Federal Reserve Today
This publication provides a detailed explanation of the functions, objectives, and organization of the Federal Reserve System.
Foreword
The Federal Reserve System, often called the Fed, is the central bank of the United States. As the nation's central bank, the Fed has three well-known responsibilities: conducting monetary policy, supervising and regulating financial institutions, and providing services to financial institutions.
The Structure and Organization of the System
The Fed's actions affect the economy and therefore affect you. To ensure that the Fed remains accountable and free from political pressure, the Federal Reserve System is composed of public and private elements.
System Functions and Objectives
The Federal Reserve System performs three traditional functions:
- Conducting monetary policy
- Supervising and regulating financial institutions
- Providing payments services to financial institutions
Monetary Policy and Economic Activity
Monetary policy is the Fed’s behavior in pursuit of price stability, moderate long-term interest rates and maximum employment.
Financial Supervision and Regulation
Regulations are the written rules and guidelines that define acceptable behavior for financial institutions. Supervision refers to the oversight and enforcement of these regulations to ensure safe and sound behavior.
Payments Services for Financial Institutions
As a "banker's bank," the Federal Reserve System provides payments services to commercial banks and other depository institutions similar to those provided by depository institutions for their customers. These services include processing checks and electronic payments.
Banking Services for the U.S. Treasury
As banker and fiscal agent for the U.S. Treasury, the Federal Reserve System provides services for the government, primarily through depository institutions.
Consumer Protection and Education
The Federal Reserve System has a number of consumer protection responsibilities. The Consumer Compliance function writes consumer protection regulations for the financial industry, and it enforces consumer protection and civil rights laws and regulations at the banks the Fed supervises.