bài tập nhóm the structure of central bank

The Federal Reserve System is composed of three main branches: 12 regional Federal Reserve Banks, the Board of Governors, and the Federal Open Market Committee.In addition, there are adv

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BÀI TẬP NHÓM

MÔN HỌC : Nhập Môn Tài Chính Tiền Tệ 2 LỚP : PSU-FIN 272 BIS

GVHD : HOÀNG ANH THƯ

THÀNH VIÊN NHÓM 3:

1 Nguyễn Minh Nghi

2 Nguyễn Phan Hoàng Long

3 Đỗ Đình Nguyên

4 Thái Đăng Hoàng Dương

Đà nẵng, tháng 01 năm 2024

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MÔN: NHẬP MÔN TÀI CHÍNH TIỀN TỆ 2

Tên đề tài/ Dự án:

THE STRUCTURE OF CENTRAL BANK

Giảng viên: Hoàng Anh Thư

Họ và tên Sinh viên 1: Thái Đăng Hoàng Dương – MSSV: 28214830367

Họ và tên Sinh viên 2: Nguyễn Phan Hoàng Long – MSSV: 28219448506

Họ và tên Sinh viên 3: Nguyễn Minh Nghi – MSSV: 28209436377

Họ và tên Sinh viên 4: Đỗ Đình Nguyên – MSSV: 28214202457

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BẢNG TỰ ĐÁNH GIÁ

THE STRUCTURE OF CENTRAL BANK

1 THE STRUCTURE OF THE FEDERAL RESERVE SYSTEM

The Federal Reserve System is composed of three main branches: 12 regional Federal Reserve Banks, the Board of Governors, and the Federal Open Market Committee

In addition, there are advisory committees and member banks

This complex structure disperses power to prevent centralization, similar to the checks and balances of the U.S government

All national banks are required to be members of the Fed, while state banks have the option to join (though most do not because of historical cost differences that no longer exist)

The Fenderal Reserve

The Federal Reserve Bank of New York, located in the heart of Wall Street, is the

largest among the 12 Federal Reserve Banks and houses the world's biggest gold vault

It serves as both the government's bank and the bankers' bank, performing vital functions like:

Issuing new currency and managing the US

Treasury's account for the government

Holding deposits, operating a payment network, and

providing funds to commercial banks through

discount loans for bankers

Supervising and regulating financial institutions in

the district to ensure their safety and soundness

Providing services to foreign central banks and

managing financial market activities like Treasury securities auctions and foreign exchange trading

Playing a role in formulating monetary policy through its representatives on the FOMC, which sets interest rates and manages the Fed's balance sheet

The Structure and Policy Organization of the Federal Reserve System

The board of the governos

The Federal Reserve Board (FRB) sits in Washington D.C and governs the entire Federal Reserve System

Its 7 Governors, appointed for 14-year terms, are chosen to represent various financial and economic interests

Their main duties include setting reserve requirements, approving interest rates, supervising banks, regulating the financial system, analyzing economic conditions, and collecting data

The Board lacks its own staff and relies on directors of various departments for support

The Federal Open Market Committee

The Federal Open Market Committee (FOMC) controls the key interest rate (federal funds rate) by buying and selling securities in the financial markets

The FOMC has 12 voting members, including the 7 Board of Governors and 5 rotating Reserve Bank presidents (plus the president of the New York Fed who always votes)

The FOMC meets 8 times a year and releases a policy statement after each meeting, explaining its decisions

The chair of the Fed is the most powerful member of the FOMC and plays a key role

in shaping policy

The Tealbook, prepared by the Board staff, is the most important information distributed to members before the meeting

While the chair is powerful, the committee structure provides checks and balances on their power

Assessing the Federal Reserve System’s Structure

Independence from Political Influence:

The Federal Reserve meets the criteria for central bank independence: it controls its own budget, interest-rate changes are irreversible, and officials have long terms

in office

Despite its structural independence, the Fed faces occasional political pressure, particularly when raising interest rates or during financial crises

The Dodd-Frank Act of 2010 introduced some changes, curtailing emergency lending powers but also expanding supervisory responsibility

Congressional critics have proposed bills that would further limit the Fed's independence, but none have been successful as of 2016

