Professional Education & Simulation Platform
A comprehensive educational platform for understanding central banking operations, monetary policy frameworks, and global financial systems through evidence-based simulations.
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Monitor your progress across all simulation modules
Select which part of the banking system you want to explore
Master the international banking system through immersive simulations across 4 worlds
Run a commercial bank and make lending and investment decisions
Navigate a financial crisis where every choice changes your path
Lead a central bank with a hard currency peg to the U.S. dollar
Operate the Fed using modern monetary policy tools and frameworks
Escape room: Survive the night of September 14, 2008 before markets open
Point-and-click: Run your retail bank branch through a busy business day
Navigate deflation, asset bubbles, and zero interest rates in 1990s Japan
America faced repeated banking panics and financial crises. Without a central bank, the money supply was unstable, and banks frequently failed.
The Panic of 1907 was particularly severe—banks collapsed, people lost their savings, and the economy plunged into recession. Something had to change.
President Woodrow Wilson signed the Federal Reserve Act, creating America's central bank. The Federal Reserve System was established with 12 regional banks across the country.
The Fed's original mission: Provide an elastic currency, supervise banks, and serve as a "lender of last resort" during crises.
The Fed's biggest test came with the Great Depression. The Fed failed to prevent bank failures and allowed the money supply to collapse—worsening the crisis.
This failure led to major reforms. The Fed gained new powers and responsibilities, including deposit insurance (FDIC) and stronger oversight of the banking system.
The Federal Reserve now operates under a dual mandate established by Congress:
Keep inflation around 2%
Keep unemployment low
The Fed also supervises banks, maintains financial stability, and provides payment services to the financial system.
You have been appointed as the next Chair of the Federal Reserve.
You now carry the responsibility of steering the world's largest economy through challenges, crises, and growth.
Your decisions will shape the economic future of millions of Americans.
Are you ready to begin your journey?
Master monetary policy through 4 comprehensive worlds
Structure, Mandate, and Balance Sheet
And The Monetary Transmission Mechanism
Unconventional Tools, and New Frameworks
And The Global Chair
Congress has given the Federal Reserve two primary policy goals:
Target: 2% inflation (PCE)
Low and stable inflation preserves purchasing power
Keep unemployment near NAIRU
Full employment without excess inflation
PCE (Personal Consumption Expenditures):
CPI (Consumer Price Index):
Key Point: The Fed targets PCE because it better reflects actual spending patterns and adjusts for consumer behavior.
NAIRU (Non-Accelerating Inflation Rate of Unemployment):
The lowest unemployment rate the economy can sustain without causing accelerating inflation. Also called the "natural rate of unemployment."
Why NAIRU matters:
Estimate: NAIRU is currently around 4.0-4.5%, though it\'s unobservable and must be estimated.
The Federal Reserve uses monetary policy to close gaps between actual output and potential output:
Problem: Output < Potential
Symptoms: High unemployment, low inflation
Fed Response: Expansionary policy (lower rates) to boost AD
Problem: Output > Potential
Symptoms: Low unemployment, high inflation
Fed Response: Contractionary policy (raise rates) to cool AD
Now that you understand the Fed\'s goals and key macroeconomic concepts, let\'s apply them to real scenarios.
Flip cards to reveal economic data, then categorize each scenario!
Categorized: 0/8
Before 1913, the United States had no central bank. This led to repeated financial crises and economic instability. Let's explore why the Federal Reserve was created.
Without a central bank, the U.S. financial system was fragile and prone to panics:
Major Panics: 1819, 1837, 1857, 1873, 1893, 1907
What happened: In October 1907, a failed attempt to corner the copper market triggered a run on New York banks and trust companies.
Timeline of Crisis:
How it was stopped: J.P. Morgan (private banker) organized a private bailout, persuading wealthy bankers to inject liquidity. But it showed the danger of relying on private individuals to save the financial system.
The Lesson: The U.S. needed a permanent institution to prevent and manage financial crises.
After years of debate, Congress passed the Federal Reserve Act on December 23, 1913, signed by President Woodrow Wilson.
