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1. Group members:
 Zeeshan Ahmed Khan 026
 Bint-e-Zahra 034
 Mudasir Ali 046
 Arsalan Qadeer 068
 M.Sohaib Asgher 071
Topic

2. Table of contents
 Introduction
 Structure of Fed and SBP
 How is the Fed Organized?
 How is the SBP Organized?
 Functions of Fed and SBP
 Monetary Policy tools of Fed and SBP
 Laws, Legislations & Regulations
 Regulation of liquidity
 Conclusion

3. Introduction
Fed SBP
• Central bank of Pakistan
• Established in 1948
• Headquarter is in Karachi
• Central bank of United State
• Established in 1914
• Headquarter is in Washington

4. Structure
Fed SBP
• 10 members of Board of Governors
• Appointed by President
• For term of 3 year
• 8 Directors
• 7 members of Board of Governors
• Appointed by President
• For term of 14 years
• 9 Directors

5. How is the Fed Organized?
Fed
Board of Governors
The Federal Open Market Committee
12 District Banks
Smaller Member Banks

6. How is the SBP Organized?
SBP

7. Functions
Fed SBP
• Issuer of paper currency
• Possesses a monopoly on printing
the national currency, which
usually serves as the nation's legal
tender.
• Issue offices: located in Karachi,
Peshawar & Lahore
• The 12 regional Federal Reserve
Banks, through their network of
Districts and branches throughout
the country, distribute Federal
Reserve notes to the public
through depository institutions.

8. Functions (cont.)
Fed SBP
• Regulates the money supply, and controls the interest rates in a country
• Oversee the commercial banking system of their respective countries
• Supervise and regulate banking operations
• Holds the reserves of banks

9. Functions (cont.)
Fed SBP
• Lender of last resort
– It offers loans to banks or other eligible institutions that are experiencing
financial difficulty or are considered highly risky or near collapse.
• Management of Foreign exchange
– It is associated with currency transactions designed to meet and receive overseas
payments. Beyond these transactions, it requires you to understand the relevant
factors that influence currency values. From that point, you may execute the
proper strategy to manage risks and improve potential earnings.

10. Monetary Policy Tools
Fed SBP
• Open Market Operation:
– It is the purchase and sale of securities in the open market by a central bank
which is also one of the key tools used by the Federal Reserve in the
implementation of monetary policy.
– The Federal Reserve has used to regulate the supply of reserve balances to
keep the federal funds rate around the target established by the Federal
Open Market Committee.
– If you want to reduce the amount of money circulating then they sell
bonds(which are actually pieces of paper) in return for money. They are not
allowed to withdraw money. In return they get a really High Interest Rate
on their money

11. Monetary Policy Tools (cont.)
Fed SBP
• Discount rate:
― It is the interest ratio charged to national banks and other financial
institutions on loans they receive from their district Federal Reserve
Bank's lending facility.

12. Monetary Policy Tools (cont.)
Fed SBP
• Reserve Requirement:
− The amount of funds that a bank establishment is obligated to retain
against deposit liabilities.
− The Board of Governors has exclusive authority over changes in reserve
requirements.
− Financial organizations must hold reserves in form of cash in vault or
deposits with Fed

13. Laws, Legislations & Regulations
Fed SBP
 SBP Act 1956: An Act to provide for
the establishment of SBP and
provide for the constitutions of a
SBP to regulate the monetary and
credit system and to foster its
growth in the best national interest
with a view to securing monetary
stability and fuller utilization of the
country’s productive resources
 Fed Act 1913: An Act to provide
for the establishment of Fed to
furnish an elastic currency to
afford means of rediscounting
commercial paper, to establish a
more effective supervision of
banking in the United States

14. Laws, Legislations & Regulations
Fed SBP
• Negotiable Act 1881: The law
relating to promissory notes, bills
of exchange and cheques.
• SBP Act 2007: The Law to provide
regulatory framework for
payment systems and electronic
fund transfers in Pakistan.
• Banking holding company act of
1956: Required Federal Reserve
Board approval for establishment
of bank holding company.
Prohibited bank holding
companies headquartered in one
state from acquiring a bank in
another state

15. Laws, Legislations & Regulations
Fed
• Housing and community
development act of 1992:
Established regulatory structure
for government-sponsored
enterprises (GSEs), combated
money laundering, and provided
regulatory relief to financial
institutions.
SBP
• Prudential Regulation: The code
of conduct or guide lines through
which state bank supervise the
institutions

16. Regulation of Liquidity
Fed SBP
• The SBP also regulates foreign
activities and foreign banks
operating in Pakistan
• SBP has responsibility to carry
out monetary & credit policy in
accordance with Government
targets for growth & inflation
• Fed regulates foreign activities
and Edge corporations, and
foreign banks operating in the
United States
• Fed has broad supervisory and
regulatory authority over the
activities of state-chartered
member banks and bank holding
companies

17. Regulation of liquidity (cont.)
Fed SBP
• The SBP also regulates the volume
& the direction of flow of credit to
different uses & sectors, the SBP
makes use of both direct &
indirect instruments of monetary
management.
• Reserve Banks by the Board of
Governors responsibilities include
the conduct of field examinations
and inspections of member banks,
bank holding companies

18. Conclusion
They both play important role in achieving economic
growth of a country and promotes economic growth
with stability.

19. Thank You