The Federal Reserve, or Fed is the central system of banking of the United States. It is owned both publicly and privately, and is comprised of a number of different branches, which work together to control the supply of money in the American economy and to set fiscal policy. The goal of this organization is to keep the American economy strong, healthy, and balanced using a blend of central policymaking and localized branches.
The Federal Reserve was created by the Federal Reserve Act of 1913, although several attempts at creating a central bank had been made before this act was passed. Since the Fed plays a major role in the American economy, most economic analysts keep a close eye on its activities, as the Fed's actions will influence the direction of the economy.
The centralized portion of the bank is the Board of Governors, which consists of a group of presidentially appointed policymakers who serve terms of 14 years each. Appointments are staggered to ensure that a single President does not end up with too much control over the Board of Governors, which acts independent of the federal government. The Board of Governors meets on a regular basis to discuss monetary policies and to implement new policies, if necessary. Members of the board come from all over the United States, ensuring that the board has a broad perspective on the American economy.
The seven members of the board also sit on the Federal Open Market Committee, the branch of the Federal Reserve which oversees open market operations. In addition to the board members, the Open Market Committee also includes five representatives from Fed banks; the President of the New York district always sits on the committee, and the other four seats are rotated on a regular basis. The Federal Open Market Committee meets eight times a year, and meetings are attended by representatives of all Federal Reserve banks.
There are 12 regional Federal Reserve banks, broken up by district and usually referred to by the city in which the regional bank is headquartered: Boston, New York, San Francisco, Philadelphia, Richmond, Kansas City, Dallas, Minneapolis, Atlanta, St. Louis, Chicago, and Cleveland. These branch banks retain reserves of currency, and each bank has its own President and board. In addition to the regional banks, there are also a number of member banks, which include all national banks and some regional banks which elect to join the Federal Reserve.