Next video:
Loading the player...

The Federal Reserve System is the central bank of the United States. It regulates monetary policy and supervises the nation’s banking system.

The Fed includes the central Board of Governors and 12 regional Federal Reserve Banks.

Among the Fed’s main duties is its responsibility to make sure the money supply doesn’t grow too quickly or too slowly. It uses monetary policy to control that growth. The Fed can change reserve requirements, which are the percentages of deposits that banks must retain. It can also change the interest rate, called the discount rate, paid by member banks when they borrow money. Or it can buy or sell Treasury securities to increase or decrease the money supply.

The Fed’s other duties include regulating banks and protecting the credit rights of consumers. It maintains the financial system’s stability, and it provides the U.S. government with financial services.

The Fed works independently from the government, which uses fiscal policy to regulate economic conditions.

Related Articles
  1. Personal Finance

    What Does a Central Bank Do?

    A central bank oversees a nation’s monetary system.
  2. Insights

    Regional Banks Give The Fed A National Perspective

    We all know that the Federal Reserve utilizes monetary policy to control the economy, but what do the 12 regional Federal Reserve Banks do?
  3. Insights

    What's the 1913 Federal Reserve Act?

    The 1913 Federal Reserve Act was a pivotal congressional act that helped establish the Federal Reserve System as it exists today. It is one of the United States financial system’s most influential ...
  4. Taxes

    The Link Between The Fed, Money, Debt And Taxes

    Assets on the Fed's balance sheet, money supply level, national debt level and economic production should be maintained in equilibrium.
  5. Insights

    How Much Influence Does The Fed Have?

    Find out how current financial policies may affect your portfolio's future returns.
  6. Insights

    What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.
  7. Personal Finance

    How the Federal Reserve Affects Your Mortgage

    The Federal Reserve can impact the cost of funds for banks and consequently for mortgage borrowers when maintaining economic stability.
Hot Definitions
  1. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  2. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  3. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
  5. Wash-Sale Rule

    An Internal Revenue Service (IRS) rule that prohibits a taxpayer from claiming a loss on the sale or trade of a security ...
  6. Porter Diamond

    A model that attempts to explain the competitive advantage some nations or groups have due to certain factors available to ...
Trading Center