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https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis eral Reserve Bank of Boston's Economic Education Newsletter 19M.tTopic Ben Franklin Gets a Makeover U.S. Will Issue Redesigned $100 Note in Early 1996 The design enhancements on the 1996 series notes will help to deter that threat. Here's a summary of the new features. (See photo of new bill on page 2.) • A larger, slightly off-center portrait. In this , the most noticeable change , the larger Benjamin Franklin will still appear on portrait will incorporate more detail, making it the front, but his portrait will be bigger and easier to recognize and more difficult to coun- shifted to the left. Independence Hall will still terfeit. Moving the portrait away from the cen- grace the back, but the sky around it will be ter, the area of highest wear, will also reduce composed of concentric fine lines. wear on the portrait. These are only some of the new securi- • A watermark to the right of the por- ty features that have been incorporated into trait depicting the same historical figure as the the U.S. $100 note. The redesigned $100 notes portrait. The watermark can be seen only when will begin to enter circulation in early 1996. held up to the light. In addition , the borders of Redesigned lower denominations will then be the note have been simplified so that the wa- introduced at the rate of about one per year. termark can be viewed more easily. As older notes reach the Federal Reserve • A security thread that will glow red in cash deposits from banks, they will be re- when exposed to placed by the redesigned notes . But the peo- ultraviolet light in ple at the U.S. Treasury and the Federal Re- a dark environ- serve are taking great pains to emphasize that ment. The thread there will be no recall and no devaluation of will be in a unique any U.S. currency. Federal Reserve Board position on each Chairman Alan Greenspan has noted that "the denomination. United States has never recalled its currency and will not do so now. Old notes will not be • Colorshifting ink that recalled or devalued . The United States always changes honors its currency at its full face value, no green to black matter how old." The purpose of the redesign is to maintain the security and integrity of U.S. currency by staying ahead of advances in reprographic from The purpose of the redesign is to maintain the security and integrity of U.S. currency ... when viewed from different angles. This feature appears in the numeral on the lower right-hand front corner. • Microprinting in the numeral on the technology, such as color copiers and elec- note's lower left-hand front corner and on the tronic digital scanners. Advanced reprograph- collar of Benjamin Franklin's coat. ic technology improved dramatically during • Concentric fine-line printing in the the 1990s. Some of the advanced equipment background of the portrait and on the back o,f is capable of accurately reproducing the colors the note. and fine-line detail of security documents and poses a potential threat to currency. Although all denominations will have enhanced security features , the number of feaThe Ledger • Spring 1996 1 The Ledger Your Money Matters Editor's Note Security Thread A polymer th read is embedded vertically in the paper a nd indicates , by its uniq ue position , the note's denomi nation. The words "USA 100" on the thread can be seen from both sides of the note when held up to a bright light. Additionally, the thread glows _ _ _ __ red when held unde r an ultraviolet light. The Ledger's New Look After more than 20 years , The Ledger has a new look. Watermark A watermark depicting Benjamin Frankli n is visible from both sides when he ld up to a light. Instead of a long lead article, the new format features a va• riety of short pieces, which we hope will hetter serve the needs of a wider audience. Bob Jahaily, Editor The Ledger Public and Community Affairs Department Federal Reserve Bank of Boston P.O. Box 2076 Boston. MA 02106-2076 Or phone: (617) 973-3452 This newsletter is published twice a year as a public service by the Federal Reserve Microprinting Because t hey're so small, microprintcd words are hard to replicate. On the front of the note, "USA 100" is with_i n t he number in the lower left corne r a nd "United States of America,, is on Benjamin Franklin's coat. Portrait The enlarged portrait of Benjamin Frankl in is easier to recogni ze. while the added detail is harder to duplicate. The portrait is now off-cente r, pro,·iding room for a watermark and reducing wear and tear on the portrait. Concentric Fine Unes The fine lines printed behind both Benjamin Franklin 's portrait and Indcpendence llall a re difficult to repli ca