What is the Federal Reserve System? Explain how and why it developed and who dev

Question

What is the Federal Reserve System? Explain how and why it developed and who developed it? Give your opinion about the usefulness of this model to the American economy and your own individual life. Do you believe there is a better system? For instance, a gold and silver standard? Explain. What human rights issues and global issues are recognized and addressed by the United Nations Global Social Compact? What are the main potential problems of corporate governance? What do our textbook authors believe are the benefits of using ethics in business? Explain the concept of a multi-national corporation?

Explanation / Answer

The Federal Reserve System is the central bank of USA which formulates monetary policies of the country. The Federal Reserve System was created on 23rd december, 1913 by the then president Woodrow Wilson. The Bankers' panic in 1907 in USA led many financial institutions run by local and state govt into bankruptcy which created the need for a central authority which could controll the monetary policies in order to keep financial crisises under controll.

Before the establishment of federal reserve system, many financial crisises occured in the country which almost crippled the economy of USA leaving many people unemployed. Now Federal System implements monetary policies which help in keeping the economy in stable condition by controlling the prices and inflation and ensuring safety of financial system. It also protects the rights of consumers by instructing all banks to maintain the reserve requirement which saves customers' money during financial crisis.

The United Nations Global Compact is an initiative by the United Nations which encourages socially responsible and sustainable business policies worldwide in the corporations and companies. It adresses human rights issues by instructing businesses to follow the internationally recognised human rights policies and prevent any kind of human rights abuses. Besides it aims improve the status of labours by eliminating forced labour, child labour, discrimination in employment and payments in the work places. Enviornmental problems are also considered by United Nations Global Social Compact and it urges everyone engaged in production system to be responsible towards their enviornment by using enviornmental friendly technologies and thus avoiding enviornmental issues. It also adressess corruptions prevailed in businessess and strictly handles extortions and bribery for a clean working atmosphere.

There are many issues in corporate governance. As there are many layers of decision making bodies in corporate governance, confusion occurs among employees due to differences in decisions which make the corporate govt slow and sometimes unyielding. The prevalance of board terms in corporate governance is a complex issues as board members get the chances to serve for a longer term in the corporation which make it difficult for any changes in their ideas and innovations making it less productive. Besides the accountability of employees serving in corporate governace to the management make them lack of any creativity and unskilled only following the guidelines of the corporations in their work.

Managing ethics in businesses increase the chances of best employees working for their companies as ethical behaviour in a company increase the honesty levels of the company towards their employees along with providing them best fecilities. Prevalance of ethics in businesses helps to build rapport and co-operation among coworkers and higher authorities with their employees. It also helps in building customer loyalty when customers feel that they are getting the quality product at affordable prices and without being cheated. Effective and efficient customer services of a company increase the trust of customers on it and helps in increasing its market area for the long run with its positive image in the market. Besides businesses remain away from any legal issues due to its fair business policies and higher ethical standards.

Corporate organisations which carry out its businesses in different countries apart from its home country are called as multi-national organisation. The multinational corporations set up their offices, fatories and industries in other countries besides their home country and regulate all the activities of different countries from a centralised office where most of the important decisions for their businesses are taken.

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