Federal Reserve Banks
Visit a Federal Reserve bank, and you'll see that its operations resemble the activities that go on in private business.
Reserve banks are the decentralized components of the Fed's structure, meaning that they operate somewhat independently but under the general oversight of the Board of Governors. Reserve banks contribute to national policy discussions, providing a regional banking perspective and the expertise of their local economies. This decentralized structure is a good example of the Federal Reserve's complex, yet effective, design.
The Federal Reserve System is divided into 12 districts. Each district is served by a regional Reserve bank, most of which have one or more branches.
Reserve bank activities serve primarily three audiences—bankers, the U.S. Treasury and the public. Reserve banks are often called the "bankers' banks," because they store commercial banks' excess currency and coins and they process and settle their checks and electronic payments. Reserve banks also supervise commercial banks in their regions.
As banks for the U.S. government, Reserve banks process the Treasury's payments, sell its securities and assist with its cash management and investment activities. Finally, Reserve banks conduct research on the national and regional economies, prepare Reserve bank presidents for their participation in the FOMC and disseminate information about the economy through publications, speeches, educational workshops and web sites.
Each Reserve bank has its own board of directors that oversees the activities of the organization. These directors contribute local business experience, community involvement and leadership, and reflect the diverse interests of each district. The boards have nine members: six, including the chairman and deputy chairman, represent the public, while three represent banking. (Reserve bank branch offices have smaller boards of directors.)
The boards of directors impart a private-sector management perspective to the Reserve bank that emphasizes efficiency and quality. The boards also appoint presidents of their respective Reserve banks, with the approval of the Board of Governors.