te . Color-Shifting Ink The number in the lower right corner o n the front of the note looks green when viewed straight on. but appears black when viewed at an angle. Bank of Boston. The reporting of news about economic tures will vary by denomination . The $100 1996 series currency. They are perfect for education programs and the note will have a full package of deterrent fea- classroom use, and they are ava ilable, free of tures, while the $1 note will have fewer and less charge, to teachers in the First Federal Reserve sophisticated features . District. To obtain these materials, write to: materials contained herein do not necessarily reflect the views of the Federal Reserve Bank of Boston or the Board of Governors. Other changes incorporated in the new Publications design include a modified serial number and a Public and Community Affairs Department Copies of this newsletter and modified Federal Reserve seal. But despite all Federal Reserve Bank of Boston a catalog of other educa - the changes, the new currency is still distinct- tional materials and research ly recognizable as American. Many elements publications may he obtained remain the same, including: • size of the bill; P.O. Box 2076 Boston, MA 02106-2076 or fax request to: 617-973-3511 or e-mail at: • ink colors - 102521 . email@example.com free of charge by writing: Publications Public and Community Affairs Federal Reserve Banlf. of Boston P.O. Box 2076 Boston, MA 02106-2076 internet: http://www.bos.frb.org e-mail: 102521.740 @compuserve.com https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis black on the front and And starting in January 1996, represen- green on the back; • paper - cotton and linen with red Boston's Public and Community Affairs De- and blue fibers; • texture of the paper - tatives from the Federal Reserve Bank of will still feel the same; • historicalfigures and back illustrations - with slight alterations; and partment will be available to deliver free educational presentations on "Currency, Coun- terfeiting, and the New .$100 Note" to groups of teachers and students anywhere in the First • motto - "In God We Trust." Federal Reserve District. You can either come The Federal Reserve Bank of Boston has to the Boston Fed for the presentation and a color posters, pamphlets, and information kits tour, or we can travel to your school. For more that provide easy-to-u nderstand information information on the presentations, ca ll ( 617) abou t the changes and new features on the 973-3451 or (617) 973-33 71. "Find what is good, and praise it" "Economics for Leaders" Summer Program Is Worth the Trip Smokey Murphy begins the "Trading Ac- University of Hartford. tivity" by handing each participant a brown pa- The Foundation for Teaching Econom- per bag. Only he knows what's inside. It could ics, based in Davis, California, was founded in be anything from an ordinary #2 pencil to a 1975 to promote economic literacy and excel- coveted souvenir T-shirt. lence in economic education. FTE has Participants are instructed to open their conducted Economics bags , peek inside , and rate the enclosed item Jar Leaders summer on a scale of one to five. A "five" means you're programs since 1991 very satisfied with what you received ; a "one" at college campuses means you hate it. Murphy tallies the individ- across the country. ual ratings to calculate the group's overall "Sat- And the program is isfaction Rating. " free. Participants pay Participants are then told they can trade only their transporta- with people in their immediate group (the sur- tion costs to and from rounding five or six people). When trading ceas- the site. During the sum- Rating, " results show that the total has jumped mer of 1995, more from 116 in Round One to 149 in Round Two. than 400 students and teachers attended are told they can trade with anyone on their Economics for Lead- side of the room, then with anyone in the en- ers sessions at seven tire room, and , finally , that they can trade any- sites: thing they brought into the room with anyone Houston, University of else in the room. After each round, the "Satis- California faction Rating" rises: Round Four - Round Three - 171; Round Five - 160; 177. When asked his thoughts on how to cope with the inevitable pain and pettiness of everyday life, both on and off the baseball diamond, a major league ballplayer said, "Find what is good, and praise it." This section of The Ledger es and Murphy recalculates the "Satisfaction During subsequent rounds, participants "Find what is good, and praise it" University at endeavors to do just that. We will try to find and praise the good work that people are doing in economic education. If you are aware of a quality economic education program or resource, let