About some features of the functioning of the Federal Reserve System

Belenchuk Sergei I., Nezamaikin Valeriy N.

The article discusses some of the features of the US Federal Reserve System (Fed, or the Federal Reserve). The Federal Reserve is most often guided in its activities by its own priorities, among which maintaining financial markets is not one of the most important. This happens almost always, except for those historical periods of time when, according to the establishment, the monetary system faces unacceptable risks. At the same time, maintaining a dollar system is always a top priority for the Federal Reserve. With the filing of the Fed, the function of implementing monetary policy was actually taken on by financial companies acting as the so-called primary dealers of the Fed. The list of primary dealers includes mainly structures affiliated with the largest world banks, which are likely to be shareholders of the Fed. Primary dealers are given the opportunity to influence monetary policy through open market operations. The role of primary dealers is also evidenced by the situation in the monetary policy at the beginning of 2019, when, largely based on the interests of primary dealers, the Fed again turned to a policy of reducing key rates after a relatively short period of tightening monetary policy. However, in September 2019, the Federal Reserve was forced to resort to emergency measures to protect the financial system and agree to limit its own independence. These measures became especially intense when the COVID-19 pandemic broke out in the world.

Keywords:Federal reserve system, primary dealers, monetary policy, currency swaps, money supply.