What is the Federal Reserve
The Federal Reserve System is mainly a central banking system which is in progress in the banks of United States. The Federal Reserve System is opted as a central banking system. The Federal Reserve System is shortly known as Fed. The Federal Reserve was created by the United States Congress. Federal Reserve System was invented under the guidance of FDR (Federal Reserve Act), and the date of the invention was December 23, 1913.
The Federal Reserve System was created because of some financial problems occurring in the field of banking. Afterwards, the Federal Reserve System has expanded its working functions. U.S. congress has made the Federal Reserve System as the main banking system to provide better and safer banking and financial systems.
The Federal Reserve Act under which the Federal Reserve System was launched was signed by Woodrow Wilson president of United States at that time in 1913. The Federal Reserve Act was introduced in the law of the country. Today, the Federal Reserve is the central bank of the United States.
The current Chairman is Ben Bernake of the FDR. The Federal Reserve System works under a government agency which is known as Board of Governors. Senate of the United States works to appoint the members who will work in the Board of Governors. These members can also be replaced and reappointed as per the necessity. The workings terms of these board members are 14 years. The chairman and the vice-chairman of Federal Reserve System are appointed by the approval of the Senate, after the stage when the President will appoint them. Ben Bernake has taken the position of the chairman on February 1, 2006. Before him, Alan Greenspan was the chairman, who was working since 1987.
The Federal Reserve System has 12 regional branches which are located in the main cities all over the country. All branches are guided through the Board of Governors also known as Federal Reserve Board (FRB) and the Federal Open Market Committee (FOMC). The chairman of the board of Governors is also the chairman of the FOMC.
The function of the FOMC is to make policies. The Federal Reserve System has the capability of generating its own income by the functional activities such as by earning interest on government securities, loans etc. or by getting an income for holding the foreign currency.
Those income collected from various operations are utilized by financing the daily working, gathering the information and researching economically. If the income is still left after these functions then it is submitted to the treasury of the United States. The Reserve Bank serves as the main operating part of the Federal Reserve System.