us know about it. of Santa Barbara, Mt. St. Mary's College (Los Angeles), University of Washington at Seattle, Universi- Murphy , a high school teacher for more ty of Hartford (CT), Northwestern University than 25 years, is clearly enjoying himself as he (Evanston, IL), and University of Colorado watches the people in the room engage in live- (Boulder). ly commerce. The expression on his face says Students and teachers spend the first that he is one of those fortunate people who half of each day participating together in eco- loves what he does for a living. nomic education activities and presentations He originally began using the "Trading that are lively, innovative, and instructive. Af- Activity" to illustrate the benefits of trade for ter lunch, students engage in activities in- his students in Sacramento, California. But this tended to promote leadership and teamwork time , he's part of a talented and enthusiastic skills , while teachers attend workshops de- team of instructors who are conducting one of signed to further develop and improve their un- the 1995 Economics for Leaders programs derstanding of economic concepts and to pro- sponsored by the Foundation for Teaching Eco- vide them with new teaching strategies. The nomics (FTE). Thirty high school seniors and FTE also provides a variety of support materi- 30 high school economics teachers have come als, simulation exercises, and lesson plans for from as far west as Texas and as far east as teachers to use when they return to their own Poland to attend the week.long program at the classrooms. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Ledger • Spring 1996 3 Students and teac he rs come back to- creased by nearly 40 percent du ting the program. gether after dinner for discussions of ethical Gerhart points ou t that FTE takes the and moral dilemmas , a simulated poli tical e lec- eva luation process very seriously. The evalu- tion , sessions on leadership skills, and ation methods, the five-page evaluation form , Murphy, a high school teacher for more than 25 years, is clearly enjoying himself as he watches the people in the room engage in lively commerce. 4 Spring 1996 • The Ledger https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis even a few recreational and social ac- and the 1995 Report Card on Economics for tivities. In fact, the easy interaction between teache rs and students charac- Leaders, were all developed by Eva L. Baker, professor at the UCLA Graduate School of Ed- terizes every aspect of the Economics ucation and Information Studies, who says she for Leaders program. "continue[s ] to be amazed at the FTE's abili- The days are full. The program is intensive, and , by most accounts, very effective. Steve Gerhart, Vice President ty to create suc h a pos itive educational experience in the field of economics ." Teachers and students who would like of Administration and Program Affairs to know more about the Economics for Lead- for FTE, is proud of the fact that Eco- ers program should write to: nomicsfor Leaders invariably receives Foundation for Teaching Economics outstanding eva luations from students Attn: Department B and teachers. Questionnaires adminis- 260 Russell Blvd., Suite B tered at the conclusion of each 1995 Davis, CA 95616 session indicated that 208 of the 219 students or call Ms. Marylou Alquizalas, who participated in the program would rec- FT£ Program Recruiting Coordinator, ommend it to their friends , and teachers were at (800) 383-4335. equally enthusiastic. In addition, pre- and post-tests indicated that student learning in- FTE's £-Mail address is FT£4£FL@aol.com. Shared Knowledge The Chronic Colonial Money Shortage Shared Knowledge by Robert J. Haas "The Chronic Colonial Money For the early American colonists, the associated value. For Shortage" was submitted by Robert J. trading of goods and services was mainly a sys- example, some Native Haas of Boyertown, Pennsylvania. This tem of bartering. Bartering is when one per- American tribes traded piece is geared to upper elementary son agrees to give you "something," and you wampum belts (made and middle school students who are give that person 'something" in return to com- of beads), as we today studying the colonial period. plete the exchange. The "something" could be trade pieces of paper Mr. Haas graduated from Indiana the exchange of products (an item you had with the word "dollar" University of Pennsylvania with a B.A. made , grown , or previously obtained) or a ser- on Colonists in economics and obtained teacher vice (any work or task performed on behalf of used tobacco or tobac- certification from the University of the other party). But bartering has certain co credits as a form of Kutztown (Pennsylvania). He