Federal Reserve Service. US Federal Reserve Banks. Secret Federal Reserve Programs

In this article we will look at what constitutes Federal Reserve System (FRS) of the USA how it was created, what it includes, how it functions, etc. All this is very important to know and understand, since the US Federal Reserve has a significant influence on economic processes not only in America, but throughout the world.

So, the Federal Reserve System (Federal Reserve, Fed, Fed, Federal Reserve) is a structure that performs the functions Central Bank USA. The Federal Reserve has been operating since December 23, 1913, when it was created with the aim of counteracting the powerful threats that befell the country's banking system (before that, the functions of the Central Bank in the United States were performed by several National Banks, which were no longer coping with their task and could not adequately withstand negative processes in economics).

Structure of the US Federal Reserve.

In the first years of its existence structure of the US Federal Reserve changed several times, and finally, in 1935, it acquired the form in which it functions to this day. The US Federal Reserve System includes:

Federal reserve banks in the amount of 12 pieces, they are also regional branches of the Federal Reserve System. Federal Reserve Banks are located in 11 different cities in different US states: Boston (Massachusetts), New York (New York), Philadelphia (Pennsylvania), Cleveland (Ohio), Richmond (Virginia), Atlanta (Georgia), Chicago (Illinois), St. Louis (Missouri), Kansas City (Missouri), Minneapolis (Minnesota), Dallas (Texas), San Francisco (California). And, accordingly, they have the names Federal Reserve Bank of Boston, Federal Reserve Bank of New York, etc.

Each Fed bank has its own board of governors, consisting of 9 members of three categories: A, B and C, each of which has its own functions. The Fed's Federal Reserve Banks are commercial entities, not government entities.

Federal Reserve Board of Governors- the body that manages the system, consisting of 7 employees who are appointed by the President of the United States and then confirmed by the Senate. Members of the Board of Governors are appointed for 14 years, without the right of reappointment. The powers of the Federal Reserve Board of Governors concentrate all the key functions of any Central Bank: operations with securities on the open market, changes discount rate and reserve standards for commercial banks.

Federal Open Market Committee US Federal Reserve(known as the FOMC) is a body that is responsible for the stability of prices in the country, ensuring economic growth, regulating the labor market, as well as issues of international trade and external payments. This committee consists of 12 people: 7 members of the Board of Governors and 5 presidents of the Reserve Banks.

These are the main institutions that make up the structure of the US Federal Reserve. In addition to them, it also includes 3 advisory councils:

Consumer;
Society of Depository Institutions;
Federal.

Thus, the highest governing body of the US Federal Reserve System is the Board of Governors, which, in turn, is appointed by the president and approved by the Senate. Today the Chairman of the Board of Governors is Janet Yellen.

The main feature of the US Federal Reserve System, which distinguishes it from the Central Banks of other countries, is that the Fed is a commercial structure created at the expense of private rather than state capital. The Fed is joint stock company, the shares of which can be freely purchased by US commercial banks that meet certain requirements. After purchasing a block of shares, the credit structure becomes a member bank of the Federal Reserve System. Today, more than 1,900 US national banks and more than 800 individual state banks are members of the Fed. At the same time, in the country as a whole, only about 40% of credit institutions are shareholder members of the Federal Reserve System.

It is important to note that Fed shareholders have fairly limited rights compared to shareholders of other companies. For example, they cannot influence the adoption of important decisions on monetary policy - this is within the competence of the Board of Governors.

At the same time, there are 2 bodies in the country that control the activities of the Federal Reserve System - the House of Representatives of the US Congress and the Banking Committee of the US Congress. These structures conduct audits of the Federal Reserve and analyze its reporting. Also, according to the Federal Reserve Act, the president of the country has the right to dismiss any member of the Board of Governors, but in practice such cases have not yet occurred. But no one can veto any decision of the Board of Governors.

Functions of the US Federal Reserve.

Let's look at the main functions that the US Federal Reserve System performs.

Money issue. The Federal Reserve has exclusive authority to determine the need and volume of issuing dollars. In practice, issued dollars are overwhelmingly invested in the purchase of US Treasury bonds as the main asset of the Fed, after which they enter circulation.
Supervisory and regulatory functions. Like any central bank, the US Federal Reserve supervises and regulates banking system countries: produces regulations for commercial banks, licenses them, controls their work, etc.
Balance of respect for the interests of citizens and credit institutions. In particular, this includes protecting the rights of borrowers and bank depositors, regulating interest rates, etc.
Ensuring economic stability in the country. This is also one of the important functions of the Federal Reserve System, which the system performs along with some other US structures.
Providing liquidity and lending to the banking system. Like any central bank, the US Federal Reserve monitors the country’s banks’ compliance with mandatory liquidity standards and, if necessary, provides commercial banks loans. The Federal Reserve also stores the required reserves of the country's banks.
Management of the system of internal and external payments.
Providing depository services for government agencies and official international companies.
Strengthening the influence and role of the United States in the global economy.

