The 11th edition of The Fed Explained: What the Central Bank Does (formerly The Federal Reserve System Purposes & Functions) details the structure, responsibilities, and work of the U.S. central banking system. The Federal Reserve System performs five functions to promote the effective operation of the U.S. economy and, more generally, to serve the public interest. It includes three key entities: the Board of Governors, 12 Federal Reserve Banks, and the Federal Open Market Committee.

1. Overview of the Federal Reserve System

The Federal Reserve performs five key functions in the public interest to promote the health of the U.S. economy and the stability of the U.S. financial system.

2. The Three Key System Entities

The Board of Governors, the Federal Reserve Banks, and the Federal Open Market Committee work together to promote the health of the U.S. economy and the stability of the U.S. financial system.

3. Conducting Monetary Policy

The Federal Reserve sets U.S. monetary policy to promote maximum employment and stable prices in the U.S. economy.
VIDEO: Fed Functions: Conducting Monetary Policy

4. Promoting Financial System Stability

The Federal Reserve monitors financial system risks and engages at home and abroad to help ensure the system supports a healthy economy for U.S. households, communities, and businesses.
VIDEO: Fed Functions: Promoting Financial System Stability

5. Supervising and Regulating Financial Institutions and Activities

The Federal Reserve promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole.
VIDEO: Fed Functions: Supervising and Regulating Financial Institutions

6. Fostering Payment and Settlement System Safety and Efficiency

The Federal Reserve works to promote a safe, efficient, and accessible system for U.S. dollar transactions.
VIDEO: Fed Functions: Fostering Payment and Settlement System Safety and Efficiency

7. Promoting Consumer Protection and Community Development

The Federal Reserve advances supervision, community reinvestment, and research to improve understanding of the impacts of financial services policies and practices on consumers and communities.
VIDEO: Fed Functions: Consumer Protection and Community Development

A publication of the Board of Governors of the Federal Reserve System

This book is available in Adobe Acrobat format, as a complete publication or by chapter.

https://doi.org/10.17016/0199-9729.11
 

Complete publication (PDF)

Last Update: August 11, 2021
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