Central bank goals
Federal reverse's goal:
- Conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy;
- promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad;
- promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole;
- fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and
- promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.
The central bank is an important institution in every country that plays a crucial role in managing the country's economy. One of the main goals of a central bank is to maintain price stability. This means that the central bank aims to keep inflation at a stable and moderate level. When inflation is low and stable, it promotes economic growth and stability, as it gives consumers and businesses confidence in the purchasing power of their money.
Another goal of the central bank is to promote full employment. The central bank implements policies that aim to reduce unemployment and create job opportunities. It does this by influencing interest rates, which can impact borrowing costs for businesses and individuals. Lower interest rates can encourage borrowing and investment, leading to economic growth and job creation.
In addition to price stability and full employment, the central bank also plays a role in ensuring financial stability. It monitors and regulates the banking sector to prevent financial crises and maintain the overall stability of the financial system. This involves setting capital requirements for banks, conducting stress tests, and overseeing the payment and settlement systems. By promoting financial stability, the central bank helps to minimize the risks of financial disruptions that can have negative implications for the economy.