Structure and Functions of the Federal Reserve System

In 1913, Congress created the Federal Reserve System to serve as the central bank for the United States. The Federal Reserve formulates the nations monetary policy, supervises and regulates banks, and provides a variety of financial services to depository financial institutions and the federal government. The System comprises three major components, the Board of Governors, a network of 12 Federal Reserve Banks, and member banks. Congress created the Federal Reserve as an independent agency to enable the central bank to carry out its responsibilities protected from excessive political and private pressures. At the same time, by law and practice, the Federal Reserve is accountable to Congress. The seven members of the board are appointed by the President with the advice and consent of the Senate. Congress routinely monitors the Federal Reserve System through formal and informal oversight activities. This report examines the structure and operations of the major components of the Federal Reserve System, and provides an overview of congressional oversight activities. This report will be updated in the event of a change in the structure or functions of the Federal Reserve System.