What is the 'Board of Governors'

The board of governors is a several-member group that oversees or manages the running of an institution. The U.S. Postal Service, the BBC, the World Bank and numerous colleges and universities, as well as professional organizations such as CFA Institute and regulatory bodies such as Financial Industry Regulatory Authority (FINRA) all have boards of governors.

BREAKING DOWN 'Board of Governors'

In the financial world, the best-known board of governors is that of the Federal Reserve. It is a federal government agency with seven members, who are appointed by the president and confirmed by the Senate, along with 1,800 in staff. Members of the board of governors serve 14-year terms, running on a staggered basis to ensure continuity. Appointments to the board are supposed to consist of a "fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country.” In practice, appointments have predominantly been of academics and former banking professionals.

Duties of the Federal Reserve Board of Governors

The Federal Reserve board analyzes domestic and international economic developments, supervises and regulates the operations of the Federal Reserve Banks, has responsibility for America's payments system, and oversees and administers most consumer credit protection laws. The board of governors has seven of the 12 seats on the Federal Open Market Committee, which determines U.S. monetary policy. The board alone has authority over changes in reserve requirements, and it must approve any change in the discount rate initiated by a Federal Reserve Bank.

Members of the board frequently testify before congressional committees on the economy, monetary policy, banking supervision and regulation, consumer credit protection and financial markets. In addition, they are responsible for supervising the work of the regional Fed banks, including approving budgets and appointing directors.

Members of the Fed’s board of governors sit on the Federal Open Market Committee (FOMC), the body responsible for setting out U.S. monetary policy. The remaining membership of the FOMC is comprised of the presidents of five of the 12 regional reserve banks. The Chair of the Fed’s board of governors is responsible for chairing the FOMC.

Recent notable chairs of the Fed’s board have governors include Janet Yellen, the first female chair to be appointed. She served from (2014-2018); Ben Bernanke, who led the Fed from 2006-2014, overseeing a range of unconventional monetary policy actions to address the financial crisis of 2007-2008 and the recession that followed; and Alan Greenspan, whose time as chair spanned nearly 30 years and four presidential administrations.

RELATED TERMS
  1. Reservable Deposit

    A bank deposit subject to reserve requirements. Reserve requirements ...
  2. Federal Open Market Committee (FOMC)

    The Federal Open Market Committee (FOMC) is the branch of the ...
  3. Federal Reserve Communications ...

    A communication network established in 1981 in an effort to update ...
  4. Federal Reserve Bank Of Philadelphia

    The Federal Reserve Bank located in Philadelphia that is responsible ...
  5. Reserve Requirements

    Reserve requirements refer to the amount of cash that banks must ...
  6. Federal Reserve Bank Of New York

    The Federal Reserve bank that is responsible for the second district ...
Related Articles
  1. Investing

    Evaluating The Board Of Directors

    Corporate structure can tell you a lot about a company's potential. Learn more here.
  2. Managing Wealth

    Retired execs: How much do corporate boards pay?

    If you have the right skill set, getting a seat on a company board can be a lucrative and stimulating way to spend some of your new free time.
  3. Managing Wealth

    How To Become A Corporate Board Member

    We look at how corporate boards are constructed, and how investors can get involved.
  4. Investing

    How The U.S. Government Formulates Monetary Policy

    Learn about the tools the Fed uses to influence interest rates and general economic conditions.
  5. Insights

    A Fed Insider on Trump Era: What to Hope For, What to Expect

    Trump has everyone guessing with two open Fed seats and conflicting statements on monetary policy.
  6. Trading

    Top 8 Most Tradable Currencies

    Currencies can provide diversification for a portfolio that's in a rut. Find out which ones you need to know.
  7. Financial Advisor

    Fund Boards: What They Do and Why You Should Care

    Fund boards oversee management and operations of the fund on behalf of shareholders. Make sure you've got a board that will look out for you.
  8. Insights

    Financial Regulators: Who They Are and What They Do

    Find out how these financial regulators govern the financial markets.
RELATED FAQS
  1. What is the structure of the U.S. Federal Reserve Bank?

    Wonder how the U.S. Federal Bank began and how it works today? Learn how this complex system is structured and how it works ... Read Answer >>
  2. Who controls the Federal Reserve Bank?

    Read about the ownership and control of the Federal Reserve, the most powerful financial institution in the world and the ... Read Answer >>
  3. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
  4. Why do some people claim the Federal Reserve is unconstitutional?

    Learn why some people believe it was unconstitutional for the government to establish the Federal Reserve Bank and why they ... Read Answer >>
  5. Who determines the reserve ratio?

    Understand what the Federal Reserve is and what it regulates in the U.S. economy. Learn about the reserve ratio and how the ... Read Answer >>
  6. How does the Federal Reserve determine the discount rate?

    Learn about the several different kind of discount rates offered to banks and other depository institutions through the Federal ... Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center