The Banker’s Bank

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In simple form, Reserve Banks are the operating arms of the central bank. They are a network of 12 Federal Reserve Banks and 25 branches make up the Federal Reserve System. These organizations are under the general oversight of the Board of Governors.

Each of the 12 Reserve Banks are named after the locations of their headquarters: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco.The Reserve Banks serve banks, the U.S. Treasury, and, indirectly, the public.

A Reserve Bank is often called a “banker’s bank,” storing currency and coin, and processing checks and electronic payments. Reserve Banks also supervise commercial banks in their regions. As the bank for the U.S. government, Reserve Banks handle the Treasury’s payments, sell government securities and assist with the Treasury’s cash management and investment activities. Reserve Banks conduct research on regional, national and international economic issues. Research plays a critical role in bringing broad economic perspectives to the national policy-making arena and supports Reserve Bank presidents who all attend meetings of the Federal Open Market Committee (FOMC).

Each Reserve Bank’s board of directors oversees the management and activities of the District bank. Reflecting the diverse interests of each District, these directors contribute local business experience, community involvement and leadership. The board imparts a private-sector perspective to the Reserve Bank. Each board appoints the president and first vice president of the Reserve Bank, subject to the approval of the Board of Governors.

All member banks hold stock in Reserve Banks and receive dividends. Unlike stockholders in a public company, banks cannot sell or trade their Fed stock. Reserve Banks interact directly with banks in their Districts through examinations and financial services and bring important regional perspectives that help the entire Federal Reserve System do its job more effectively.

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