So, what does the Fed actually do?

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The Fed’s mandate is to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates, according to the Federal Reserve’s web site.

Simply put, the Fed has to make sure the U.S. has a sound banking system and a healthy economy.

To do that, the Fed makes decisions over monetary policy to help maintain employment, keep prices stable, and keep interest rates at a level that helps the economy. It also supervises and regulates banks to make sure they are safe places for people to keep their money, and to protect consumers’ credit rights.

But there’s more.

The Fed plays a major role in clearing checks, processing electronic payments, and distributing coin and paper money to the nation’s banks, credit unions, savings and loan associations. For example, when you cash a check or have money electronically transferred, there is a good chance that a Fed Bank will handle the transfer of money from one bank to another.

The Federal Reserve System also conducts research on the U.S. and regional economies and distributes information about the economy to the public through published articles, speeches by board members, seminars and web sites. This information is released to the public as part of the Fed’s mandate to study the economy. Two important outlets for this information are The Beige Book and Fed minutes. These two reports are followed very closely by the stock market and economists in general to gauge how the economy is doing and what the Federal Reserve board is thinking.

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