 12 Federal Reserve district banks selects one member each year. The council meets periodically to advise the Board of Governors.

Finally, at the bottom of the organizational chart is the remainder of the Federal Reserve System, consisting of commercial banks, mutual saving banks, saving and loan associations and credit unions.

2)

The commercial bank's most important activity is the extension of credit. Banks will lend money in two ways:

– by a personal loan;

– by an overdraft loan arrangement.

The personal loan is charged at a fixed rate of interest repayable over a fixed period of time. The overdraft is used mostly by businessmen. The advantage with overdrafts is that interest is repayable only on the amount owed at a particular time. Interest is calculated on a daily basis. The borrower will have to pay a lot of interest when the debt is large, but if he is able to make a good deposit and reduce the size of the overdraft then the interest charged will be lowered accordingly. Overdrafts may be recalled by the bank at a very short notice.

B. Translate into English.

Коммерческие банки могут быть универсальными или специализированными. Инвестиционные банки специализируются на кредитовании фирм; торговые банки финансируют операции на рынке капитала и внешнеторговую деятельность; сберегательные банки собирают и пускают в оборот сбережения многочисленных, главным образом, мелких вкладчиков.

Частные лица и компании открывают банковские счета, по которым проводят различные операции, например, при необходимости снимают наличные деньги либо переводят средства на счета других людей посредством выписывания чеков, прямого дебетования или электронного трансфера. При утрате доверия клиентов к банку все его вкладчики одновременно пытаются изъять из него свои деньги, что приводит к «набегу» на банк. Во избежание подобных ситуаций в большинстве стран существуют государственные органы, которые наблюдают за деятельностью банков.