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Glossary
Test Your Knowledge
What is the goal of the Federal Reserve's participation in banking regulation and supervision?
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Question: 1—2—3…4


How does the Federal Reserve provide liquidity to the banking system?
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Question: 1—2—3

Conclusion

One of the Federal Reserve's main responsibilities is to foster safe, sound and competitive practices in the nation's banking system. The Fed is among the agencies responsible for regulating the banking system and supervising financial institutions. In its role as bank supervisor, bank examiners from the Reserve Banks assess whether member banks are engaging in wise lending and investing, are following their own internal controls, and are complying with federal and state laws and regulations. The Fed also takes an active role in consumer protection, particularly in lending and deposit transactions. The Fed has the critical task of providing a safe and efficient method of transferring funds throughout the country's banking system. Essentially, the Reserve Banks serve as banker's banks, offering a wide variety of financial services including distributing currency and coin, processing checks and offering electronic forms of payment.