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Federal Reserve

The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises.[list 1] Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System.[6][11]

"The Fed" redirects here. For the Welsh trade union, see South Wales Miners' Federation. For other uses, see The Fed (disambiguation).

Headquarters

December 23, 1913 (1913-12-23)

5.25–5.50%[3]

5.40%[4]

Congress established three key objectives for monetary policy in the Federal Reserve Act: maximizing employment, stabilizing prices, and moderating long-term interest rates.[12] The first two objectives are sometimes referred to as the Federal Reserve's dual mandate.[13] Its duties have expanded over the years, and currently also include supervising and regulating banks, maintaining the stability of the financial system, and providing financial services to depository institutions, the U.S. government, and foreign official institutions.[14] The Fed also conducts research into the economy and provides numerous publications, such as the Beige Book and the FRED database.


The Federal Reserve System is composed of several layers. It is governed by the presidentially-appointed board of governors or Federal Reserve Board (FRB). Twelve regional Federal Reserve Banks, located in cities throughout the nation, regulate and oversee privately-owned commercial banks.[15] Nationally chartered commercial banks are required to hold stock in, and can elect some board members of, the Federal Reserve Bank of their region.


The Federal Open Market Committee (FOMC) sets monetary policy by adjusting the target for the federal funds rate, which influences market interest rates generally and via the monetary transmission mechanism in turn US economic activity. The FOMC consists of all seven members of the board of governors and the twelve regional Federal Reserve Bank presidents, though only five bank presidents vote at a time—the president of the New York Fed and four others who rotate through one-year voting terms. There are also various advisory councils.[list 2] It has a structure unique among central banks, and is also unusual in that the United States Department of the Treasury, an entity outside of the central bank, prints the currency used.[21]


The federal government sets the salaries of the board's seven governors, and it receives all the system's annual profits, after dividends on member banks' capital investments are paid, and an account surplus is maintained. In 2015, the Federal Reserve earned a net income of $100.2 billion and transferred $97.7 billion to the U.S. Treasury,[22] and 2020 earnings were approximately $88.6 billion with remittances to the U.S. Treasury of $86.9 billion.[23] Although an instrument of the U.S. government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the president or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms."[24]

To address the problem of

banking panics

To serve as the for the United States

central bank

inflation

To maintain the stability of the financial system and contain in financial markets

systemic risk

To strengthen U.S. standing in the world economy

was purchased by Borrower on or after September 19, 2008, from a registered investment company that held itself out as a money market mutual fund;

was purchased by Borrower at the Fund's acquisition cost as adjusted for amortization of premium or accretion of discount on the ABCP through the date of its purchase by Borrower;

was rated at the time pledged to FRBB, not lower than A1, F1, or P1 by at least two major rating agencies or, if rated by only one major rating agency, the ABCP must have been rated within the top rating category by that agency;

was issued by an entity organized under the laws of the United States or a political subdivision thereof under a program that was in existence on September 18, 2008; and

had stated maturity that did not exceed 120 days if the Borrower was a bank or 270 days for non-bank Borrowers.

Sarah Binder & Mark Spindel. 2017. The Myth of Independence: How Congress Governs the Federal Reserve. .

Princeton University Press

Board of Governors of the Federal Reserve System (2005). (PDF). Archived from the original (PDF) on January 11, 2014.

The Federal Reserve System: Purposes and Functions

Board of Governors of the Federal Reserve System (2006). . from the St. Louis Fed

The Federal Reserve in Plain English

Conti-Brown, Peter. The Power and Independence of the Federal Reserve (, 2016).

Princeton University Press

Epstein, Lita & Martin, Preston (2003). The Complete Idiot's Guide to the Federal Reserve. Alpha Books.  0-02-864323-2.

ISBN

(1987). Secrets of the Temple. Simon & Schuster. ISBN 0-671-67556-7; nontechnical book explaining the structures, functions, and history of the Federal Reserve, focusing specifically on the tenure of Paul Volcker.

Greider, William

Hafer, R. W. The Federal Reserve System: An Encyclopedia. Greenwood Press, 2005. 451 pp, 280 entries;  0-313-32839-0.

ISBN

Lavelle, Kathryn C. (2013) Money and Banks in the American Political System. New York: Cambridge University Press. 978-1-107-60916-7 Explains basic political processes surrounding the Federal Reserve in the broader system of Congress and the Executive Branch.

(2004). A Term at the Fed: An Insider's View. HarperBusiness. ISBN 0-06-054270-5; focuses on the period from 1996 to 2002, emphasizing Alan Greenspan's chairmanship during the 1997 Asian financial crisis, the stock market boom and the financial aftermath of the September 11, 2001, attacks.

Meyer, Laurence H.

Woodward, Bob. Maestro: Greenspan's Fed and the American Boom (2000) study of Greenspan in the 1990s.

Smialek, Jeanna (2023). Limitless: The Federal Reserve Takes on a New Age of Crisis. New York: Alfred A. Knopf.  9780593320235. OCLC 1322058230.

ISBN