About the Fed: An Introduction to the U.S. Central Bank
The Federal Reserve System is the central bank of the United States. As the nation's central bank, it 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.
by Federal Reserve Bank of St. Louis staff
The Federal Reserve System (sometimes called "The Fed") is the central bank of the United States.
As the St. Louis Fed's overview "In Plain English" explains it,
A "central bank" is the name given to a country's primary monetary authority. A nation's central bank is usually given a mix of responsibilities including determining the money supply, supervising banks, providing banking services for the government, lending to banks during crises, and promoting consumer protection and community development.
The Fed 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:
- conducts the nation’s monetary policy;
- promotes the stability of the financial system;
- promotes the safety and soundness of individual financial institutions;
- fosters payment and settlement system safety and efficiency; and
- promotes consumer protection and community development
Instead of a single central bank, the framers of the Federal Reserve Act provided for a central banking “system” with three main features: (1) a central governing Board, (2) a decentralized operating structure of regional reserve banks, and (3) a combination of public and private characteristics. That's why the Federal Reserve System has multiple parts that together serve as the central bank of the United States. This system has three main entities: the Board of Governors, the Reserve Banks, and the Federal Open Market Committee (FOMC). Learn more about the Federal Reserve's structure.
The Federal Reserve is designed to be independent, but also does its work alongside other institutions that have a role in the nation's economy and banking system, like the Treasury, the Department of Labor, the FDIC, and more.
The Fed's structure and responsibilities have shifted over time as the economy—and our understanding of the economy—has changed. But from the original Federal Reserve Act to the Banking Act of 1935 to today, the Fed has worked to promote a healthy economy. Learn more about the Fed's work in The Fed Explained, produced by the Board of Governors, or dig into the explanation "In Plain English" from the St. Louis Fed's economic education team.
Written as of September 13, 2021. See disclaimer.