The Federal Reserve System

1
The Federal Reserve System

• The Structure of the Federal Reserve System
• The primary elements in the Federal Reserve
  System are
• 1) The Board of Governors
• 2) The Regional Federal Reserve Banks
• 3) The Federal Open Market Committee

2
The Federal Reserve System

• The Board of Governors
• Seven members
• Appointed by the President
• Confirmed by the Senate
• Serve 14-year terms

3
The Federal Reserve System

• The Board of Governors
• Terms are staggered so that one comes vacant
  every two years
• President appoints a member as Chairman to serve
  a four-year term

4
The Federal Reserve System

• The Federal Reserve Banks
• 12 District banks
• Nine directors
• Three appointed by the Board of Governors
• Six are elected by the commercial banks in the
  district
• The directors appoint the district president
  which is approved by the Board of Governors

5
The Federal Reserve System

• The Federal Reserve Banks
• The New York Fed implements some of the Feds
  most important policy decisions

6
The Federal Reserve System
7
The Federal Reserve System

• The Federal Open Market Committee (FOMC)
• Serves as the main policy-making organ of the
  Federal Reserve System
• Meets approximately every six weeks to review the
  economy

8
The Federal Reserve System

• The Federal Open Market Committee (FOMC)
• Made up of the following voting members
• The chairman and the other six members of the
  Board of Governors
• The president of the Federal Reserve Bank of New
  York
• The presidents of the other regional Federal
  Reserve banks (four vote on a yearly rotating
  basis)

9
The Federal Reserve System

• The Feds Power Center
• The chairman of the Board of Governors has the
  largest influence on the Feds monetary policy
  actions.
• Paul Volcker
• Alan Greenspan

10
The Federal Reserve System

• The Feds Power Center
• The chairmans power and influence stem from
• First, the chairman controls the agenda and
  dominates the meetings of the FOMC.

11
The Federal Reserve System

• The Feds Power Center
• The chairmans power and influence stem from
• Secondly, contact with a staff of economists and
  other experts provides the chairman with detailed
  briefings on monetary policy issues.

12
The Federal Reserve System

• The Feds Power Center
• The chairmans power and influence stem from
• Lastly, the chairman is the Feds spokesperson
  and the point of contact with the President and
  government and with foreign central banks and
  governments.