The Role of the Federal Reserve

Read this article to learn more about the Federal Reserve Bank of New York.

Overview of the Federal Reserve System

Board of Governors of the Federal Reserve System

The Federal Reserve System was designed to ensure its political independence and its sensitivity to divergent economic concerns. The chairman and the six other members of the Board of Governors who oversee the Federal Reserve are nominated by the president of the United States and confirmed by the Senate. The president is directed by law to select governors who provide "a fair representation of the financial, agricultural, industrial and geographical divisions of the country". One term is set to expire every two years. This is to prevent any one president from saturating the Board with his or her nominees.


Federal Open Market Committee

The seven governors of the Federal Reserve Board and the president of the New York Fed are permanent voting members of the FOMC. The first vice president of only the New York Fed may vote at FOMC meetings in the president's absence. Other Reserve Bank presidents take turns serving for one year as the four remaining voting members of the committee. Non-voting Reserve Bank presidents attend and participate in discussions at all FOMC meetings. The chairman of the Board of Governors of the Federal Reserve System serves as the committee's chairman. The New York Fed president serves as the committee's vice-chairman. At the end of each FOMC meeting, a directive is issued to guide the open market operations of the New York Fed until the next meeting.


Federal Reserve Banks

Each Reserve Bank is headed by a President appointed by the Bank's nine-member board of directors. Three of the directors are elected by the commercial banks in the Bank's region that are members of the Federal Reserve System. The other directors are selected to represent the public with due consideration to the interests of agriculture, commerce, industry, services, labor, and consumers. Three of these six directors are elected by member banks and the other three are chosen by the Board of Governors.

The 12 Federal Reserve Banks are the operating arms of the Federal Reserve System. They supervise and regulate bank holding companies, as well as state-chartered banks in their district that are members of the Federal Reserve System. Each Reserve Bank provides services to depository institutions in its respective district and functions as a fiscal agent of the U.S. government.