Monetary Accord Of 1951

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DEFINITION of 'Monetary Accord Of 1951'

A 1951 agreement between the U.S. Secretary of the Treasury and the Federal Reserve Board on government financing and monetary policy. The accord represented the resolution of a major conflict between the Treasury and the Fed over World War II financing. Perhaps most significantly, the accord gave the Fed independence from the Treasury.

INVESTOPEDIA EXPLAINS 'Monetary Accord Of 1951'

The Fed first acquired responsibility for setting monetary policy in 1913. Through monetary policy, the Fed (the U.S.'s central bank) is able to manipulate the money supply and affect interest rates. While some people believe that the Fed is necessary to smooth out the ups and downs in the economy, others believe that its policies are in fact responsible for the booms and busts of the business cycle.

RELATED TERMS
  1. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  2. Treasury Secretary

    The Secretary of the Treasury is a member of the Presidential ...
  3. Money Supply

    The entire stock of currency and other liquid instruments in ...
  4. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  5. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
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