Federal Reserve System

The Role of the Federal Reserve Provides financial services to the government Regulates financial institutions Maintains the payment systems Enforces consumer protection laws Conducts monetary policy

Structure of the ‘Fed’ Board of Governors – 7 members appointed by the President that serve 14-year terms – Supervise and regulate the Fed – The appointments are staggered so that one appointment becomes vacant every two years – Sets general policies and conducts some aspects of monetary policy – Chairman: Janet Yellen

Structure of the ‘Fed’ Advisory Councils – Federal Advisory Council Representatives from each of the 12 district banks Provides advice to the Federal Reserve on matters concerning the overall health of the economy – Consumer Advisory Council The 30 members meet with the Board three times a year to discuss consumer credit laws Educators, consumer legal specialists – Thrift Institutions Advisory Council Representatives from savings and loan associations, savings banks, and credit unions Advise on matters pertaining to the thrift industry

Structure of the ‘Fed’ Federal Open Market Committee (FOMC) – 7 members of the Board of Governors – 5 presidents of district banks – Makes decisions about the growth of the money supply and the level of interest rates – The Fed’s primary monetary policy-making body

Structure of the ‘Fed’ Federal Reserve District Banks – 12 district banks and 25 additional branch banks – Each have their own presidents and board of directors, they are supervised by the Federal Reserve Board – Federal Reserve District Banks to thrift institutions as local banks to people

Responsibilities of the ‘Fed’ Member Banks – Hold stock in the Federal Reserve – The Federal Reserve must maintain the reserves of member banks – Member banks use the reserve to clear checks – The Fed uses the reserves to control the size of the money supply – The Fed sets interests rates!