The past several lessons have introduced you to who we are at the Federal Reserve – the Board of Governors, the 12 Reserve Banks and the Federal Open Market Committee (FOMC) – as well as what we do.
We have also described our three main responsibilities – conducting monetary policy, supervising banks and providing financial services. We hope we have helped you make sense of the complex, yet effective, functions of the Federal Reserve System.
What becomes apparent is not only how important our functions are but just how effective our structure is in fulfilling the purposes of the Federal Reserve System.
A financial crisis led to our creation, and a financial crisis is exactly what the Federal Reserve is best prepared to handle. Should a financial crisis arise in any part of the country, a Reserve Bank is close at hand with the banking and payments system expertise and emergency funds necessary to respond quickly.
Through the combined efforts of the Board of Governors, the Reserve Banks and the Federal Open Market Committee (FOMC), the Federal Reserve System is in a strong position to make monetary policy, provide a safe banking system and contribute to an effective payments system, all of which contribute to a healthy economy.
Now that you have completed the module, please answer the following questions.