Federal Reserve auction brought $30 billion by Sandra Stoklaskova

The Federal Reserve System is a central banking system of the United States, known also as federal Reserve or The Fed. It is like public banking system, part government and part private. This is a major banking institution that includes three kinds of authorities, which are responsible for leading this organization. As there was a huge credit crisis in US, Board of Governors, Federal Open Market Committee and representatives of Federal Reserve Banks have to think carefully about the solution to this problem. They have decided to implement in American banking system new tool, which should guarantee sufficient reserves for banks. Several auctions were carried out since December. The aim was to mellow the effects of a serious credit crisis. Results from last auction showed, that Federal Reserve auctioned $30 billion in funds to commercial banks while the interest rate was 3.010 percent. This was the fifth from the auctions, which have altogether congested $130 billion into the US banking system with the goal of providing cash-strapped banks with some extra reserves. The Fed believe, that rising resources could help banks go on with lending and prevent credit squeeze from making US economic slowdown worse. As all of us could have marked, Fed's effort is successful, because the interest rate of last auction was the lowest rate from any of previous. The level of rate equaled 3.010, which was still below the last but one interest rate of 3.123 percent. "The current auction process will continue for as long as needed to make sure that banks have sufficient reserves," said Ben Bernanke, Federal Reserve Chairman.

related story: http://news.yahoo.com/s/ap/20080212/ap_on_bi_ge/fed_credit_crisis;_ylt=AkLouYlL86aIbcaf_P.MOWas0NUE

by Sandra Stoklaskova for PocketNews (http://pocketnews.tv)

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