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 major responsibilities: conducting monetary policy, supervising and regulating financial markets, and providing financial services (to depository institutions and the U.S. government).

The actions of the Federal Reserve System affect everyone. Economic conditions worldwide depend on how well the System helps strengthen the United States economy. The integrity of our country's financial institutions, the efficiency of its payments system, the adequacy of its money and credit, and the soundness of its dollar are all responsibilities of the Federal Reserve.

The System's principal goal of economic stability has not changed since the Federal Reserve was created in 1913. In the intervening years, however, its role has grown a great deal. In the past decade, for example, System functions changed and expanded to deal with dramatic transformations in financial institutions, payments processes, markets, and instruments.

Almost 40 years have passed since Robert P. Black, then an economist and later president of the Federal Reserve Bank of Richmond, wrote the text for the first edition of this publication. This fifteenth edition is the story of the System today — its structure, its objectives, and its actions.