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FED IMF G20 G7 OPEC. Abhi Namboorimadam Bhumi Joshi Ritika Tondak Suresh Kumar. Federal Reserve System - FED. The Federal Reserve is the central bank of the United States .. Its unique structures includes

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FED

IMF

G20

G7

OPEC

  • Abhi Namboorimadam

  • Bhumi Joshi

  • Ritika Tondak

  • Suresh Kumar




  • Money Manager :

  • the primary responsibility of the Fed is devising and implementing monetary policy

  • Banker’s Bank :

    • Each of the 12 Fed Banks provide services to financial institutions in the same way that regular banks provide services to individuals

  • Regulator and Supervisor :

    • Helps to ensure that banks act in the public's interest by helping to develop federal laws governing consumer credit

    • Monitors banks that are members of the system, the international banking facilities in the U.S., the foreign activities of member banks and the U.S. activities of foreign-owned banks

  • The Government's Bank :

    • The biggest customer of the Federal Reserve is

    • one of the largest spenders in the world –

    • the U.S. government

    • The U.S. Treasury has a checking account with it. All revenue generated by taxes and all outgoing government payments are handled through this account.

    • The Fed sells and redeems government securities such as savings bonds and Treasury bills, notes and bonds.

    • The Fed also issues & destroys currency


  • Federal Open Market Committee

  • The Federal Open Market Committee (FOMC) is composed of twelve members:

    • The seven governors.

    • The President of the Federal Reserve Bank of New York (current: William Dudley)

    • Four other district bank presidents (presidents who serve one year terms on a rotating basis).

  • The committee typically meets every six weeks (eight times a year) to assess the condition of the economy and then vote on monetary policy. They decide to increase, decrease or maintain the growth of the money supply in the country.

  • The FOMC controls economic policy by using one or more of three tools available to it:

    • Changing the discount rate, which is the rate the FED charges banks to borrow from it

    • Changing reserve requirements, which is the percentage of deposits the banks must hold on reserve to cover all deposits

    • Buying or selling U.S. Treasury debt from it's member banks

  • The FOMC also has the ability to grow the money supply (create money) in the U.S lending money to it's member banks.


Why do we care

Source: Federal Reserve

Speaker: Federal Reserve Chairman Ben Bernanke

Usual Effect: More hawkish than expected = Good for currency; poor than expected=bad for currency

The testimony usually comes in 2 parts:

first he reads a prepared statement (a text version is made available on the Fed's website at the start),

then the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that lead to heavy market volatility

Why Traders Care:

As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy

Why do we care?



  • Formed in 1944, IMF is a forum of national economic policies, international monetary and financial systems, which involves active dialogue with each member country..

  • Five largest shareholders: United States, Japan, Germany, France, United Kingdom

  • France became the first country to borrow from the IMF.


Role

  • Lending

    • low-interest loans for low-income countries

    • Stand By Arrangements (SBA). These are used to help countries with short-term balance of payment issues

    • Emergency Assistance loans. These are designed to provide assistance to countries that have had a natural disaster

  • Surveillance

    • “Watchdog”

  • Technical Assistance

    • The IMF provides technical assistance in its areas of core expertise:

      • macroeconomic policy,

      • tax policy and revenue administration,

      • expenditure management,

      • monetary policy,

      • the exchange rate system,

      • financial sector stability,

      • legislative frameworks,

      • and macroeconomic and financial statistics


Global lender of last resort

IMF offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse…

Where does all the money come from?

  • the IMF remains the third largest official holder of gold in the world

  • quota subscriptions or membership fees- that are based on the wealth of each nation. The wealthier the country, the higher the quota subscription, and are reviewed periodically.

  • New Arrangements to Borrow (NAB)-the IMF's main backstop for quota resources, a number of member countries and institutions stand ready to lend additional resources to the IMF.

Global lender of last resort


Group 20 g20 group 7 g7
Group 20- G20Group 7- G7


  • It is a group of finance ministers and central bank governors from 20 major economies..

  • The G-20 was proposed by former Canadian Finance Minister Paul Martin for cooperation and consultation on matters pertaining to the international financial system


More about g20

All 20 member nations are among the top 28 economies as measured in GDP in a list published by the IMF for 2010

Spain, being the 12th largest economy in the world and 5th in the European Union in terms of nominal GDP, is a 'permanent guest' of the organization

  • In addition to these 20 members, the following forums and institutions, as represented by their respective chief executive officers, participate in meetings of the G-20:

  • the Managing Director of the International Monetary Fund

  • the Chairman of the International Monetary Fund

  • the President of the World Bank

  • the International Monetary and Financial Committee

  • the Chairman of the Development Committee

More About G20:


2012 Feb 27 : The G20 met in Mexico, where resolving the European debt crisis and restoring growth are key priorities for the leaders of the world’s most important economies.


Assembled in 1987, the G7is an international finance group consisting of the finance ministers from seven industrialized nations..

Members are Canada, France, Germany, Great Britain, Italy, Japan, and the United States. The G7 discusses and coordinates its members' actions on economic and commercial matters and works to aid the economies of other nations. It can be said that group G7 is playing an important role about providing a stable protocol of economy to the various concerning countries of the group and it also helps in resolving financial crisis of a particular zone of the world.

The leaders of the G7 nations meet annually in member countries.

The Group of Eight. (G8), which consists of the G7 nations plus Russia, was officially established in 1998

G7



OPEC headquarters was moved from Geneva to Vienna, Austria, on September 1, 1965..

OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry

OPEC Bulletin

Monthly Oil Market Report

World Oil Outlook

Annual Statistical Bulletin


Why is OPEC so important?

  • 2/3rds of oil reserves belong to OPEC members & the members are responsible for half of world’s oil exports.

  • More than three-quarters of the world’s proven crude oil reserves are located in OPEC Member Countries.

  • Moreover, these reserves are more accessible and cheaper to exploit than those in non-OPEC areas.

  • In 2030, the OPEC ,secretariat reference case sees the Organization meeting almost half the world’s oil demand with supplies of 53.4 million barrels per day, including natural gas liquids.


In the news

Spare Capacity : the ability of a factory, company, or industry to produce more of a product than is now being produced…

In the news…


Is there a connection

Classic example is what happened on Wednesday (29.2.12)?

If tensions with Iran, a major producer, continue into the U.S. summer driving season, prices at the pump could rise more

The Federal Reserve said the U.S. economy expanded modestly in January through mid-February as hiring picked up a bit across several districts-Beige Book

The Federal Reserve, along with the 17 euro zone national central banks, may help provide the International Monetary Fund with funds that could be used to aid debt-ridden states

IS THERE A CONNECTION?



Thank you for your attention

AnyQuestions

Thank You for your attention!


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