Description                                  
In this presentation, the narrator explains the structure and the functions of the Federal Reserve System. 

Narrator: 
The Federal Reserve System, often referred to as just the "Fed", is the central bank of the United States. It largely controls our total money supply and can influence most short-term interest rates. 

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The Federal Reserve System consists of two primary decision-making bodies: the Federal Reserve Board of Governors and the Federal Reserve Open Market Committee (FOMC) plus twelve federal reserve banks. 

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The Federal Reserve Board of Governors consists of seven people appointed by the President and approved by the Congress for fourteen-year terms. The head of this body is a position currently held by Alan Greenspan. The chairman serves a four-year term. 

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The FOMC consists of the seven governors plus the presidents from five of the Federal Reserve banks. The FOMC makes decisions on open market operations. Open market operations are purchases or sales of U.S. government securities from or to the banks. 

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The powers of the Board of Governors include setting the reserve requirement, changing the discount rate, and changing the federal funds rate. 

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The reserve requirement is the percentage of deposit liabilities that banks must maintain. In other words, this is the money they cannot lend out or invest. 

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The discount rate is the interest rate that the Fed charges on overnight loans to banks. 

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The federal funds rate is the interest rate commercial banks charge one another on overnight loans. 

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The Fed plays several important roles in the U.S. economy. Its primary role is to conduct monetary policy. Monetary policy involves the use of the powers of the Fed to influence the money supply and interest rates in pursuit of certain aggregate economic goals. 

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The aggregate economic goals of monetary policy include high levels of employment, price stability, sustainable economic growth, stable financial markets, and stable international currency markets. 

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The principal tools of monetary policy are changing the reserve requirement, the discount rate, the federal funds rate, and open market operations. 

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The Fed plays a number of other important roles in the economy. For example, it regulates the banking system and plays a large role in the clearance of checks. The Fed also runs the federal funds market where day to day loans between banks are made. 

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