Board of Governors of the Federal Reserve System
US banking.
(FRB).
A board of seven members, appointed by the President of the US from the 12 Federal Reserve Banks, who formulate monetary policy and have regulatory and supervisory responsibilities for banking activities carried out in the US.
Commonly called the Federal Reserve Board.
Monetary policy
For monetary policy, the Board is responsible for:
- Determining the discount rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility, the discount window.
- Setting reserve requirements - funds that a depository institution must hold in reserve against specified deposit liabilities in the form of vault cash or deposits with the Federal Reserve Banks.
- Open market operations, carried out by the Federal Open Market Committee.
In these three ways, the Federal Reserve influences the demand for and supply of balances ("reserves") banks hold at the Federal Reserve and so the price at which banks will lend reserves overnight to each other. This is called the federal funds rate though often abbreviated to the fed funds rate.
Bank supervision
Under Board direction, the Division of Supervision and Regulation is responsible for the oversight of US banking holding companies, foreign banking organizations operating in the US, and state-chartered member banks of the Federal Reserve System.
