Financial markets play an important role in contributing to the health and efficiency of an economy. The combination of well-developed financial markets and institutions, as well as a diverse array of financial products and instruments, suits the needs of borrowers and lenders and therefore the overall economy.
Running head: FINANICAL MARKETS
Financial markets are - any type of financial transaction that you can think of that helps businesses grow and investors make money. Financial markets such as those that trade stocks or bonds, and institutions provide opportunities for investors to specialize in particular markets or services, diversify risks, or both. Together financial markets and financial institutions contribute to economic growth.
The U.S. Federal Reserve System known as the Fed was established to provide an independent means to help ensure the stability of the financial system and set monetary policy by determining the size of the money supply and various interest rates. Federal Reserve Chairman Bernanke is responsible for guiding monetary policy for the U.S. economy. The Board of Governors oversees the operation of the Federal Reserve System and exerts a great deal of control over the financial side of the macroeconomy.
Today, the U.S. economy continues to recover at a moderate pace, but unemployment remains unacceptably high. Monetary policy is supporting economic growth, but monetary policy has limits. In current circumstances, it would be particularly helpful if fiscal and regulatory policies were among the forces supporting economic growth. Central banks worldwide are facing economic circumstances that are similar to those in the U.S., and are taking innovative monetary policy actions that may influence the theory and practice of monetary policy in years to come. I believe that our accommodative monetary policy stance is keeping the U.S. economy on the path of economic recovery, and is contributing to both U.S. and...
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