Federal Reserve System

1. The Federal Reserve System (or the Fed) is the central banking system of the United States. It was created in 1913 by the enactment of the Federal Reserve Act and is made up of the Board of Governors, located in Washington, D.C., and 12 district Federal Reserve Banks located in major cities throughout the nation.

2. In its role as the central bank of the United States, the Fed serves as the banker to both the banking community and the government. It also issues the national currency, conducts monetary policy, and plays a major role in the supervision and regulation of banks and bank holding companies. Fed's actions have a significant effect on U.S. interest rates and, subsequently, on stock, bond, and other financial markets.

3. The Federal Reserve's basic powers are concentrated in the Board of Governors, which consists of seven members appointed by the President and confirmed by the Senate. The Board carefully monitors domestic and international financial and economic development, and supervises and regulates the operations of the Federal Reserve Banks. The Board also sets reserve requirements for depository institutions and approves changes in discount rates recommended by Reserve Banks. The Board of Governors and the heads of the Reserve banks orient their policies to the public interest rather than to the benefit of the private banking system.

4. The twelve Federal Reserve Banks provide banking services to depository institutions within their district, and to the federal government. For depository institutions they maintain reserve and clearing accounts and provide various payment services. For the federal government they act as fiscal agents. As such they maintain the Treasury Department's transaction account; pay Treasury cheques; process electronic payments; and issue, transfer, and redeem U.S. government securities.

5. Approximately 38 percent of all commercial banks in the United States are members of the Federal Reserve System. National banks must be members while state-chartered banks may join the System if they meet certain requirements. The member banks are stockholders of the Reserve Bank in their district and are to hold 3 percent of their capital as stock in their Reserve Banks.

6. In addition to the approximately 3,000 member banks, about 17,000 other depository institutions provide checkable deposits and other banking services. These depository institutions include nonmember commercial banks, savings banks, savings and loan associations, and credit unions.

Notes:

Federal Reserve Act – закон о федеральной резервной системе

Treasury Department – государственное казначейство США

transaction account – текущий счет

state-chartered banks – уполномоченные администрацией штата банки

member bank – банк – член федеральной резервной системы