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.

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