Board of Governors
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Federal Open
Market Committee
- Seven member board
- 14 year term, limited to one term*
- Nominated by President, confirmed by Senate
- Chair, Vice Chair designated by President (confirmed by Senate) to serve a term of 4 years.
- Sets monetary policy
- Discount rate
- Rate of interest the Federal Reserve Banks charge on loans to commercial banks
- Discount rate
- Reserve requirements
- Amount of money that banks are required to hold on reserve
* Members can be reeappointed once if they were initially appointed to fill an unexpired term of a vacant position.
- 12 Districts - District Map
- Serve as banks to commercial banks, credit unions, etc
- Hold reserves deposited by banks
- Supply currency and coins to banks
- Operate clearinghouses for checks
- Destroy worn-out bills, coins
- 12 Members
- Seven Federal Reserve governors
- President of New York Federal Reserve Bank
- Four of the presidents of the other 11 Federal Reserve Banks on a rotating basis
- Seven Federal Reserve governors
- Direct the buying and selling of government securities on the open market
- This influences the Federal Funds rate to meet an interest rate target set by the Board
- Federal Funds rate: The interest rate that depository institutions charge when they loan reserves to each other overnight
- This is what the media refers to when they report that the Fed has "raised" or "lowered" interest rates.
- This influences the Federal Funds rate to meet an interest rate target set by the Board
| Effects of monetary policy | |
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Contractionary monetary policy decreases the money supply |
Expansionary monetary policy increases the money supply |
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