The Federal Reserve Board

aka "The Fed"

On December 23, 1913, the Federal Reserve System, which serves as the nation's central bank, was created by an act of Congress. The System consists of a seven-member Board of Governors with headquarters in Washington, D.C., and twelve Reserve Banks located in major cities throughout the United States.

The primary responsibility of the Board is the formulation of monetary policy. It does this by setting reserve requirements and, with the Reserve Banks, sets the "prime lending rate," the amount individual banks in the United States pay for borrowing funds from Reserve Banks. The Board is also responsible for the development and administration of regulations that implement major federal laws governing consumer credit -- the Truth in Lending Act, Equal Credit Opportunity Act, Home Mortgage Disclosure Act, and Truth in Savings Act, for example.

The members of the Board of Governors are appointed by the President and confirmed by the Senate to serve 14-year terms of office. Only one member of the Board may be selected from any one of the twelve Federal Reserve Districts. Members may serve only one full term, but a member who has been appointed to complete an unexpired term may be reappointed to a full term. The President designates, and the Senate confirms, two members to be Chairman and Vice-Chairman, for four-year terms.

See The Fed's website for a more complete description of its duties and responsibilities, as well as links to information about how the Federal Reserve System works: www.federalreserve.gov.

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This page was last updated on September 27, 2017.