Complexities of the U.S. Financial System - Essay Example

Complexities of the U.S. Financial System Impacts of Financial Markets One Way the U.S. Financial Markets Impact the Economy. The financial markets of the US have significant impacts on the overall growth of the economy of the nation. Notably, it will be significant to mention that the economy of the US is deemed to get negatively affected by the higher rate of unemployment. Hence, providing employment opportunities provided by the financial sector will certainly ensure positive impact on the overall US economy.

For instance, the financial sector provides large number of employment opportunities for the country, which further steers the growth of the economy (Wharton School of the University of Pennsylvania, n.d.).One (1) Way the U.S. Financial Markets Impact Businesses. Financial markets provide funds for business units so that they can operate in a large scale. Funding needs are among the most significant for any business sufficed by the financial markets (Bhattacharya & Bonser-Neal, n.d.). Notably, business that intends to grow consistently seeks the assistance of the investors and the financial markets and acts as that potential investor in this context.

Furthermore, the foreign companies that operate in the US market, also considers the financial markets, as one of the major source of funds (Wharton School of the University of Pennsylvania, n.d.). One (1) Way the U.S. Financial Markets Impact Individuals. Individuals also consider financial markets or financial institutions as a source of getting personal funds against particular interest rate. People rely heavily for their financial needs on the financial markets (Wharton School of the University of Pennsylvania, n.d.)Roles in Federal Agency Explain the Primary Role of the U.S. Federal Reserve and Their Effectiveness In Today’s Economic Environment.

It has been comprehended that the US Federal Reserve is involved in conducting the activities relevant to the monetary policies of the country. It also works towards supervising as well as regulating the banks and financial institutions. Notably, the Federal Reserve also provides financial services directly to the US government. It is deemed to be quite effective in ensuring, the accomplishment of the financial goals of the nation (Federal Reserve, n.d.). Explain the Primary Role of the U.S.

Federal Reserve Chairman and Their Effectiveness in Today’s Economic Environment. The chairman of the Federal Reserve, work towards supervising the regulatory bodies and the banking system of the FEDs. He/she also leads the open market committee of the FEDs within their respective department. The chairman also works towards ensuring or enhancing the effectiveness of FEDs policies that directly impacts the people of the nation. Notably, the approach of the chairman has resulted in the improvement of the overall monetary policies of the FEDs (Waggoner, 2013).

Explain the Primary Role of the U.S. Federal Reserve Board and Their Effectiveness In Today’s Economic Environment. The board of the Federal Reserve works towards developing as well as amending the monetary policies of the FEDs. It also supervises the work of the federal banks and deals with the policies relevant to consumer-credit regulations. It is quite effective, in ensuring the development of an equitable monetary policy throughout the US (Federal Reserve Bank of New York, n.d.). Two (2) Ways Interest Rates Influence the U.S. and Global Financial Environment.

Interest rates have substantial effect on financial sector. With the change in the interest rate by the FEDs, there can be ripple effect all across the financial sector. It can also result in recession. One (1) Example of Such Influence for Both the U.S. Financial Environment. For example, a change in the interest rate will certainly result in altering the burrowing habits of the individual or business units within the financial sector of U.S. With the change in the interest rates, considerable alteration can also be experienced in the internal borrowings.

The lending pattern of the economy is quiet likely to get affected from the change in the interest rates. One (1) Example for the Global Financial Environment. For example, with the change in the interest rates, global imbalances and financial crisis can also be accompanied in the economic system (Bloomberg, 2014). ReferencesBloomberg. (2014). Online extra: a world of influence on interest rates. Retrieved from http://www.businessweek.com/stories/2005-07-10/online-extra-a-world-of-influence-on-interest-ratesBhattacharya, U.

, & Bonser-Neal, C. (n.d.). The effect of global financial markets on businesses. Retrieved from http://www.kelley.iu.edu/ubhattac/Cathy%20Paper.pdfFederal Reserve. (n.d.). What is the purpose of the Federal Reserve System? Retrieved form http://www.federalreserve.gov/faqs/about_12594.htmFederal Reserve Bank of New York. (n.d.). Board of the governors of the Federal Reserve System. Retrieved from http://www.newyorkfed.org/aboutthefed/fedpoint/fed46.html Waggoner, J. (2013). What the fed chairman does.

Retrieved from http://www.usatoday.com/story/money/business/2013/10/09/what-the-fed-chairman-really-does/2950999/Wharton School of the University of Pennsylvania. (n.d.). The feedback effect: how the financial markets affect decisions in the ‘real economy’. Retrieved from http://knowledge.wharton.upenn.edu/article/the-feedback-effect-how-the-financial-markets-affect-decisions-in-the-real-economy/