Tags: Money | Federal Reserve | ownership

Who Owns the Federal Reserve?

By    |   Sunday, 14 June 2015 03:51 PM

The Federal Reserve is an independent entity set up by Congress to act as the nation’s central bank to support the banking and financial system. It acts as a private, non-profit institution and is not owned by anyone, according to the Board of Governors of the Federal Reserve System.

The Fed does not receive funding through Congress, which oversees its actions. Its monetary policies can be made without approval from Congress or the President. It does not belong to the executive or legislative branches, but Congress approves the appointment of board members, which can change throughout different presidential administrations.

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Although an independent entity, the Fed has been referred to as “independent within the government” and not independent from government.

The Fed operates 12 regional Federal Reserve Banks, which also were established by Congress to manage the central banking system. The banks in the Federal Reserve System issue shares of stocks to other member banks, but do not profit from the stock, which cannot be sold or traded as security for loans.

Any profits the Fed makes are remitted to the federal government with most of the profits going to the Treasury, notes Cullen Roche in Business Insider. Roche describes the Fed as a “national clearinghouse” for bank payment systems. Its aim is to help the financial system run smoothly and function properly.

Although it acts as an independent entity, the Fed must please bankers and the public. It works to make sure the banking system remains healthy and operative while providing information to the public on various economic signals. It initiates monetary policy when necessary to deal with short- and long-term financial changes. For example, it may raise or lower interest rates followed by other banks to avoid drastic inflation rates. Or it may purchase bonds and securities to improve lending by banks and spending by businesses or consumers.

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Roche explains that “it’s better to think of the Fed as a public/private hybrid and not really being ‘owned’ by anyone.”

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The Federal Reserve is an independent entity set up by Congress to act as the nation's central bank to support the banking and financial system. It acts as a private, non-profit institution and is not owned by anyone.
Federal Reserve, ownership
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2015-51-14
Sunday, 14 June 2015 03:51 PM
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