teaches drawbacks. First, you must find someone who money. A product such eighth grade social studies at Upper has what you want; then you must have as tobacco was easily Perkiomen Middle School in south- something that the other party wants. Finally, recognized and had a eastern Pennsylvania, and just from you both need to agree on what constitutes a certain value talking with him over the telephone, he fair swap. It's an inefficient, time-consuming associated with it that conveys the sense of someone who way to do business. everyone understood does his job with great energy and en- them. thusiasm. A monetary system, the outgrowth of a and, more importantly, maturing economic society, soon replaced the accepted. One of the If you have an economic educa- basic barter system in the colonies. The use most important attrib- tion lesson plan, teaching technique, of money enabled people to complete a trans- utes of currency is that or article that you would like to share action with the specific demand occurring in people must be willing with our readers, please write to: only one direction. That's because in a barter to accept it in exchange Editor, The Ledger, Public and Com- system each party must want or need the oth- for their product or ser- munity Affairs Dept., Federal Reserve er party's product or service, but in a curren- vice . They must also Bank of Boston, P.O. Box 2076, cy system one party can give some form of believe that others will Boston, MA accept it as well . (617) 973-3452. We'd love to hear money instead. The replacement of the bartering system was an indication of economic growth and diversification in the colonies. A crucial part of a monetary system is the existence of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis an item with some In early colonial 02106-2076; or call from you. America, there was no established system of money . evertheless, there was some money! Ships' passengers and crew carried English money with them to the ew World. But the colonial supply of English coins was very limited, and what few coins there were, generally returned to England as payment for goods that were not available in the colonies. (As a rule, English merchants accepted payment only in English currency.) On top of that, the English government, in an attempt to ensure continued strong demand for English money, enacted laws that prohibited the production of colonial coins. This prohibition, combined with the chronic The Ledger • Spring 1996 :i https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis shortage of English coins, created problems for During the early colonial period, most the colonial commerce and difficulties in trade economic transactions were accomplished between colonies. through the barter system. But as the economy grew and diversified, the use of money soon Conclusion replaced barter. The many different things that have The problem was that money was al- served as money over the centuries, have most always in short supply in colonial Amer- shared two common traits: they have been ica. Most coins went back to England to pay for relatively scarce and widely accepted. And goods that were not available in the colonies. throughout history, money has served three The money shortage was also made worse by important functions. It has served as: 1) a the fact that the English government enacted medium of exchange, 2) a means to store laws that prohibited the colonists from mint- wealth, and 3) a way to measure value. ing their own coins. DEFINE the following words and terms: barter diversification monetary system medium of exchange means to store wealth measure of value QUESTIONS 1) Do modem American adults barter with one another? Are there times when they work for something other than money? (Answer YES or NO and use examples to explain.) 2) What are some of the things that today's teenagers sometimes use as substitutes for money? 3) Where's the one place that elementary and middle school students use the barter system every day, Monday through Friday? Why? (HINT: "Bologna?! Again?!") Back to Basics 1983, and 1984. In each of the 3 years, about What Is the CPI? 4,800 families from around the country provided information on their spending habits in The Consumer Price Index (CPI) is a a series of quarterly interviews. To collect in- measure of the average change over time in the formation on frequently purchased items, such prices paid by urban consumers for a fixed mar- as food and persona l care products, another ket basket of consumer goods and services from 4,800 families in each of the 3 years kept di- A to Z. The CPI provides a way for consumers aries listing everything they bought during a 2- to compare what the market basket of goods week period. and