The United States is recognized as the largest economic entity in the world and its financial system has developed steadily through the guidance of the Federal Reserve System for over one hundred years. However, in recent years, the global economic downturn, coupled with the global COVID-19 pandemic, has led to an unprecedented economic depression and rapid decline in the United States financial sector. Although the U.S. government has gradually instructed banks to raise the core quantity but a giant crisis under the economic depression is still present. This study thus takes U.S. commercial banks as the subject of research and employs the two-stage bootstrapped truncated regression to investigate the impacts of increases in required Core, Tier 1, and total capital adequacy ratios on their efficiency.

This article introduces the theory of uncovered interest parity and describes the relationship between monetary policy and the UIP theory. The UIP means that the expected rate of depreciation of domestic currency against one foreign currency is equal to the interest rate differential in the two countries. This article will demonstrate the theory of UIP with some past econometric tests and discuss whether this theory can hold in different time horizons. Then, how the UIP influences the monetary Policy will be showed in the subsequent part. The UIP is more important in the economic analysis perspective than in the exchange rate market. The simple UIP condition could not be an efficient predictor in the open economy, but its usefulness in international finance researches is obvious.