Original Mission: Provide stability, prevent panics, and serve as "lender of last resort"
Walter Bagehot, a 19th-century British economist, established the doctrine for how central banks should respond to financial crises:
"In a crisis, the central bank should:"
Why This Works:
The Federal Reserve was created to prevent banking panics by serving as a "lender of last resort" - providing emergency liquidity to solvent banks during crises according to Bagehot\'s principle.
Match each historical event to its correct date on the timeline to trace how the Federal Reserve came to be.
The Panic of 1907 was the breaking point that led to the Federal Reserve's creation. After decades of recurring banking panics, the 1907 crisis showed that relying on private individuals (like J.P. Morgan) to save the financial system was unsustainable. This led Congress to create a permanent lender of last resort in 1913.
The Federal Reserve is unique: it's a decentralized central bank with power shared between Washington D.C. and 12 regional banks across the country.
1. Boston
2. New York
3. Philadelphia
4. Cleveland
5. Richmond
6. Atlanta
7. Chicago
8. St. Louis
9. Minneapolis
10. Kansas City
11. Dallas
12. San Francisco
Each bank: Supervises banks in its district, provides economic research, implements policy
The 12 Reserve Banks aren't just symbolic—they provide crucial regional perspective:
Now build the Fed's organizational structure by matching components to their characteristics!
Drag each characteristic to the correct Fed component (Board of Governors, Reserve Banks, or FOMC).
Click or drop characteristics here
Click or drop characteristics here
Click or drop characteristics here
The Federal Open Market Committee is the most powerful committee in the Federal Reserve—it sets U.S. monetary policy.
The remaining 11 Reserve Bank Presidents rotate voting rights annually:
Note: All 12 Reserve Bank Presidents attend every meeting and participate in discussions, but only 5 vote at any given time.
Official name: Summary of Commentary on Current Economic Conditions by Federal Reserve District
Created by: Fed Board staff economists in Washington
The New York Fed's Open Market Desk executes the policy decision through market operations.
Now test your understanding of the FOMC's composition, voting, and process.
Select the 12 voting members for the FOMC in 2025. Remember: 7 Governors + NY Fed always vote. You need to select 4 rotating Regional Presidents (one from each group).
Scenario 1 of 3
Selected: 8/12
The Federal Reserve has three major responsibilities: monetary policy, financial regulation, and operating the payment system.
Congress established the Fed's dual mandate in the Federal Reserve Act (amended 1977):
Target: 2% inflation (PCE)
Why 2% and not 0%?
Flexible Average Inflation Targeting (FAIT): Adopted in 2020, the Fed aims for 2% inflation on average over time, allowing for periods above 2% to make up for periods below 2%.
No specific target - "maximum employment" is not a specific unemployment rate
Why no specific number?
Shortfalls approach: Post-2020, the Fed focuses on "shortfalls" from maximum employment (not "deviations"), meaning it won't preemptively tighten just because unemployment is low if inflation isn't a problem.
In the short run, there's often a trade-off between price stability and maximum employment (the Phillips Curve). Lowering unemployment might increase inflation and vice versa. The Fed must balance these goals based on current conditions.
Beyond monetary policy, the Fed regulates and supervises banks to maintain financial system stability:
Post-2008 Expansion: After the 2008 financial crisis, Congress significantly expanded the Fed's regulatory authority (Dodd-Frank Act) and created the Vice Chair for Supervision position to lead these efforts.
The Fed operates core infrastructure that enables money to move through the economy:
Test your understanding of the Fed's three major responsibilities.
Route each problem to the correct Fed department. One problem at a time!
Progress: 0/9
Score: 0 correct
The Federal Reserve's balance sheet is a powerful tool. By expanding or shrinking it, the Fed directly affects the money supply and financial conditions.
Like any institution, the Fed has a balance sheet: Assets = Liabilities + Capital
Securities: ~$8T
U.S. Treasury bonds, Mortgage-Backed Securities (MBS)
Loans: Variable
Discount window loans to banks
Other: ~$0.1T
Gold, foreign currency, etc.
Currency in Circulation: ~$2.3T
Paper bills and coins
Bank Reserves: ~$3.5T
Deposits banks hold at the Fed
Reverse Repos: ~$2T
Overnight borrowing from money market funds
Capital: ~$0.04T
Fed's net worth
Key Point: When the Fed's balance sheet expands, both assets and liabilities increase. This is how the Fed creates money!
What the Fed does:
Result:
What the Fed does:
Result:
Test your understanding of the Fed's balance sheet mechanics.
Perform QE and QT operations and watch the Fed's balance sheet change in real-time!
Expand by buying securities
Effect: Creates reserves to buy securities
Shrink by selling securities
Effect: Removes reserves as banks pay
Treasury bonds & MBS
Loans, gold, etc.
Deposits banks hold at Fed
✅ Balance Sheet Balanced: Assets = Liabilities + Capital
Calculate the changes to the Fed's balance sheet!
Round: 1 of 3
Use + for increases, - for decreases
Use + for increases, - for decreases
Congratulations on completing Levels 1-6! Now it's time to test everything you've learned about the Federal Reserve System, its structure, mandate, and balance sheet.
You'll answer 10 questions covering all topics from World 1. You need to get at least 7/10 correct to pass and unlock World 2!
The Federal Funds Rate (FFR) is the interest rate at which banks lend reserves to each other overnight. It's the most important interest rate in the U.S. economy.
Why do banks lend to each other? Every day, some banks end up with excess reserves (from customer deposits) while others have reserve deficits (from loans/withdrawals). Instead of holding idle reserves or violating requirements, they trade in the Fed Funds market.
Banks with more reserves than required can earn interest by lending their excess to other banks.
Banks short on reserves must borrow to meet their reserve requirements by day's end.
The FFR is determined by supply and demand. When many banks need reserves (high demand), rates rise. When many banks have excess reserves (high supply), rates fall. The Fed sets a target rate (currently 5.25%) and uses tools to keep the actual market rate close to this target.
The FFR is the Fed's primary policy lever. Changes in the FFR ripple through the entire economy:
FFR ↑ → Bank lending rates ↑ → Mortgage/car loan rates ↑ → Borrowing more expensive → Investment/consumption ↓ → Economy slows → Inflation ↓
FFR ↓ → Bank lending rates ↓ → Mortgage/car loan rates ↓ → Borrowing cheaper → Investment/consumption ↑ → Economy grows → Employment ↑
You'll manage the Fed Funds market for 3 days. For each bank, assess their reserve position and decide if they should borrow, lend, or hold. Then match lenders with borrowers to clear the market. Keep the FFR close to the Fed's 5.25% target!
Day 1 of 3 | Fed Target: 5.25% | Current Market Rate: ???
Banks Assessed: 0/6
Connect banks to clear the market | Target FFR: 5.25%
Open Market Operations (OMOs) are the Fed's PRIMARY tool for implementing monetary policy. By buying or selling U.S. Treasury securities, the Fed directly controls the supply of reserves in the banking system.
How it works: When the Fed BUYS securities, it creates reserves out of thin air and adds them to banks' accounts. When it SELLS securities, those reserves disappear!
💰 Buy Securities (Expansionary):
📉 Sell Securities (Contractionary):
The Federal Funds Rate is determined by the intersection of:
Round 1 of 3 | Target FFR: 5.25% | Current FFR: 5.50%
See how your OMO affects the reserve market and FFR
When banks can't find reserves in the Fed Funds market, they have a backup option: borrow directly from the Federal Reserve through the "Discount Window."
Key Insight: The Discount Rate acts as a CEILING on the Federal Funds Rate. Banks won't pay more than the discount rate in the Fed Funds market when they can just borrow from the Fed instead!
1. Primary Credit (Most Common):
2. Secondary Credit (Problem Banks):
3. Seasonal Credit (Agricultural Banks):
Despite being designed as a safety valve, banks are reluctant to use the discount window because:
Result: During the 2008 crisis, banks were so afraid of stigma they almost preferred to fail than use the discount window! This forced the Fed to create anonymous lending facilities.
Banks used to be required to hold a minimum percentage of their deposits as reserves. For example, a 10% requirement meant a bank with $1 billion in deposits needed to hold at least $100 million in reserves.
📅 March 2020: Reserve Requirements Reduced to ZERO
The Fed eliminated reserve requirements entirely. Why?
You're about to face a liquidity crisis. You'll need to decide whether to borrow from other banks, tap the discount window, or sell assets. Choose wisely!
Day 1 of 3 | Tech Outage Crisis
9:15 AM: Your IT department reports a critical system outage. The payment processing system is down, and you can't complete $50 million in scheduled wire transfers today.
Impact: Your reserves will be locked until tomorrow, putting you $50M below your reserve requirement.
Your Task: Find a way to meet your reserve requirement by end of day or face regulatory penalties.
When the Fed changes the Federal Funds Rate, it doesn't directly affect mortgage rates or car loans. Instead, changes ripple through the economy via the **Interest Rate Channel** - one of the primary ways monetary policy affects the real economy.
The Cascade: FFR ↑ → Bank lending rates ↑ → Long-term rates ↑ → Borrowing costs ↑ → Consumer spending ↓ → Business investment ↓ → Economic activity ↓
Round 1 of 3 | Fed Target FFR: 5.25%
Interest rate changes don't just affect borrowing costs—they also impact wealth and credit availability, creating powerful transmission channels.
When rates ↓:
When rates ↓:
The wealth and credit channels amplify monetary policy effects. A rate cut doesn't just make borrowing cheaper—it makes people feel richer and makes credit more available, creating a multiplier effect on economic activity.
Conversely, rate hikes tighten credit conditions and reduce wealth, which can slow the economy even before consumers feel the full impact of higher borrowing costs.
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August 1979. You are Paul Volcker, the newly appointed Federal Reserve Chairman. Inflation is raging at 11.3% and climbing. The American public is losing faith in the dollar. Your mission: break the back of inflation—no matter the cost.
History remembers Volcker's victory, but it came at tremendous cost: unemployment would reach 10.8%, the worst recession since the Great Depression, and relentless political pressure. Can you make the same hard choices?
You'll face three critical decision points between 1979-1982. Each decision will affect inflation, unemployment, and your political support. Your goal: bring inflation below 5% while maintaining enough political capital to continue.
Warning: The right decisions for the economy may be politically devastating.
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Prove your mastery of traditional monetary policy tools and transmission mechanisms!
10 questions covering Fed Funds Market, OMOs, Discount Window, Interest Rate Channel, Credit & Wealth Channels, and Volcker's Fight.
You've been appointed as the Chair of the Federal Reserve. Your job is to manage the economy using the Fed's dual mandate: maintaining price stability (keeping inflation near 2%) and maximizing employment (minimizing unemployment).
DUAL MANDATE: The Fed must balance two sometimes-competing goals:
• Price Stability - Keep inflation around 2%
• Maximum Employment - Keep unemployment low
YOUR MAIN TOOL - Interest Rates:
RAISE RATES (Contractionary Policy): Fight inflation
→ Federal Funds Rate ↑ → Commercial lending rates ↑ → Borrowing more expensive → Investment/spending ↓ → Economy slows → Inflation ↓ but Unemployment may ↑
LOWER RATES (Expansionary Policy): Fight unemployment
→ Federal Funds Rate ↓ → Commercial lending rates ↓ → Borrowing cheaper → Investment/spending ↑ → Economy grows → Unemployment ↓ but Inflation may ↑
THE CHALLENGE: These tools require opposite actions! You must decide which part of your mandate takes priority based on current economic conditions.
You're now the CEO of First National Bank. Your job is to make smart lending and investment decisions that balance profit with risk, while following banking regulations.
Commercial banks are the backbone of the financial system. They lend money to other banks (using the Federal Funds Rate), to businesses and consumers (using rates based on LIBOR/SOFR and Prime Rate), and make investment decisions. Banks must balance making profits with managing risk and meeting regulatory capital requirements.
