The Federal Reserve System
The Federal Reserve System was created in 1913 to act as the central bank for the United States of America. The major role of the Federal Reserve System is to oversee the monetary credit policy such that it regulates the stability of credit systems within the US. Over the past four years, the Federal Reserve System has taken actions to keep the interest rates low through amassing approximately $2 trillion in form of government debts and mortgage backed securities. This action was taken in 2008 after the wobbling of the Wall Street in 2007. This amount has been projected to increase the capital investments due for credit to its clients, which has seen a reduced interest rate.
On the other hand, the stimulus program aimed at quantitative easing has taken root with the implementation of the QE3 program, in September 2012. This program is aimed at zero rating the interest rates for as long as the employment rate is above 6.5 percent. This program was coupled with the continued monthly purchase of $85 billion in form of treasury and mortgage-backed securities. In 2010, the Federal Reserve System improved the growth of the economy through reducing the borrowing rates. This implies that there are stringent steps to see to it that the future trend of the interest rates will be lower.
In this breath, the Fed has the jurisdiction of requiring banks to keep part or whole of the percentage of assets in the form of liquid cash or have the assets deposited in one of its reserve banks. This is a trading strategy that the Federal Reserve System can adopt to capitalize to this outcome. By consideration, liquidation of assets could result in increased security advancements as a form of raising the incentives advanced to credit facilities. This could lead to an improved outcome towards lowering the interest rates.
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