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Knowledge Base

Banks, Regulations, and the Financial Crisis with Amit Seru

Bank runs: Bank run occurs when a large number of clients withdraw their money and assets from a bank at the same time fearing that the banks may become insolvent.

Shadow banks: A shadow banking system is the group of financial intermediaries facilitating the creation of credit across the global financial system but whose members are not subject to regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.

Deficit: A deficit is an amount by which a resource, such as money, falls short of what is required. A deficit occurs when expenses exceed revenues or imports exceed exports.

Surplus: A surplus is an opposite of a deficit. Surplus is when a country has more resources or assets than it can use in production. In other words, it’s when a country’s assets exceed the useful demand for them.

 Central Banks: A central bank is a financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations. The central bank is usually responsible for the formulation of monetary policy and the regulation of member banks.

Inflation: Inflation is a sustained on-going increase in the general level of the prices of goods and services.

Federal Reserve: The Federal Reserve System, often referred to as the Federal Reserve or simply "the Fed," is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. 

The Federal Reserve conducts the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices. It also supervises and regulates banks and other important financial institutions to ensure the safety and soundness of the nation's banking and financial system, and to protect the credit rights of consumers. It maintains the stability of the financial system and provides certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions.