The structure of the U.S. Federal Reserve Bank is centralized and hierarchical, consisting of several independent but interrelated elements. These separate entities work together in the role of a central bank, striving to provide the nation with a secure, more flexible, and stabilized monetary and financial system.

Board of Governors

The organization of the U.S. Federal Reserve Bank was created in 1913 by Congress for overseeing and regulating financial matters in the banking system. The chief administrators of this system are the board of governors in the nation's capitol. The president of the United States appoints the seven members, with Congressional approval, to 14-year terms. Also, a chairman and vice-chairman are elected within this body for a four-year term. These governors write regulations, approve mergers, set reserve requirements and sit on the Federal Open Market Committee (FOMC).

Committees and Councils

Central to policymaking, the FOMC manages control over the increase of the nation's supply of money and decides on interest rates. The other five members of the committee consist of the president of the Federal Reserve Bank of New York and four presidents of one of the other regional Reserve Banks. One member from each of the 12 regional Federal Reserve Districts make up the Federal Advisory Council, which counsels the Board on matters of importance relevant within their district.

Regional Reserve Banks

The 12 regional Federal Reserve Banks each have nine directors. These Reserve Banks then operate 25 branches and have nine offices for check processing. The member banks vary in number and are divided into three different-sized groups. Each group then appoints one class A and one class B director in each of the 12 districts. Every Reserve Bank also has its own set of committees for advisement on thrift institutions, small business, agricultural and operational matters.

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  2. How are bank reserve requirements determined and how does this affect shareholders?

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  3. What happens if the Federal Reserve lowers the reserve ratio?

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  5. Who determines interest rates?

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  6. How does the Federal Reserve determine the discount rate?

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