services costs this month with what the Altogether, about 29,000 individuals and same market basket cost a month or a year ago. families provided expenditure information for use in determining the Is the CPI a cost-of-living index? No, although it frequently and mistakenly is called a cost-of-living index. The CPI is importance, or weight, Back to Basics of each item in the in- Every month, news reports focus dex structure. time on fluctuations in the Consumer Price flect the changes in buying or consumption constraints, the Bu- Index (CPI). But what exactly is the CPI patterns that consumers probably would make reau of Labor Statistics and what does it measure? to adjust to relative price changes. For exam- (BLS) used data from ''What Is the CPI" offers a basic ple, if the price of beef increases more rapidly only the first 2 years of explanation of what the CPI is all than other meats , shoppers may shift their pur- the Consumer Expen- about. It is drawn from the pages of chases away from beef to pork, poultry, or fish. diture Survey to select "Understanding the Consumer Price If the charges for household energy increase the items to be priced . Index: Answers to Some Questions," more rapidly than for other items , households In addition, BLS up- an informative (and free) pamphlet may buy more insulation and consume less dates the sample of published by the Bureau of Labor Sta- fuel. The CPI does not reflect this substitution stores and service out- tistics (BLS). among other items as a cost-of-living index lets in roughly 20 per- would . Rather, the CPI assumes the purchase cent of the urban areas of the same market basket, in the same fixed priced for the CPI each year. proportion (or weight) month after month. troduced with these new samples. an index of price change only. It does not re- Due to ew items are in- About every 10 years the market basket is thoroughly updated to allow for the introduction What goods and services does the CPI cover? of new products and services and to reflect The CPI represents all goods and ser- more current spending patterns . In addition, vices purchased for consumption by urban the CPI does not reflect taxes that are not di- households. BLS has classified all expenditure rectly associated with the purchase of specific items into over 200 categories, arranged into goods and services. In other words, the CPI ex- 7 major groups. Major groups and examples of cludes taxes such as income and Social Secu- categories in each are as follows: rity taxes. • food and beverages (cookies, cereals, cheese, coffee, chicken, beer and ale, restau- How is the CPI market basket chosen? rant meals) ; The CPI market basket is developed • housing (residential rent, homeown- from detailed expenditure information provid- ers' costs, fuel oil, soaps and detergents, tele- ed by families and individuals on what they visions, local telephone service); actually bought. For the current CPI, this information was collected from the Consumer Expenditure Survey over the 3 years of 1982, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • apparel and its upkeep (men's shirts, women's dresses, jewelry); • transportation (airline fares, new and The Ledger • Sprinj\ 1996 7 used cars, gasoline, car insurance) ; • medical care (prescription drugs , eye care, physicians' services, hospital rooms); • entertainment (newspapers , toys , musical instruments, admissions) ; and • other goods and services (haircuts, col- the number of consumers represented by each area priced for the CPI. Next, another sample of about 24,000 families serves as the basis for a Point-of-Purchase survey that identifies the places where households purchase various types of goods and services. lege tuitions , bank fees) . In addition , the CPI includes various user fees such as water and sewerage charges, the media? auto registration fees , vehicle tolls, and so forth. Each month , BLS releases thousands of Taxes that are directly associated with the price detailed CPI numbers to the press. However the of specific goods and services (such as sales and press generally focuses on the broadest, most excise taxes) are also included . But comprehensive CPI. This is known as "The The CPI is an index of price change only. It does not reflect the changes in buying or consumption patterns that consumers probably would make to adjust to relati'Ve price changes. Digitized for 8FRASER Spring 1996 • The Ledger https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Which index is the "official CPI" reported in the CPI excludes taxes not directly Consumer Price Index for All Urban Con- associated with the purchase of con- sumers (CPI-U) for the U.S. City Average for All sumer goods and services (such as in- Items , 