The US Federal Reserve Is definitely  the major power in world’s economy and in the forex international market here are few facts behind those “men in black”

1) It is appointed by the President of the Council of the Federal Reserve, located in Washington.

2), the Federal Open Market Committee.

3) 12 local Federal Reserve Bank, located in major cities across the country, as the U.S. Treasury’s financial agent. Each branch has its own board of 9.

4) a large number of members of the private banks, these banks need to hold the local Federal Reserve’s non-negotiable shares

5) various advisory bodies.

In 1979, President Jimmy Carter appointed by the U.S. Federal Reserve Chairman Paul Volcker will work as an anti-inflationary goals, by tightening the money supply to reduce inflation in 1986. In 1979, the Federal Reserve announced the implementation of the new monetary policy - the target money supply and bank reserves - to curb double-digit inflation.

In 1987, CPI inflation fell to 1% of the data, the Federal Reserve announced that it would not take the money supply to control inflation as a guide line. Although the Federal Reserve in 1979 has been the use of this policy targets, and achieved great success. In 1980, before the interest rate has been chosen as the monetary policy targets, a high level of inflation. Complained that the Fed is not easy to grasp the total indicators. Volcker1987 in office in August, as Greenspan’s successor in the total amount of currency policy change in 7 months after the adoption of the monetary policy of pegging interest rates.

And the legal status of the government’s position

Federal Reserve Board, which is an independent federal government agency, the CMC did not receive funding from Congress. 7 members of the management committee of the term of office across the term of presidency and Congress. Once the president appointed, the independence of their work quite strong. MC on a regular basis every year to the House of Representatives spokesman for the operation of the central bank to do the report. President of the law in a particular case can remove a member. The CMC is responsible for monetary policy. The CMC is also responsible for monitoring all over the Federal Reserve Bank and Bank of America system. Federal Reserve Bank of the private all members, each member of the Federal Reserve banks are local non-negotiable shares.

The organizational structure of the Federal Reserve Federal Reserve Board Federal Open Market Committee, Federal Reserve Bank of each of the members of the private Federal Reserve Bank and each of the Federal Reserve System member banks must accept the supervision of the management committee. 7 is the management committee of individuals appointed by the president, parliament confirmed. Unless the President of the replacement, each is a term of office for 14 years, an official in his own term of office, the successor to the other members of the remainder of the term of office.

Federal Open Market Committee (FOMC) under the United States Code (USC) to set up, including 7 members of the CMC and 5 local representatives of the Commonwealth Bank. From 2 - to New York was represented by permanent members, representatives of each other 2-3 in a replacement.

Federal Reserve monetary tools to control, through open market operations to control money supply, the Federal Reserve in the open market, dealers as a priority (primary dealers) to buy with government participation and the issue of special securities. All operations are in the New York Federal Reserve Bank of the counter, then the purpose of the federal funds rate as close as possible to the target level. Counter on the open market have different tools to adjust money supply: re-purchase and overnight trading.

The implementation of monetary policy to buy or sell government bonds. When the Federal Reserve to buy bonds when the market is to enter the currency. When the circulation of money supply too much, interest rates will decline, more money was lent. When the Fed to sell bonds in circulation will reduce the field of currency and interest rates will rise, borrowing becomes difficult than before.

Members of the provisions of the bank deposit reserve. When the Federal Reserve to raise deposit reserve, a member of loans made to banks will be reduced accordingly. To reduce loan interest rates rise.

Re-lending rate. Members of the Federal Reserve Bank to carry out the discount notes to make up for short-term position. U.S. Federal Reserve interest rate charged is called the discount rate. The effect of this policy is very small.

Discount rate

Federal Reserve monetary policy implementation, the main federal funds rate peg, which is the inter-bank lending funds rate by a member of the Federal Reserve Bank to master. The main interest rate determined by the market rather than by the Federal Reserve. As a result, the Federal Reserve through changes in the liquidity to the market interest rates in line with the target rate. The Fed also provided a direct re-discount rate. Even if the discount rate lower than the inter-bank interest rates, banks are willing to borrow from the inter-bank market. This is because, for rediscount at the Federal Reserve will make people think that the bank’s payment problems.

Two interest rates affect the bank lending rate (prime rate), bank lending rates are usually higher than the federal funds rate by 3 percentage points. Bank lending rate for banks to provide their customers the best rate. Low rates by reducing borrowing costs, lower consumer and business purchase and construction costs; high interest rates increase borrowing costs to cool the economy. Every time the Federal Reserve through the regular adjustment of 0.25 to 0.5 percentage points the way to adjust the Federal Reserve funds rate. From 2001 to early 2003, the mid-13th Fed to adjust interest rates, fell to 6.25 percent from 1.00 percent to curb economic recession. In November 2002, interest rates fell to 1.75 percent, and many of the inflation rate down to below the level of (at this time of negative real interest rates). June 25, 2003 fell to 1.00 percent, since reaching its lowest level since 1958, tie, the average overnight rate is 0.68 percent. From the beginning by the end of June 2004, the Federal Reserve raised interest rates 17 times. August 8, 2006 interest rates rose to 5.25 percent. In the Fed’s Aug. 8 meeting on interest rates unchanged. 2006 9 to 20 and interest rates remain unchanged.

U.S. Federal Reserve may be through open market operations to change long-term interest rates, but relative to the market in the private sector, its purchasing power is still much smaller. Of course, the Fed can try to put forward advice on the market, but will have limited impact.