What is Federal Reserve System

The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913, with the enactment of the Federal Reserve Act, and was largely a response to prior financial panics and bank runs, the most severe of which being the Panic of 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved. Events such as the Great Depression were some of the major factors leading to changes in the system. Its duties today, according to official Federal Reserve documentation, fall into four general areas.
1. Conducting the nation's monetary policy by influencing monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
2. Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system, and protect the credit rights of consumers.
3. Maintaining stability of the financial system and containing systemic risk that may arise in financial markets.
4. Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system.
The Federal Reserve System is subject to the Administrative Procedure Act and so is legally obligated to inform the public about its organization, procedures and rules. In addition, the Act requires the Federal Reserve to establish uniform standards for the conduct of formal rulemaking and adjudication.
According to the board of governors: "It is not 'owned' by anyone and is 'not a private, profit-making institution'. Instead, it is an independent entity within the government, having both public purposes and private aspects. In particular, neither the Federal Reserve System nor its component banks are owned by the United States Government.
According to the Federal Reserve, there are presently five different parts of the Federal Reserve System.
1. The presidentially appointed Board of Governors of the Federal Reserve System, a governmental agency in Washington, D.C.
2. The Federal Open Market Committee (FOMC), which oversees Open Market Operations, the principal tool of national monetary policy.
3. Twelve regional privately-owned Federal Reserve Banks located in major cities throughout the nation, which divide the nation into 12 districts, acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors.
4. Numerous other private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks.
5. Various advisory councils.
The structure of the central banking system in the United States is unique compared to others' in the world, in that an entity outside of the central bank creates the currency. This other entity is the United States Department of the Treasury .