Introduction to the Fed
Sections
Map of the Third Federal Reserve District
Other Federal Reserve Locations 
Congress created the Federal Reserve System in 1913 to serve as the central bank of the United States and to provide the nation with a safer, more flexible and more stable monetary and financial system. Over the years, the Fed's role in banking and the economy has expanded, but its focus has remained the same. Today, the Fed’s three functions are:
- To conduct the nation’s monetary policy,
- To provide and maintain an effective and efficient payments system, and
- To supervise and regulate banking operations.
Although all three roles are important in maintaining a stable growing economy, monetary policy is the most visible to many citizens. Monetary policy is the strategic actions taken by the Federal Reserve to influence the supply of money and credit in order to foster price stability and maintain maximum sustainable economic growth. Through these actions, the Fed helps keep our national economy strong and the world economy stable.
Independent Within Government
The Federal Reserve System was structured by Congress as a
distinctly American version of a central bank, established to carry out
Congress’ own constitutional mandate to “coin money and regulate the
value thereof.” The Fed is a decentralized central bank, with
Reserve Banks and Branches in 12 Districts across the country 
, coordinated by a
Board of Governors in Washington, D.C.
The Fed has a unique public/private structure that operates independently within government but not independent of it. The Board of Governors, appointed by the President of the United States and confirmed by the Senate, represents the public sector, or governmental side of the Fed. The Reserve Banks and the local citizens on their boards of directors represent the private sector. This structure provides accountability while avoiding centralized, governmental control of banking and monetary policy.
The Federal Reserve is fiscally independent because it receives no government appropriations. The Fed funds its activities with the interest earned from loans to banks and investments in government securities and from the revenue received from providing services to financial institutions. The Fed’s financial goal in providing services is to generate only enough revenue to cover costs. Any excess earnings—money made above the cost of operations—is turned over to the U.S. Treasury.
The Fed's Structure
The seven-member Board of Governors is the main governing body of the Federal Reserve System. The Board is charged
with overseeing the 12 District Reserve Banks and
with helping implement national monetary policy. Governors are appointed by the
President of the United States, one on January 31 of every even-numbered year,
for staggered 14-year terms. The Chairman and Vice Chairman of
the Board of Governors are also appointed by the president and confirmed by the
Senate to serve a four-year term. The nominees to these posts are selected from
the Board membership.
Each Federal Reserve Bank has a board of directors, whose members work closely with their Reserve Bank president to provide grassroots economic information and input on management and monetary policy decisions. These boards are drawn from the general public and the banking community and oversee the activities of the organization. They also appoint the presidents of the Reserve Banks, subject to the approval of the Board of Governors. Reserve Bank boards consist of nine members: six serving as representatives of nonbanking enterprises and the public (nonbankers) and three as representatives of banking. The Federal Reserve Branch offices have five- or seven-member boards that provide vital information concerning regional economies.
Related Links
- Banks in the Federal Reserve System
- Board of Directors for the Federal Reserve Bank of Philadelphia
- Board of Governors
- Charles I. Plosser, President of the Federal Reserve Bank of Philadelphia
You can also learn more in our Economic Education section.
