The federal reserve system

The American banking system consists of the Federal Reserve System as its Central bank and four types of commercial banks and organizations: commercial banks, savings and loan associations, Credit Unions, and mutual savings banks.

The Federal Reserve System of the United States performs many of the functions of the Central bank of other countries. It was designed to control the banking system and the money supply in the country. The territory of the United States is divided into twelve Federal Reserve Districts, each one of which has a Federal Reserve Bank in a major city. Policies of these twelve banks are uniform, however, because they are set by the Board of Governors of the Federal Reserve System.

The FRS carries out operations similar to those that are the responsibility of central banks in other countries: conducting certain open market operations that can affect the money supply in the county, extending credit to member banks through advances or rediscounts (the rediscounting rate is set by each of the individual member banks), issuing national currency, advising the government on making the country's financial policy, regulating money supply, and supervising commercial banks and other financial institutions in the country. The Board can buy or sell US Government securities, thus increasing or decreasing the amount of money in circulation. Besides, other open-market interventions of the FRS include the purchase and sale of investments such as bankers' acceptances and bills of exchange.

The Federal Reserve Board can influence the volume of activity on the Stock Exchanges by setting margin requirements for the purchase of securities. In other words, the FR Board can set the percentage of the market price of securities that a buyer must pay when buying stocks or bonds with a loan. Margin requirements thus limit the amount of credit that buyers of securities may be given to finance their investment activity. By raising or lowering margin requirements, the FR Board may limit or expand the volume of stock purchases.

The FRS supervises American commercial banks. A number of restrictions have been placed on banks for the fear they might monopolize the kinds of investments made. No bank may have branches outside the state it operates in. Stocks are to be bought or sold at separate brokerage houses subordinated to the FRS. Banks chartered by the FRS are less likely to be a risk for the depositor as the FRS insures most deposits against bankruptcy.

The banking system of ukraine

The banking system of Ukraine dates to March 1991, when the Ukrainian Parliament passed the law 'On Banks and Banking Activities', determining this system as two-level, composed of the National Bank and commercial banks.

The National Bank of Ukraine is the central financial body of the state conducting a uniform national monetary, credit and currency policy, aiming to strengthen the national currency; organizing interbank settlements; and coordinating and supervising the whole banking system.

Commercial banks varying in type and ownership are set up by legal entities and private persons as joint-stock companies. The Savings Bank is state-owned, other banks are limited liability partnerships, closed joint-stock companies, and open joint-stock companies. Their main functions include granting loans to businesses and individuals (backed by something valuable, like assets of enterprises, institutions, and organizations), cash transfers and payment services, currency exchange, and other banking transactions. The banking sector of Ukraine has a ramified system of correspondent accounts in foreign banks. Simultaneously, non-resident banks operate correspondent accounts in Ukraine's banks. This supports the settlement of import-export operations.

Transition to international accounting and reporting standards beginning January 1,1998 was an important event for the Ukrainian banking system. It has adapted Ukrainian banking system to the international standards and reporting formats; the development and implementation of software has also been completed.

Privatbank and Bank Aval are the leading commercial banks in Ukraine. Of the overall number of commercial banks, some are banks with foreign participation, including wholly foreign-owned banks. There was founded the Ukrainian Interbank Currency Exchange which trades efficiently Ukrainian and foreign currencies and prevents significant fluctuations in the international value of the hryvnia.

To secure the banks' stability the National Bank of Ukraine resolved to increase the minimum amount of a commercial bank's own funds, and an authorized stock was set for the registration of newly established banks.

Ukraine's banking strategy is to promote and stimulate commercial banks in solving economic and social problems in the country.