The Federal Reserve System performs five functions to promote the effective operation of the U.S. economy and, more generally, to serve the public interest. Think of the financial system as an engine. What does the Federal Reserve do? The 10th edition of The Federal Reserve System Purposes & Functions details the structure, responsibilities, and aims of the U.S. central banking system. The Federal Reserve Banks are also responsible for setting the discount rate for banks upon approval from another Fed branch, which influences overall interest rates for consumers. The Federal Reserve officially identifies Districts by number and Reserve Bank city. A new … The Federal Reserve System was created by Congress in 1913. In the 12th District, the Seattle Branch serves Alaska, and the San Francisco Bank serves Hawaii. Federal Reserve Banks Each Reserve Bank is headed by a president appointed by the Bank's nine-member board of directors. The Federal Reserve is a government agency that regulates the American financial system and, by extension, the broader economy. The banks of the Fed carry out the day-to-day operations and policies of the Fed. Still, as Ben Bernanke and Janet Yellen, both former Fed chairs and now our colleagues at the Hutchins Center, outlined recently in the Financial Times, there is more that the Fed could do… The Fed is comprised of 12 Federal Reserve banks located in regions around the United States. Ultimately, the Fed’s goal is to keep Americans employed and help the economy boom at a healthy rate, while also steering clear of big busts. What does the Fed actually do? One of the more mysterious areas of the economy is the role of the Fed. By looking at inflation. The Federal Reserve Board of Governors is the governing body that guides the U.S. central bank. Formally known as the Federal Reserve, the Fed is the gatekeeper of the U.S. economy.It is the central bank of the United States -- it is the bank of banks and the bank of the U.S. government. The Fed controls the availability of fuel, basically by manipulating the price, and it dictates the permissible uses of fuel. Three of the directors are elected by the commercial banks in the Bank's region that are members of the Federal Reserve System. But how does the Fed tell if the economy is running a bit too hot? The Fed creates money through open … The Board consists of seven members—nominated by the president and confirmed by the Senate—who each serve 14-year terms, all of which are staggered. On the one hand, this is no surprise, given how the Fed was set up in 1913. The Federal Reserve, as America's central bank, is responsible for controlling the money supply of the U.S. dollar. 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