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Why does the Federal Reserve System have 12 regional banks?

The Federal Reserve System is the central bank of the United States – and one of the world’s few decentralized central banks, reflecting the diversity of local economies throughout America. The Fed’s structure was established in the Federal Reserve Act of 1913. As shown in the map below, the System has 12 regional banks that are named after the city in which the bank’s head office is located. The banks are overseen by the Fed’s Board of Governors in Washington, D.C.

Regional map of the Federal Reserve Districts and the Board of Governors

Each of the 12 Federal Reserve Banks serves its geographic district in various ways, including, but not limited to, distributing paper currency and coins, processing automated electronic payments and monitoring commercial banks to ensure compliance with regulations and banking practices. The regional banks collect expert opinions on economic information from their regions to understand and serve the local economy – for example, by implementing programs to help ensure financial stability and economic recovery.

Research conducted by each Reserve Bank supports the Bank presidents and Board of Governors at Federal Open Market Committee (FOMC) meetings, which occur eight times a year on a routine basis or more on an emergency basis. The Board governors and New York Fed president have permanent FOMC voting seats. All 12 Reserve Bank presidents attend and contribute to FOMC meetings, while the four remaining voting seats rotate among the other 11 regional bank presidents. Policies set at the FOMC are carried out by the 12 Federal Reserve Banks.

Each Reserve Bank has a board of governors to oversee its management and activities. These directors offer their private-sector perspectives, local business experience, community involvement and leadership to the Bank they serve. In addition, the board appoints the president and first vice president of its Reserve Bank, subject to Board of Governors approval.

Learn more about the Federal Reserve System at (Off-site).