In most of the countries a government body governs the economic and financial aspects and implements policies to ensure a steady financial growth. Likewise, in the U.S. the Federal Reserve System (FRS) referred to as the central bank governs the economic and financial condition of the country. The FRS considered as the governing bank of the U.S. regulates and supervises the country’s economy and also regulates the nation’s financial institutions.
The central bank works as an independent entity and the board of governors are elected by the president of the U.S. Further, the monetary policy and the working of the central bank are reviewed periodically by the U.S. congress. The central bank earns the revenue through the 12 reserved banks working as the operating arms of the central bank. The main sources of income that generates revenue for the central bank are through: providing services to various other banks, interest earned through government securities, income earned through foreign currency, and interest earned from the loans offered to other depository institutions.
The FRS considered as the bank of the country is entitled to define monetary policy for achieving various financial and economical objectives of the country. The monetary policy is defined by the Federal Open Market Committee (FOMC), wherein the committee is associated with the FRS. Based on the defined policy, the FRS implements various functionalities by adopting a working structure. Since the central bank of the U.S. regulates and governs the world’s leading economy, the central bank is considered as the most powerful institution.