When individuals look at a map of the U.S., they may simply see the outline of 50 states. Most likely, when bankers eye a U.S. map, they see the district boundaries established by the Federal Reserve.
A network of 12 Federal Reserve Banks and 24 branches comprise the Federal Reserve System under the general oversight of the Board of Governors. Each of the 12 Reserve Banks serves its region of the country, and all but three have other offices within their Districts to help provide services to depository institutions and the public. The 12 Banks are named after the locations of their headquarters as shown below:
The Reserve Banks serve banks, the U.S. Treasury and, indirectly, the public. A Reserve Bank is often called a "banker's bank," storing currency and coin, and processing checks and electronic payments. Reserve Banks also supervise commercial banks in their regions. As the bank for the U.S. government, Reserve Banks handle the Treasury's payments, sell government securities and assist with the Treasury's cash management and investment activities. Reserve Banks conduct research on regional, national and international economic issues; and this research plays a critical role in bringing broad economic perspectives to the national policymaking arena and supports Reserve Bank presidents who all attend meetings of the Federal Open Market Committee (FOMC).
Reflecting the diverse interests of a District, the board of directors of each Reserve Bank oversees the management and activities of that District bank. These directors contribute local business experience, community involvement and leadership. The board imparts a private-sector perspective to the Reserve Bank and appoints the president and first vice president of the Reserve Bank, subject to the approval of the Board of Governors.
All member banks hold stock in Reserve Banks and receive dividends. Unlike stockholders in a public company, banks cannot sell or trade their Fed stock. Reserve Banks interact directly with banks in their Districts through examinations and financial services, bringing important regional perspectives that help the entire Federal Reserve System fulfill its responsibilities more effectively.
Test your knowledge about the Fed’s history, monetary policies, and more, by taking one of the quizzes (Off-site) found on the Federal Reserve Education website.
The Structure and Functions of the Federal Reserve System (Off-site)