Board of Governors : 7 members, 14 year termsChairman and Vice chairman serve four year termsBoard of governors oversees the 12 district Federal Reserve banks.12 membersThe 7 governorsThe head of the NY fed4 other head of Federal Reserve district banks n a rotating basisThe Fed Open Market Committee is responsible for monetary policy.Monetary policy involves the changing rate of growth of the supply of money I circulation inorder to affect the amount of credit, which affects business activity in the economy.Twelve Federal Reserve banks are set up as corporations owned by member banks.The Federal Advisory Council reports to the board of governors on general business conditions inthe country.The Federal Open Market Committee decides what the Fed should do to control money supply.Member Banks – all national banks, those chartered by the federal government, must join theFederal Reserve System; state chartered banks may join if they choose.All institutions that accept deposits from customers must keep reserves in their district FederalReserve banks.The Federal Reserve System has many functions.It’s most important function is to regulate the money supply.Learning Targets 4/26/13Describe the functions of the Fed.Notes: Functions of the Federal Reserve SystemSupervising banksHolding Reserves for banksSupplying paper money and coinsThe Banker for the Federal GovernmentThe Fed sets standards for consumer protection, mainly truth-in-lending lawsMost important function: Regulating the money supply in order to manage the overall economyMonetary policy involves changing the growth rate of the money supply in order to change thecost and availability of credit.
