What Is the Federal Reserve Bank of Chicago?

The Federal Reserve Bank of Chicago is one of 12 reserve banks in the Federal Reserve System (FRS). The bank is responsible for the seventh district, whose territory includes Iowa and parts of the states of Indiana, Illinois, Wisconsin and Michigan. 

Key Takeaways

  • The Federal Reserve Bank of Chicago comprises one of twelve reserve banks in the Federal Reserve System. 
  • The Chicago Fed serves the Seventh Federal Reserve District, which covers the state of Iowa; 68 counties of northern Indiana; 50 counties of northern Illinois; 68 counties of southern Michigan; and 46 counties of southern Wisconsin.
  • Headquartered in Chicago, IL, with branch offices in Detroit, MI.
  • The Chicago Fed also hosts the National Money Museum.

Understanding the Federal Reserve Bank of Chicago

The Federal Reserve Bank of Chicago is responsible for executing the central bank's monetary policy by reviewing price inflation and economic growth and by regulating the banks within its territory. In addition, as outlined on the Federal Reserve website, it supports the U.S. central bank’s mission to maintain the stability of the financial system, foster payment and settlement system safety and efficiency and promote consumer protection and community development.

Like the 11 other reserve banks, the Federal Reserve Bank of Chicago provides cash to banks within its district, as well as monitoring electronic deposits. The president of the Federal Reserve Bank of Chicago is part of a rotation of bank presidents who, along with the seven governors of the Federal Reserve Board, meet to set open market operations. This is referred to as the Federal Open Market Committee (FOMC).

As with all reserve banks, the Federal Reserve Bank of Chicago has a nine-member board of directors, six of which are elected by member banks in the district and the remaining three appointed by the Federal Reserve Board of Governors or the reserve bank itself. Its president is appointed to a five-year term, which may be renewed.

Image by Sabrina Jiang © Investopedia 2020

Characteristics and Organization

The Federal Reserve Bank of Chicago has been led by Bank President Charles Evans since 2007. Like other Fed bank presidents, Evans publicly shares his policy views through media appearances and publication of economic reports and working papers put out by the bank. Over the years, the views of bank presidents and the research done by each bank have shaped their reputation within the Federal Reserve system. Evans, for example, disagreed with the Fed’s decision to raise the federal funds rate in December 2017 and March 2018 due to a lack of strong inflation signals. 

The Federal Reserve Bank maintains the Money Museum at its headquarters in Chicago. The museum features a section on Alexander Hamilton, the first Secretary of the U.S. Treasury, as well as currency artifacts and interactive displays.

Every bank has its own research staff which is responsible for conducting and publishing academic-level economic research related to Fed policy. Every month, the Federal Reserve Bank of Chicago releases the Chicago Fed National Activity Index, a gauge of 85 monthly indicators. Each bank also has a staff that tracks economic activity in their district, compiled in a publication known as the Beige Book that is published eight times per year.