Federal Reserve Functions

by: Abby & Rachel

Federal Reserve

What is the Federal Reserve?

The Federal Reserve is a centralized banking system, also known as the Fed. President Woodrow Wilson signed the the Federal Reserve act into law in 1913. It was put into act to establish and maintain the US monetary system, ensure a safe and healthy economy, regulate member banks and serve the public, and issue currency or coin money. All national banks are required to be part of the Fed. It is optional for state banks. There are 12 districts in the United States. North Carolina is in District 5. There are two arms of the Fed, Board of Governors and District Federal Reserve Banks.

Functions

  • Federal Supervision- set reserve requirements
  • Agents for federal government- they hold a checking account for the US tresuary
  • Monetary policy- regulate monetary policy, it's where they influence money and credit conditions in the economy to acheive economic goals
  • Open market policy- They buy and sell government securities
  • Lending standards- Sets standards for consumer legislation dealing with lending and credit
  • Supplies currency- Federal reserve supplies paper currency