The Federal Reserve System is the central bank of the United States. It is made up of the Board of Governors, 12 regional Federal Reserve Banks, and the Federal Open Market Committee (FOMC). The Board oversees the System, Reserve Banks carry out operational and regional work, and the FOMC sets monetary policy. Together, these institutions perform five broad functions—not just setting interest rates.
How is the Federal Reserve System structured?
Congress created the Federal Reserve System and established its statutory framework. Its three main entities have different responsibilities, though they work together. The Board is accountable to Congress; its governors are nominated by the President and confirmed by the Senate.
| Entity | Main role | Who it serves or affects |
|---|---|---|
| Board of Governors | System-wide guidance and oversight of the Reserve Banks | Congress and the public through its governance of the central bank |
| Federal Reserve Banks | Regional operations, services, supervision, and economic information | Depository institutions and the federal government |
| Federal Open Market Committee | Monetary policymaking | The economy through monetary and financial conditions |
Board of Governors
The Board is a federal agency in Washington, D.C., and the System’s governing body. It has seven members, who provide general guidance and oversee the 12 Reserve Banks. The Board also has specific monetary-policy responsibilities, including setting the discount rate and reserve requirements.
Federal Reserve Banks
The 12 regional Reserve Banks are the System’s operating arms. They provide accounts and payment services to depository institutions, move currency and coin, provide services to the federal government, and act as fiscal agents. They also supervise and examine financial institutions within their remit and contribute regional information and perspectives to monetary-policy discussions.
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Reserve Banks are not retail banks: they do not offer accounts to individuals. Their accounts and services are for eligible depository institutions and the federal government.
Federal Open Market Committee
The FOMC is the monetary policymaking body. It has 12 voting members: the seven Board governors, the president of the Federal Reserve Bank of New York, and four of the other 11 Reserve Bank presidents, who serve on rotating one-year voting terms. Reserve Bank presidents who are not current voting members attend and participate in discussions. The FOMC holds eight regularly scheduled meetings a year, according to the Board’s current FOMC page, accessed in 2026.
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What does the Federal Reserve do?
The Board describes five general functions of the Federal Reserve System. The statutory aims of monetary policy are maximum employment, stable prices, and moderate long-term interest rates; the other functions address broader financial-system and public responsibilities.
- Conduct monetary policy. The Fed works to promote maximum employment, stable prices, and moderate long-term interest rates.
- Promote financial stability. It monitors the financial system and seeks to contain risks that could threaten the system as a whole.
- Supervise and regulate financial institutions. It promotes the safety and soundness of institutions under its remit and monitors how their activities affect the broader financial system.
- Support safe and efficient payment and settlement systems. The Fed operates and helps oversee systems that enable payments and the transfer of funds.
- Promote consumer protection and community development. Its work includes supervision, research, and community economic-development activities.
How does the Fed influence interest rates?
The FOMC directs open market operations, while the Board sets the discount rate and reserve requirements. These tools influence the supply and demand for balances that depository institutions hold at Federal Reserve Banks. That, in turn, affects the federal funds rate—the overnight rate at which depository institutions lend balances held at the Fed to one another.
The transmission is indirect. A change in the federal funds rate can affect other short-term interest rates, foreign exchange rates, longer-term rates, and the availability of money and credit. Those financial conditions can then influence employment, output, and prices. The Fed does not directly set every market rate, nor does a policy change mechanically determine economic outcomes.
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The Board’s About the Federal Reserve, Federal Reserve System structure, and FOMC pages explain the institutions and their responsibilities. Its publication The Fed Explained: What the Central Bank Does is an 11th-edition guide to the System’s structure and work; the publication page was last updated February 26, 2026.
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