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THE U.S. FEDERAL RESERVE SYSTEM
The Federal Reserve System (also the Federal Reserve; informally The Fed) is
the central banking system of the United States. Created in 1913 by the
enactment of the Federal Reserve Act, it is a quasi-public (part private, part
government) banking system composed of:
- the presidentially-appointed Board of Governors of the Federal Reserve
System in Washington, D.C.;
- the Federal Open Market Committee;
- 12 regional Federal Reserve Banks located in major cities throughout the
nation acting as fiscal agents for the U.S. Treasury, each with its own
nine-member board of directors;
- numerous private U.S. member banks, which subscribe to required amounts of
non-transferable stock in their regional Federal Reserve Banks;
- various advisory councils.
The purpose and functions of the Federal Reserve include:
- to address banking panics (bank runs)
- to serve as the central bank for the United States
- to strike a balance between private interests of banks and the centralized
responsibility of government
- supervising and regulating banking institutions
- protect the credit rights of consumers
- to manage the nation's money supply through monetary policy
- maximum employment
- stable prices
- moderate long-term interest rates
- maintain the stability of the financial system and containing systemic risk
in financial markets
- providing financial services to depository institutions, the U.S.
government, and foreign official institutions, including playing a major role in
operating the nation’s payments system
- national functions
- facilitate the exchange of payments among regions
- strengthen U.S. standing in the world economy
- regional functions within the nation
- to be responsive to local liquidity needs
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