The main goal of the US Federal Reserve, like any Central Bank, is to ensure a stable the economic growth in the country with optimal inflation rates.

US Federal Reserve System: interesting facts.

Since the Fed is a commercial shareholder structure, it earns profits, which it uses to pay staff, and also distributes to its shareholders in the form of . But the bulk of the US Federal Reserve System's income is transferred to federal budget countries - to the US Treasury.

The very principle of money emission carried out by the Fed is also interesting. In fact, it turns out that US dollars do not belong to the state, but belong to a private joint stock company. On dollar bills it says “Federal Reserve note”, that is, “Federal Reserve Note” (not a US note). The state actually borrows dollars from the Fed for its bonds, which it then repays with interest. This is such an interesting scheme.

Of particular importance are always the meetings of the US Federal Reserve System, at which certain decisions regarding monetary policy countries. The meetings themselves take place several times a year, sometimes every month, sometimes not. The schedule of US Federal Reserve meetings is prepared in advance for the whole year, their dates are always known. For example, a total of 8 such events are planned for 2016.

Because the dollar is the main world currency, such decisions always have a very significant impact not only on the US economy, but also on the entire world: on quotes valuable papers, exchange rates, the cost of goods in global demand, etc. Therefore, the meetings of the US Federal Reserve always attract the attention of financiers, analysts, and stock traders around the world. Meetings always end with a press conference by the Fed Chairman, and their results are published at 14:00 New York time. It is at the time of press conferences and the publication of reports that significant fluctuations in world markets always occur.

The history of the US Federal Reserve suggests that the system was most often led by financiers who were competent and independent in their decisions, who did not engage in populism, but actually solved global problems facing the structure, sometimes acting with new, non-standard methods. For example, it was the US Federal Reserve System that developed and successfully implemented. The Federal Reserve has repeatedly demonstrated its competent fight against inflation and deflation and its successful overcoming of powerful financial crises.

The leading position of the US economy and American currency in the world can also be considered one of the outstanding achievements of the Fed.

Now you have an idea of what the US Federal Reserve System is, what it consists of and how it functions.

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Federal Reserve System(Federal Reserve System, Fed, Federal Reserve, Fed) is a specially created independent federal agency to perform the functions and exercise centralized control over the US commercial banking system. The Federal Reserve System includes (FRBs) located in largest cities USA, about three thousand commercial so-called member banks, appointed by the President of the United States, Federal Open Market Committee and advisory councils. The basis for its creation is the Federal Reserve Act. The state plays a decisive role in the management of the Federal Reserve System, although the form of ownership of capital is private - joint stock with a special status of shares.

From a governance perspective, the Fed is an independent agency within the US government. As national central bank, The Federal Reserve receives powers from the US Congress. Independence at work is ensured by the fact that decisions made about monetary policy do not have to be approved by the President of the United States or any other executive or legislative branch of government, the Federal Reserve does not receive funding from Congress, and the terms of office of members of the Board of Governors of the Federal Reserve System span multiple terms of office of the President and members of Congress. At the same time, the Fed is controlled by Congress, which often reviews the Fed's activities and can change the Fed's responsibilities by legislative means.

Money For Nothing - Liberty Street Films, 2013 (Trailer, the original is being removed from YouTube..):

Senior Management and Fed Chairman

The governing body of the Federal Reserve is composed of 7 members, who are appointed by the President of the United States with the approval of the Senate. Each member of the Council is appointed for a non-renewable term of 14 years. One member of the Council is appointed every two years, and each president can thus appoint only two members (or four if the president is elected for a second term), provided that no one vacates the post early.

The Board of Governors is headed by a chairman and his deputy, who are selected by the president from among the seven members of the Board for a term of four years with no restrictions on the extension of their terms of office.

Since February 2006, he has held the post of Chairman of the Board of Governors of the Federal Reserve System. On December 17, 2009, the US Senate Banking Committee confirmed Fed Chairman Ben Bernanke for a second term. 16 senators voted for his candidacy, seven were against.

On January 6, 2014, the US Senate approved President Barack Obama's nomination Janet Yellen to head the Federal Reserve System. For the past two years, Yellen has served as Ben Bernanke's deputy.

Who owns the Federal Reserve?:

Federal Reserve Banks US Federal Reserve

Subordinate to the Board of Governors are 12 regional branches of the Federal Reserve System, called “”, which were created on the basis of the Federal Reserve Act and form the basis of the structure of the US Federal Reserve System. Regional branches geographically located in twenty-five branches and exercise their powers in the states assigned to them, named after the cities in which their headquarters are located:

Boston;
NY;
Philadelphia;
Cleveland;
Richmond;
Atlanta;
Chicago;
St. Louis;
Minneapolis;
Kansas City;
Dallas;
San Francisco.

Twelve Federal Reserve banks have independent status legal entity, but they report and are subordinate to the Board of Governors of the Federal Reserve, appointed by the President of the United States and approved by the US Senate.

The main functions of the Federal Reserve Banks are:

Setting discount rates with the permission of the Federal Reserve Board of Governors;
Monitoring the status of local economic and financial institutions;
Providing financial services US government and other depositories.

Functions of the Federal Reserve

The current functions of the Federal Reserve System of the United States are:

Carrying out US responsibilities;
Maintaining a balance between interests and national interests;
Ensuring supervision and regulation of banking institutions;
Protection credit rights consumers;
Managing the issue of money (often with conflicting goals: minimizing unemployment, maintaining price stability, ensuring moderate interest rates);
Ensuring the stability of the US financial system, controlling systemic risks in

An organization that performs the functions of the United States Central Bank. An independent agency within the US government.

Source: https://www.youtube.com/watch?v=KggHsajMwYo

Since February 2015, Janet Yellen has been the Chairman of the Federal Reserve.

History of the creation of the Federal Reserve System

The Federal Reserve System began in 1913, when the Federal Reserve Act was passed. Before the creation of the Fed, there was a system of private banks that were unable to create an effective centralized country. The creation of the Fed was the result of counteracting a series of interbank crises in 1873, 1893 and 1907, which made the need for a single regulatory and issuing body apparent.

Composition of the Federal Reserve System

The Fed includes 12 Federal Reserve Banks located in the largest cities, about three thousand commercial so-called member banks, a presidentially appointed Board of Governors (consists of seven people appointed by the President of the United States and approved by Congress for a period of 14 years) Federal Open Market Committee market and advisory advice.

Functions of the Federal Reserve System

fulfilling the tasks of the Central Bank of the country;
maintaining a balance between public interests in the USA and the interests of commercial banks;
supervision and regulation of the country's banking system, protecting the interests of investors and clients;
carrying out the issue of money - US dollars;
regulation and stabilization financial markets, risk control;
providing depository services for the US government and official international institutions;
participation in the functioning of the system of international and domestic payments;
eliminating liquidity problems at the local level and providing loans to credit institutions;
strengthening the US role in .

Features of the Federal Reserve System

The main feature is that the system is built not on state, but on private capital.

Control over the activities of the Federal Reserve is carried out by the House of Representatives of the US Congress, to which it must report annually, and the Congressional Banking Committee (reporting twice a year). FRS passes annually audit. In addition, from the point of view of the law, the US President can fire any Fed governor, but this rule has never been applied to date.

Part of the Fed's profit, received from government securities, as well as as a result of operations on open markets, goes to pay salaries to employees and dividends to banks participating in the system. The main share of income is transferred to the federal budget.

Federal Reserve System(Fed) is an organization that performs the functions of the US Central Bank.

The history of the Federal Reserve dates back to 1913, when the Federal Reserve Act was adopted. The predecessors of the Fed were successively several private banks, which were unable to create an effective centralized financial system countries. The creation of the Fed was the result of counteracting a series of interbank crises in 1873, 1893 and 1907, which made the need for a single regulatory and issuing body apparent.

Today, the Federal Reserve System assumes the following functions:

fulfilling the tasks of the Central Bank of the country;
maintaining a balance between the public interests in the United States and the interests of commercial banks;
supervision and regulation of the country's banking system, protection of the interests of investors and clients of credit institutions;
carrying out the issue of money - US dollars;
regulation and stabilization of financial markets, risk control;
providing depository services for the US government and official international institutions;
participation in the functioning of the system of international and domestic payments;
eliminating liquidity problems at the local level and providing loans to credit institutions;
strengthening the role of the United States in the global economy.

Today the Federal Reserve System includes the following main structural units: a seven-member board of governors appointed by the President of the United States and confirmed by Congress for a term of 14 years; The Federal Open Market Committee, the Federal Advisory Council, 12 Federal Reserve Banks, which are regional representatives of the Federal Reserve, and other credit institutions that are participants in the system.

The peculiarity of the Federal Reserve System (unlike traditional central banks of other countries, for example the Bank of England or the Central Bank of the Russian Federation) is that it is built not on public, but on private capital. Any credit organisation, meeting the requirements of the Federal Reserve, can purchase its shares. This allows you to receive a fixed dividend income, and also gives you the right to vote in the election of six of the nine managers of regional branches.

Control over the activities of the Federal Reserve is carried out by the House of Representatives of the US Congress, to which it must report annually, and the Congressional Banking Committee (reporting twice a year). The Federal Reserve is audited annually. In addition, from the point of view of the law, the US President can fire any Fed governor, but this rule has never been applied to date.

One of the most important functions of the Federal Reserve System is money issue. In practice, it is done as follows. The money issued is used primarily to purchase U.S. government debt—Treasuries. Only then do the banknotes go into circulation.

It was created in December 1913 as a body to prevent systematic crises. Gradually, its functions and powers were significantly expanded. But what is the Fed? Is it a "secret society" or just another central bank, albeit one of its own? rich country in the world?

Main functions

The main purpose of the Fed is to conduct monetary policy. Thus, the following answer to the question of what the Federal Reserve is is absolutely correct: it is a body in the United States that regulates the amount of money in circulation by establishing norms required reserves, refinancing rates and open market operations. The Federal Reserve is dedicated to managing inflation and maintaining price stability. The US Federal Reserve also strives to achieve maximum employment levels. The main function of this organ is sustainable economic development countries. What it is? The Fed provides GDP growth by 2-3% per year. However, the purpose of the Federal Reserve System is not limited to this. The Fed meeting may touch on the topic of regulating commercial banks to protect consumer rights. The discussion may also be related to maintaining the stability of financial markets and preventing potential crises. Moreover, the Fed provides services to the American government, federal and foreign banks.

Structure

Consideration of the question of what the Federal Reserve System is would not be complete without studying the components of this body. There are three of them in total. The Board of Governors is the main body. He controls monetary policy. The Federal Reserve Board of Governors has seven members. They are responsible for setting the discount rate and reserve requirements for member banks. Any decision by the Federal Reserve is based on the analysis carried out by its employees. All findings are published monthly in the so-called “Beige Book,” and the Congressional Monetary Report is published every six months. Another component is the Federal Committee for open market(FOMC). Its task is to set a target rate for funds. The Federal Committee includes members of the Board of Governors and 4 of the 12 presidents of member banks. This body meets eight times a year. Another component of the Fed is the member banks themselves. They supervise commercial financial structures and monitor the implementation of the chosen monetary policy. Each of the 12 member banks is in its own district.

History of origin

The first attempts to create a more flexible monetary system in the USA were undertaken back in the 18th century. The First and Second Banks were created in 1791 and 1816, respectively. Each of them lasted about 20 years. Both First and Second Bank had branches throughout the country and served the government, monetary institutions, and private clients. In general, their performance was satisfactory. However, a significant part of the population did not have any confidence in them. The decline in their authority was associated with worsening political contradictions, so they closed. The Panic of 1907 prompted Congress to create the Federal Reserve System. The National Monetary Commission was established to evaluate methods to prevent constant financial panics and business bankruptcies. In 1913, Congress passed the Federal Reserve Act. It was originally planned that the Fed would have much less power than we see now. It was supposed to support the creation of member banks, increase the elasticity of the currency and the efficiency of the entire system as a whole. However, gradually the range of powers of the body in question expanded significantly, which is associated with the periodic occurrence of crises requiring state intervention.

Who owns the Fed?

The Federal Reserve System is independent bank. The decisions of the FOMC and the Board of Governors are based on research by Fed staff. They are not ratified by the President, the Treasury Department, or Congress. That is, they are independent. However, members of the Board of Governors are elected by the President and confirmed by Congress. Thus, the state controls long-term policy Federal Reserve System. Some officials treat the latter with such suspicion that they see the need for a complete cessation of its activities. Senator Rand Paul believes the system needs to be audited more thoroughly.

Role of the Chairman

The head of the Federal Reserve sets the direction of monetary policy. Between 2014 and 2018, Janet Yellen served as chairman. She focused her attention on overcoming unemployment, which was her academic specialty. Therefore it reduces interest rates. Many experts believe that her actions are only aggravating the crisis, and the economy needs opposite measures to stabilize. He served as chairman from 2006 to 2014. He was an expert on the Fed's role during the Great Depression. It was thanks to Bernanke that the consequences of the recent recession were mitigated.