what is the federal reserve system frs 
the term federal reserve system frs refers to the central bank of the u s the fed as it is commonly known regulates the u s monetary and financial system the federal reserve system is composed of a central governmental agency in washington d c the board of governors and 12 regional federal reserve banks in major cities throughout the u s the fed s central role is to handle the country s monetary policy among other things understanding the federal reserve system frs the federal reserve system is the central banking system of the united states it is a major force in the country s economy and banking industry the bank is headed by the governor and has a board with six other members these individuals are nominated by the president and are then confirmed by the senate the fed performs five general functions the fed also operates three wholesale payment systems including the fedwire funds service the fedwire securities service and the national settlement service the fed has broad power to act to ensure financial stability and it is the primary regulator of banks that are members of the federal reserve system it acts as the lender of last resort to member institutions who have no place else to borrow the fed s open mouth operations are known to publicly declare the current interest rate banks in the u s are also subject to regulations established by the states the federal deposit insurance corporation if they are members and the office of the comptroller of the currency occ jerome powell was sworn in as fed chair on feb 5 2018 for a four year term he was reappointed for a second four year term on may 23 2022 fed paymentsthe fed uses two payment systems fedwire and fednow the fednow service allows for instant payments as the fed describes payments that can be sent and received within seconds at any time of the day on any day of the year such that the receiver can use the funds almost instantly fedwire is a payment service for financial institutions that hold an account with the fed according to the fed it is a real time gross settlement system that enables participants to initiate funds transfer that are immediate final and irrevocable once processed it is used to make large value time critical payments history of the frsthe fed was established by the federal reserve act which was signed by president woodrow wilson on dec 23 1913 in response to the financial panic of 1907 before that the u s was the only major financial power without a central bank the following are some key highlights in the fed s history the federal reserve attempts to reach a target rate of inflation of 2 federal reserve system frs vs federal open market committee fomc the federal open market committee fomc is the fed s monetary policy making body and manages the country s money supply it is made up of the seven members of the fed s board of governors the president of the new york fed and four of the remaining 11 regional fed presidents who serve one year terms on a rotating basis the fomc meets eight times a year and additionally on an as needed basis to discuss the outlook for the national economy and review options for its monetary policy the fomc adjusts the target for the overnight federal funds rate which controls short term interest rates at its meetings based on its view of the strength of the economy when it wants to stimulate the economy it reduces the target rate conversely it raises the federal funds rate to slow the economy here s a history of how the target rate has moved in recent years 