1982-84=100." Often, the media will re- come and Social Security taxes). port some or all of the following : The CPI does not include investment items (such as stocks, bonds, real estate , and life insur- a .) the index level (for example, July 1992=140.S); ance) . These items relate to savings and not day-to-day living expenses. b.) the 12-month percent change (for example, July 1991 to July 1992 = 3 .2 percent) ; How are CPI prices collected? Each month , BLS field repre- c.) the I-month percent change on a sea- sentatives visit or call thousands of sonally adjusted basis (for example, from June retail stores, service establishments, 1992 to July 1992 = 0.1 percent); rental units , and doctors' offices all over the United States to obtain d.) the annual rate of percent change so price information on thousands of far this year (for example, from December 1991 items in the CPI market basket. For to July 1992 if the rate of increase over the first the entire month , they record the 7 months of the year continued for the full year, prices of about 90,000 items. These after the removal of seasonal influences, the 90,000 items represent a scientifi- rise would be 2.9 percent) . cally-selected sample of the prices of goods and services sold to urban consumers throughout the country. How is the CPI calculated? The CPI is a product of a series of interrelated samples. First, using data from the Census of Population , BLS selects the urban areas from which prices are to be collected and chooses the housing units within each area that are eligible for use in the shelter component of the CPI. The Census of Population also provides the data which allows the assigning of MULTIMEDIA Money, Banking, and Monetary Policy ANA Offers a Wealth of Information Money, Banking and Monetary In addition to functioning as a Policy is the sixth publication in the medium of exchange, a store of value, "Everyday Economics" series from the and a measure of value, coins can also Federal Reserve Bank of Dallas. As is serve as a "hook" for getting students the case with the other five publica- interested in history, economics, mon- tions in the series, this one is informa- ey and banking, or even the classics tive and well-designed. It discusses the and mythology. Coin collecting is one properties and characteristics of mon- of the oldest and most popular of hob- ey and touches on a variety of other bies. Walk into any elementary school topics, including how banks create classroom, and you will encounter sev- money and how the Federal Reserve eral enthusiastic collectors. The American Numismatic As- conducts monetary policy. sociation (ANA) offers some excellent tli\G!I f' 0 ,.....,. __,,_, materials to help educators use coins and coin collecting as a teaching tool. lie Radio and heard on more than 500 stations. !any of the scripts are avail- able for use by classroom teachers. The American l\'umismatic Association , a nonprofit educational organization chartered by Congress , is also the world's largest organization for collectors of coins, paper money , medals , and tokens . For more information on the A.1\JA and its educational materials , please write to: Education Director American Numismatic Association, 818 North Cascade Avenue Colorado Springs, CO 80903-3279 For example, there's a 30 minute video narrated by James Earl Jones , Money, History in Your Hands. The video shows historical coins and currency Currency in U.S. History and explains how coins and paper •• 1 ... , For a free copy of Money, Bank- ing and Monetary Policy, write to: Publications Public Affairs Department Federal Reserve Bank of Dallas money are made, with an emphasis on Currency in U.S. History offers the United States. It is available for readers an interesting look at eight teachers to borrow free . There's also types of paper money , from state bank a free pamphlet called Coin Collecting: notes and Confederate currency to A Fascinating Hobbyfor Young and fractional currency and Federal Re- Old , which talks about how to start serve notes . The story of currency is and catalog a collection, care for coins, interwoven with snippets of U.S. histo- and decipher mint marks. It also con- ry, and the photos of old notes are fun tains sections on numismatic trivia to look at. and a brief summation of the terms used to describe the various recog- U.S. History, write to: nized conditions of coins. In addition, the 1 For free copies of Ci, n·ency in A produces Public Affairs Department 2200 N. Pearl Street educational scripts for Money Talks, Federal Reserve Bank of Kansas City Dallas, TX 75201-2272 a daily, two-and-a-half minute radio 925 Grand Boulevard https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis program distributed by ational