Making Sense of the Federal Reserve

Providing Financial Services

Cash and checks are processed at a federal reserve bank.

In 2014, the Fed processed approximately 5.7 billion paper check transactions. In the near future, the Fed anticipates that at least 95 percent of these will be electronic transactions.

When Congress established the Federal Reserve, it charged the Fed with the critical task of providing a safe and efficient method of transferring funds throughout the country's banking system. Reserve Banks and their branches carry out this mission, offering financial services to all financial institutions in the United States, regardless of size or location.

Essentially, Reserve Banks serve as bankers' banks, offering a variety of financial services. They distribute currency and coin, processes checks, and offer electronic forms of payment.

Traditional Forms of Payment

Regional Reserve Banks meet the public demand for currency and coin within their Districts. Sometimes, people want to hold more of their assets in cash (currency and coin).

The transition from Dec. 31, 1999, to Jan. 1, 2000, involved more than the usual New Year's Eve celebrations. Many people stocked up on drinking water, fearing that the water companies' systems would fail. People avoided flights, fearing that planes would begin falling from the sky at the stroke of midnight. And, many people withdrew large sums of cash from their bank accounts for various reasons; they feared that stores would stop taking checks or debit cards, or they thought their bank accounts would suddenly contain no money. All this disruption was the result of a feared computer glitch related to the change of century date from 1999 to 2000. These problems never materialized and people redeposited their money into their checking and savings accounts shortly after New Year's Day. However, when people wanted to hold more cash, the Fed made sure the currency and coin was available.

Besides providing currency and coin, Reserve Banks process commercial checks. Over the past decade, the Fed has led the industry's push to replace paper forms of payment, such as checks, with electronic forms of payment that offer lower risk and higher efficiency. The Fed now transmits electronic images of checks and allows electronic deposits and payments.

Back to Top