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What is the USA Financial System? A Simple Guide for Beginners (2025)

 Introductions:

    If you're interested in finance, understanding the USA financial system is essential. As the world's largest economy, the US financial structure significantly impacts global markets. In this blog, we’ll break down how the USA financial system works in simple terms.

 



1. The Federal Reserve System (The Fed):

      The Federal Reserve, or "Fed," is the central banking system of the United States. It controls the entire monetary policy of the country.


° Key functions of the Fed:

° Controlling interest rates

° Regulating currency supply

° Supervising banks

° Ensuring economic stability



2. Banks and Credit Institutions:


     The USA has thousands of commercial banks such as JP Morgan Chase, Bank of America, Wells Fargo, etc.


• These banks:

• Provide loans (for homes, businesses, education)

• Manage savings and checking accounts

• Offer credit card services



3. Stock Market:

* The USA has two major stock exchanges:

* NYSE (New York Stock Exchange)

* NASDAQ

Companies list their shares on these exchanges, allowing investors to buy and sell stocks. Big companies like Apple, Amazon, and Tesla are listed here.


4. Securities and Exchange Commission (SEC):


  The SEC is a government agency that sets rules for the stock market and monitors companies. Its main job is to prevent illegal activities like fraud and insider trading.

5. Investment Firms and Hedge Funds:

There are several large financial companies in the USA such as:


BlackRock (world's largest asset manager)

Goldman Sachs

Vanguard

     These companies manage trillions of dollars, investing in stocks, bonds, real estate, and more.


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