The markets are trembling. Housing prices are collapsing. Major investment banks are on the brink. You're in the crisis command center, and every decision you make will change the course of history.
This is a choose-your-own-adventure simulation. Unlike the other simulations, your choices here will branch the story in different directions. Save one institution and you might face different challenges than if you let it fail. There are no perfect answers—only trade-offs, consequences, and the weight of impossible decisions.
Remember: This is inspired by real financial crises but isn't historically accurate. It's designed to teach you about the complexity of crisis management, not to replicate what actually happened.
You've been appointed Governor of the Central Bank of a small island nation with a tourism-based economy. Your country maintains a hard currency peg to the U.S. dollar at a fixed 1:1 exchange rate.
WHAT IS A CURRENCY PEG?
A currency peg is a fixed exchange rate where your country's currency is locked to another currency (in this case, the U.S. dollar at 1:1). This means 1 island dollar = 1 U.S. dollar, always.
WHY PEG?
• Tourism Stability: 70% of your GDP comes from tourism, mostly American tourists. The peg makes it easy for them to spend without worrying about exchange rates.
• Import Costs: You import 85% of goods from the U.S. The peg keeps import costs predictable.
THE TRADE-OFF:
To maintain the peg, you cannot use monetary policy independently. When the U.S. Federal Reserve changes rates, you must follow. When the dollar strengthens or weakens globally, your currency must move with it.
YOUR LIMITED TOOLS:
• Foreign Reserves: Buy/sell currency to maintain peg
• Capital Controls: Restrict money flows in emergencies
• Debt: During crises, borrow instead of adjusting currency
THE CHALLENGE: You must maintain the peg's credibility while responding to economic shocks—without the flexibility other central banks have.
You've been appointed as the Chair of the Federal Reserve in the post-2020 era. The Fed's operating framework has fundamentally changed—you'll be using modern tools that didn't exist (or weren't primary) in the traditional system.
WHAT CHANGED IN 2020?
• March 2020: Reserve requirements eliminated (set to 0%)
• Banks now hold reserves voluntarily based on their liquidity needs
• The Fed moved to an "ample reserves" or "floor system"
• Balance sheet expanded massively due to pandemic QE
YOUR NEW TOOLS:
1. IORB (Interest on Reserve Balances):
This is your PRIMARY tool now. The Fed pays banks interest on their reserves. By changing IORB, you control where the Federal Funds Rate (FFR) trades. If IORB = 5.40%, the FFR will trade just above that (around 5.40%-5.50%).
2. Quantitative Easing (QE):
Buy Treasury bonds and mortgage-backed securities to inject money into the economy. This lowers long-term interest rates, expands your balance sheet, and increases bank reserves.
3. Quantitative Tightening (QT):
Let bonds mature without reinvesting. This shrinks your balance sheet and drains reserves from the banking system, tightening financial conditions.
4. Overnight Reverse Repo (ON RRP):
Money market funds can park cash with the Fed overnight. This sets a floor for short-term rates and helps control the FFR from below.
HOW THIS DIFFERS FROM TRADITIONAL FED:
• Old System: Fed adjusted reserve supply to hit FFR target (scarce reserves system)
• New System: Fed pays IORB to set FFR (ample reserves system)
• Old System: Reserve requirements forced banks to hold reserves
• New System: Banks voluntarily hold reserves for liquidity/safety
• Old System: Balance sheet ~$800B pre-2008
• New System: Balance sheet $8.9T (2022 peak), now ~$7.2T
YOUR DUAL MANDATE REMAINS:
• Price stability (2% inflation target)
• Maximum employment (low unemployment)
THE CHALLENGE: Use modern tools to achieve timeless goals. IORB changes work like traditional rate changes, but QE/QT affect the economy through different channels (long-term rates, wealth effects, credit availability).
Sunday, September 14, 2008 - 6:00 PM
You are the CEO of Sterling Capital, a mid-sized investment bank with $12 billion in assets. Lehman Brothers is hours away from bankruptcy. Your bank has significant exposure.
