The chairmen of the House and Senate Banking and Currency committees sponsored this legislation; Rep. According to the House committee report accompanying the Currency bill H. Attempts to reform currency and banking had been made in the United States prior H.
It acts as a fiscal agent for the U. There are several thousand member banks. The seven-member Board of Governors of the Federal Reserve System determines the reserve requirements of the member banks within statutory limits, reviews and determines the discount rates established by the 12 Federal Reserve banks, and reviews the budgets of the reserve banks.
The Chairman of the Board of Governors is appointed to a four-year term by the president of the United States.
A Federal Reserve bank is a privately owned corporation established pursuant to the Federal Reserve Act to serve the public interest; it is governed by a board of Federal reserve system directors, six of whom are elected by the member banks and three of whom are appointed by the Board of Governors of the Federal Reserve System.
Louis, Missouri; and San Francisco. The member Federal Open Market Committee, consisting of the seven members of the Board of Governors, the president of the Federal Reserve Bank of New Yorkand four members elected by the Federal Reserve banks, is responsible for setting Federal Reserve bank policy to encourage the long-term objectives of price stability i.
The Federal Advisory Council, whose role is purely advisory, consists of one representative from each of the 12 Federal Reserve districts. The Federal Reserve System exercises its regulatory powers in several ways, the most important of which may be classified as instruments of direct or indirect control.
One form of direct control can be exercised by adjusting the legal reserve ratio—i. Because loans give rise to new deposits, the potential money supply is, in this way, expanded or reduced. The money supply may also be influenced through manipulation of the discount ratewhich is the rate of interest charged by Federal Reserve banks on short-term secured loans to member banks.
Since these loans are typically sought by banks to maintain reserves at their required level, an increase in the cost of such loans has an effect similar to that of increasing the reserve requirement. The classic method of indirect control is through open-market operationsfirst widely used in the s and now employed daily to make small adjustments in the market.
Federal Reserve bank sales or purchases of securities on the open market tend to reduce or increase the size of commercial-bank reserves; e. The three instruments of control described here have been conceded to be more effective in preventing inflation in times of high economic activity than in bringing about revival from a period of depression.
A supplemental control occasionally used by the Federal Reserve Board is that of changing the margin requirements involved in the purchase of securities. The Federal Reserve has broad supervisory and regulatory authority over state-chartered banks and bank holding companies, as well as foreign banks operating in the United States.
Through the CFPB, it is also involved in maintaining the credit rights of consumers. One of the longest chairmanships of the Federal Reserve Board was held by Alan Greenspanwho took office in August and held the post until January In Janet Yellen became the first woman to chair the board.
Learn More in these related Britannica articles:Board of Governors of the Federal Reserve System. The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.
The Federal Reserve Banking System is a network of 12 Federal Reserve banks that both supervise and serve as banks for all the commercial banks in their region. The 12 banks are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St.
Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Federal Reserve Act (ch. 6, 38 Stat. , enacted December 23, , 12 U.S.C. §§ to ) is an Act of Congress that created the Federal Reserve System (the central banking system of the United States), and which created the authority to issue Federal Reserve Notes (commonly known as the US Dollar) as legal tender.
The Structure and Functions of the Federal Reserve System. The Federal Reserve System is the central bank of the United States.
It was founded by Congress in to provide the nation with a safer, more flexible, and more stable monetary and financial system. A Federal Reserve bank is a privately owned corporation established pursuant to the Federal Reserve Act to serve the public interest; it is governed by a board of nine directors, six of whom are elected by the member banks and three of whom are appointed by the Board of .
Board of Governors of the Federal Reserve System. The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.