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What is The Federal Reserve System?

Jerome Powell was renominated to be the Chair of the Federal Reserve. But what is the Fed, and what does it do?

The Federal Reserve system in the United States consists of three key entities…

The Board of Governors

12 Federal Reserve Banks

The Federal Open Market Committee (FOMC)

The Federal Reserve serves as a “Bank to banks.” Together, the three entities have five functions:

  1. Set monetary policy, to promote maximum employment and stable prices.
  2. Promote stability in the financial system through minimizing systemic risks.
  3. Promote the safety and soundness of individual financial institutions.
  4. Foster payment and settlement system safety and efficiency for banks and the Federal Government.
  5. Promote consumer protection and community development.
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