1. European Central Bank and the Federal Reserve System
... about the Fed's goals and by indirectly influencing the interest rates banks pay depositors for funds and at which banks offer loans. The discount rate is changed infrequently. The reserve requirement is the percentage of deposits in demand deposit accounts that financial institutions must set aside and hold in reserve. If the Fed raises the reserve ... requirement, banks have less money to lend, which restrains the growth of the money supply. On the other hand, if the Fed lowers the reserve requirement, banks have more money to lend and the money supply increases. The Fed changes the r...
- Word Count: 2990
- Approx Pages: 12
- Has Bibliography
- Grade Level: Undergraduate