Financial Markets and Institutions (2-downloads)

Committee (FOMC)

Seven members of Board

of Governors plus

presidents of FRB of New

York and four other FRBs

Around 2,800

member

commercial

banks

Member Banks

F I G U R E   9 . 1

Structure and Responsibility for Policy Tools in the Federal Reserve System

Dashed lines indicate that the FOMC “advises” on the setting of reserve requirements and the discount rate.

Access

www.federalreserve

.gov/pubs/frseries/frseri.htm

for information on the

structure of the Federal

Reserve System.

G O   O N L I N E

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194

Part 4 Central Banking and the Conduct of Monetary Policy

Federal Reserve Banks

Each of the 12 Federal Reserve districts has one main Federal Reserve bank, which may

have branches in other cities in the district. The locations of these districts, the Federal

Reserve banks, and their branches are shown in Figure 9.2. The three largest Federal

Reserve banks in terms of assets are those of New York, Chicago, and San Francisco—

combined they hold more than 50% of the assets (discount loans, securities, and other

holdings) of the Federal Reserve System. The New York bank, with around one-quar-

ter of the assets, is the most important of the Federal Reserve banks (see Inside the Fed

box, “The Special Role of the Federal Reserve Bank of New York”).

Each of the Federal Reserve banks is a quasi-public (part private, part govern-

ment) institution owned by the private commercial banks in the district that are mem-

bers of the Federal Reserve System. These member banks have purchased stock in

their district Federal Reserve bank (a requirement of membership), and the dividends

paid by that stock are limited by law to 6% annually. The member banks elect six

directors for each district bank; three more are appointed by the Board of Governors.

Together, these nine directors appoint the president of the bank (subject to the

approval of the Board of Governors).

The directors of a district bank are classified into three categories: A, B, and C.

The three A directors (elected by the member banks) are professional bankers, 

and the three B directors (also elected by the member banks) are prominent leaders

from industry, labor, agriculture, or the consumer sector. The three C directors, who are

appointed by the Board of Governors to represent the public interest, are not allowed

Access

www.federalreserve

.gov/otherfrb.htm

for

addresses and phone

numbers of Federal

Reserve Banks and

branches, and links to the

main pages of the 12

reserve banks and Board

of Governors.

G O   O N L I N E

F I G U R E   9 . 2

Federal Reserve System

Source: Federal Reserve Bulletin.

Miami