Decision Making by Committee

The Federal Reserve (Fed) makes decisions by committee through the Federal Open Market Committee (FOMC)

Although the chair of the Board of Governors holds significant influence, the presence of 12 voting members prevents any single individual from dictating policy

This committee structure protects against arbitrary decisions and ensures a more balanced and considered approach to policy making

Accountability and Transparency

The Federal Open Market Committee (FOMC) releases extensive information to the public

Before meetings, they publish the Beige Book, and after, they announce decisions and reasoning in a statement, minutes, and eventually transcripts

The Fed Chair holds press conferences and testimonies, along with public speeches by FOMC members

Some information, like staff forecasts and policy options, is only released after five years

While this transparency seems sufficient, the Fed lacks a published consensus economic/interest-rate projection and delays some data releases

However, a recent shift to inflation targeting has improved the focus and effectiveness

of Fed communications

Policy Framework

The US Congress set vague objectives for the Federal Reserve: promoting

"maximum employment, stable prices, and moderate long-term interest rates."

This ambiguity was initially used by the Fed to have flexibility in setting their own goals

In 2012, the Fed adopted a more transparent, inflation-targeting approach, similar to other central banks

Inflation targeting involves aiming for a specific long-term inflation rate (2% in this case) and adjusting policies to keep inflation close to that target

The Fed doesn't set specific goals for employment or economic growth as they cannot directly control these

If there's a conflict between the inflation target and the optimal employment level, the Fed will balance both goals in a "balanced approach"

2 THE EUROPEAN OF CENTRAL BANK

Organizational Structure Of ECB

a Executive Board of the European Central Bank

The Executive Board consists of the

President, the Vice-President, and four

other members

Executive Board members serve

eight-year terms (without the possibility of

reappointment), and member nations

must appoint their central bank

governors for a minimum of five years

b The independence of European Central Bank (ECB)

The ECB's financial interests must remain separate from any political organization

The Governing Council cannot take instructions from any government, so its policy decisions are irreversible

The ECB is the product of a treaty agreed to by all European Union countries, making it challenging to change its operational terms

2.1 The ECB's role and tasks.

The primary objective of the ECB is to maintain price stability within the Eurozone The ECB aims to keep inflation rates below, but close to, 2% over the medium term It formulates and implements monetary policy to achieve this objective

The ECB is responsible for issuing the euro banknotes It works alongside the national central banks of the Eurozone countries to ensure the proper circulation and management of euro banknotes and coins

The ECB conducts foreign exchange operations to manage the euro's exchange rate against other currencies While the ECB's primary focus is on domestic price

stability, it also considers the impact of exchange rate movements on the eurozone economy

The ECB, in collaboration with national supervisory authorities, oversees the prudential supervision of significant banks within the Eurozone This is part of the Single Supervisory Mechanism (SSM) established to ensure the stability of the European banking system

The ECB monitors and assesses the overall stability of the financial system in the Eurozone It plays a role in identifying and addressing risks that could impact the stability of the financial markets

The ECB promotes the smooth functioning of payment systems and financial market infrastructure within the Eurozone

3 THE STATE BANK OF VIET NAM

Introduction

The State Bank of Vietnam is a government agency and the central bank of the Socialist Republic of Vietnam It carries out the state management functions on currency, banking, and foreign exchange In addition, it performs the functions of the central bank in issuing banknotes for credit institutions and providing monetary services to the government

Overview of the State Bank of Vietnam

It is the bank responsible for issuing currency

It is the regulatory and supervisory authority for the banking currency

It functions as the comprehensive financial machinery

The establishment process of the State Bank of Vietnam.

Before 1945: The Đông Dương Bank was the exclusive currency-issuing bank

May 6, 1951: Establishment of the National Bank of Vietnam

January 1960: Renamed as the State Bank of Vietnam, and it has retained this name since then

The organizational model of the State Bank of Vietnam

5,

The role of the central bank of Vietnam

Supervising and implementing the national monetary policy

Managing and overseeing the banking system, regulating the operations of credit institutions, and addressing other financial and monetary issues Controlling inflation and safeguarding the national currency to support socio-economic development activities and contribute to the socio-economic stability of the country