Pub- Kansas City, MO 64198-0001 The Ledger • Spring 1996 9 NEW ENGLAND UPDATE The Economic Education Councils and Centers Have Much to Offer Teachers Economic Education Council in your state will be able to put you in touch with the Economic Connecticut, Maine, Massachusetts, and Rhode Island have active and Education Ce nter nearest you . thriving Economic Education Councils and Centers that offer teachers a variety of educational opportunities and tools ranging from in-service classes and specialized workshops to print materials and videos. For more information , teachers in those states should contact: If you live outside New England and you would like to find out the address of your state's Economic Education Council , you should write to: Connecticut Council Economic Education Council on Economic Education of Massachusetts University of Connecticut at Storrs University of U-55 One Bishop Circle Massachusetts-Lowell Room 104 West Campus Storrs, CT 06269-4055 Lowell, MA O1854 Phone: (203) 486-2327 Phone: (508) 934-4622 Maine Council Rhode Island Council on Economic Education on Economic Education University of Southern Maine Rhode Island College EconomicsAmerica National Council on Economic Education 1140 Avenue of the Americas New York, NY 10036 Phone: (212) 730-7007 or 1-800-338-1192 P.O. Box 9715-159 Providence, RI 02908 Portland, ME 04104 Phone: (401) 456-8037 Phone: (207) 780-5926 New England Educators Attend "A Fed Sampler" More than 120 secondary Education , the Economic Education forts, Mr. Swanson won his very own copy of The Federal Reserve Act.) school teachers and administrators Council of Massachusetts, and the from all six New England states came Rhode Island Council on Economic Mr. Swanson's prize-winning to the Federal Reserve Bank of Boston Education jointly hosted the daylong performance led into the real core of on ovember 3 to attend A Fed Sam- program. the program : background presenta- p ler, an economic education work- First on the agenda was a ses- tions by three Federal Reserve Bank shop. The workshop's primary pur- sion on "Central Bank Basics," during of Boston Vice Presidents . Stephen pose was to give First District educa- which Robert Swanson of Sanborn Re- Trebino, Vice President of the Feder- tors a thorough introduction to the gional High School in Kingston , ew al Reserve Bank of Boston's Loan and Federal Reserve System. The Federal Hampshire, managed to win himself a Credit Department, explained the in- Reserve Bank of Boston, the Con- prize by correctly answering six out of tricacies of reserve requirements and necticut Council on Economic Educa- seven tricky true/false questions on the "discount window" lending. He was tion , the Maine Council on Economic Federal Reserve System . (For his ef- followed by Stephen McNees, a Vice 10 Spring 1996 • The ledger https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis President and Economist in the Editor, The Ledger Boston Reserve Bank's Research De- Public and Community partment, who drew on his many Affairs Department years of attending Federal Open Mar- Federal Reserve Bank of Boston ket Committee Meetings to demysti- P.O. Box 2076 fy monetary policy. Boston, MA 02106-2076 or phone: (617) 973-3452 After lunch , Gera ld Giaccai , the Boston Fed's Vice President for Marketing and Customer Services , For next year's workshop we are presented a n overview of check imag- considering a workshop on foreign ing and other technological innova- trade . That was the topic mentioned tions that are changing the U.S. pay- most often when we asked this year's ments system. Ile also explained the participants to tell us what they would Federal Reserve's efforts to foster the like us to cover in fu ture workshops. In add ition to workshops for innovations . All the presentations triggered teachers, the Boston Fed distributes a excellent questions from the teachers broad range of free ed ucationa l pub- in attendance. And the program lications , we offer free group tours of evaluations indicated that the work- the Bank (by appointment) , and we shop was a very positive, worthwhile conduct free economic education pre- experience. sentations on money, banking, and If you are a secondary school the Federal Reserve . For free copies of teacher or administrator in the First our Public Information Materials Federal Reserve District, and you did Catalog and Speahing of Money, a de- not receive notification about A Fed scriptive broch u re abo ut our eco- Sampler, please let us know and we nomic education presentations, con - will add your name to our mai ling list tact our publications coordinator (see for future programs. Write to: page 2 for address). I Boston Fed Hosts College Instructors The Boston Fed's Public