Federal Reserve

Definition

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States that regulates the national monetary policy and financial institutions. It controls inflation, supervises banks, and provides financial services to the government and commercial banks.

Analogy

Think of the Federal Reserve as the referee in a basketball game. Just as a referee ensures the game follows established rules, maintains fairness, and keeps the game flowing smoothly, the Federal Reserve oversees the banking system to ensure it operates efficiently, remains stable, and follows monetary policy rules to keep the economy running smoothly.

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