LEHMAN BROTHERS IS COLLAPSING
• Markets open in 18 hours (Monday 9:30 AM)
• Your bank holds $2.8B in Lehman-related assets
• Credit markets are frozen - no one is lending
• Your stock is down 35% in the past week
• The Fed has refused to bail out Lehman
YOUR MISSION:
Navigate through your bank's departments, solve critical challenges, and make the decisions that will determine whether Sterling Capital survives Monday morning.
RESOURCES TO MANAGE:
• Capital: $3.2B (your buffer against losses)
• Liquidity: $1.8B (cash to meet obligations)
• Reputation: 75/100 (affects market confidence)
HOW IT WORKS:
1. Navigate Rooms: Visit Trading Floor, Risk Management, Legal, Board Room, and Treasury
2. Solve Puzzles: Each room has a challenge you must complete
3. Watch The Clock: You have 18 hours (sped up for gameplay)
4. Manage Resources: Every decision affects your Capital, Liquidity, and Reputation
5. Survive Monday: If you still have positive capital when markets open, you win!
THE CHALLENGE: This is not a drill. Lehman's collapse will trigger the worst financial crisis since the Great Depression. Make the wrong calls tonight, and Sterling Capital will be next.
Monday Morning - Riverside Community Bank
You're the branch manager of Riverside Community Bank, a small retail bank serving local customers and businesses. Today you'll handle everything from customer service to lending decisions.
As Branch Manager, you balance three key metrics:
• Profit: Make smart lending decisions, generate fee income
• Customer Satisfaction: Provide excellent service, solve problems
• Compliance: Follow banking regulations, avoid violations
1. Explore the Bank: Click on different areas of your branch
2. Meet Characters: Customers, employees, and regulators visit throughout the day
3. Make Decisions: Each interaction requires you to choose an action
4. Watch Your Metrics: Decisions affect profit, satisfaction, and compliance
5. Survive the Day: Keep all three metrics above 50% to succeed!
• How retail banks evaluate loan applications
• Customer service challenges in banking
• Regulatory compliance (KYC, AML, fair lending)
• Trade-offs between profit and customer satisfaction
• Day-to-day operations of a bank branch
Click on areas to interact with customers and staff
Tokyo - December 1991
You are the Governor of the Bank of Japan. The asset bubble has just burst. Stock prices have crashed 60% from their peak, real estate is collapsing, and banks hold trillions of yen in bad loans.
In the 1980s, Japan experienced an extraordinary asset price bubble. Real estate and stock prices soared to unsustainable levels. At the peak:
• The Imperial Palace grounds in Tokyo were worth more than all of California
• The Nikkei stock index hit 38,916 (December 1989)
• Banks lent aggressively against inflated collateral
• The bubble was fueled by easy credit and speculation
When the bubble burst in 1991, Japan entered what would become known as the "Lost Decade" (which actually lasted over 20 years).
Navigate unprecedented economic challenges:
1. Banking Crisis: Massive non-performing loans threaten the financial system
2. Deflation: Falling prices create a self-reinforcing downward spiral
3. Liquidity Trap: Traditional monetary policy becomes ineffective
4. Yen Volatility: Currency movements complicate policy choices
5. Zero Lower Bound: Interest rates approach zero, limiting your tools
• How asset bubbles form and burst
• The dangers of deflation vs. inflation
• Why central banks fear the zero lower bound
• Exchange rate policy and currency interventions
• Origins of quantitative easing (QE)
• Banking sector restructuring during crises
• The importance of acting quickly and decisively
Bank of Japan Headquarters - Tokyo
It's early 1992. The asset bubble has burst, and the damage is becoming clear:
Your advisors present three immediate options:
Asset Bubble: When asset prices rise far above their fundamental value due to speculation and excessive credit. Bubbles always burst eventually, causing severe economic damage.
Deflation: A persistent decline in the general price level. Unlike inflation, deflation causes consumers to delay purchases (expecting lower prices tomorrow) and increases the real burden of debt, creating a downward spiral.
Non-Performing Loans (NPLs): Loans where the borrower has stopped making payments. When asset prices collapse, borrowers default and banks are left holding worthless collateral.
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