and Community Affairs Department hosted its third an nual luncheon seminar for college economics and business instructors on Friday, ovember 10. More than 50 college faculty members from across the region came to hear Jeffrey Fuhrer, Vice President a nd Economist in the Bank's Research Department, discuss Inflation: Theory, Recent Behavior, and Near-Term Outlook. Mr. Fu hrer's presentation was followed by an interesting and informative round of questions and answers. The luncheon seminar is a free annual event open to any college economics or business instructor in the First Federal Reserve District. If you would li ke us to add your name to the invita tion list for next year's program , please write to: Angelo Veneziano, Public and Community Affairs Department, Federal Reserve Bank of Boston, P.O. Box 2076 Boston, MA 02106-2076 F ~ HOME The Boston Fed Has Found a Home on the World Wide Web PAGE Guests to the site will be able • The new series 1996 U.S . currency to find up-to-date information on • Treasury Information what's new at th e Boston Fed , read • Community Affairs a n d dow nload Public & Commu nity • Economic Education programs The Federal Reserve Bank of Affairs and Research publi cations , • Boston Fed tour information Boston has established a site on the and learn more about the Federa l Re- World Wide Web (WW\1/). The new serve System and its operations in "home page " is a gateway to infor- Boston. mation on the functions and purposes of the Boston Fed and the Federal The following are featured on the new WWW s ite: World Wide Web address: http://www.bos.frb.org £-mail address: firstname.lastname@example.org Reserve System. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Ledger • Sprin~ I 996 11 Fed Points the nation's payments system. America's Central Bank i.e., Reserve Banks hold the Treasury's Banking, of course, has changed checking accounts ;nd handle the is- since 1913 and so has the Federal Re- suance and redemptfori ofh'reasury se- serve System. Today, most deposito- curities; 3) it is ~:S.-µpervis.o.r:..anq:regu- The Federal Reserve is the cen- ry institutions are subject to reserve lator of bankipg instituti~:w s; an~:4) it tral banking system of the United and reporting requirements, so the dis- States. It was created by Congress in tinction between member banks and makes and implements U.S. monetary . ~--- . policy. 1913 to serve the financial communi- nonmember banks is not as sharp as The Federal Reserve's monetary ty, the government, and the public. it once was. Furthermore, all depos- policy-making body, the Federal Open Under provisions of the Federal itory institutions are now allowed Market Committee (FOMC), meets Reserve Act , the United States was di- access to such Federal Reserve regularly at the Board of Governors in vided into 12 Federal Reserve Districts, services as check processing and Washington, D.C. During these meet- each with its own Federal Reserve electronic funds. ings, the 12 voting members of the Bank, and the entire System was however, are ,.J •·.• presided over by a seven-member Fed- priced ; even eral Reserve Board ( now known as the member Board of Governors). All nationally- banks must chartered commercial banks were re- pay to use quired to become members of the Fed- them . The services, FOMC As the ber bank was required to deposit nation's cen- reserves with its District Reserve Bank. tral bank, the Federal Re- (the seven Fed Points This Fed Points gives a capsule description of the structure and functions of the Federal Reserve System. Future Fed Points pieces will focus on eral Reserve System, and each mem- In return for holding reserves , '. specific aspects of the Federal Reserve, such as the selection process for Reserve Bank Presidents or the role of a Reserve Bank's Board of Directors. bers Memof the Board of Governors, President the the of Federal Reserve Bank of New York, and four other member banks were allowed free ac- serve has four Reserve Bank cess to a variety of banking services, in- main Presidents cluding the Federal Resen1e's check tions: 1) it provides banking services who serve on a one-year rotation) processing network. This helped to to depository institutions; 2) it serves make decisions that affect the supply bring order and increased efficiency to as fiscal agent for the U.S. Treasury, and the cost of money and credit. func- The Ledger First Class U.S. Postage Paid Boston. MA Permit So. 59702 Public and Community Affairs Federal Reserve Bank of Boston 600 Atlantic Avenue P.O. Box 2076 Boston, MA 02106-2076 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 23669/LD3/GSRJE/25MAR96/ 8100004 Research Library Federal Reserve Bank of St. Louis 411 Locust Street P.O. Box 442 St. Louis MO 63166