ByThomas C. Melzer
I received a kind note a few months back from the director of a bank in the Eighth Federal Reserve District, thanking me for inviting him to one of our public information programs. What made the director's note extraordinary was his declaration that he had learned more about economic policy at our brief forum than he had learned in his entire business career.
Though most state it less emphatically, countless others around the District have expressed a similar sentiment: They are curious, but have little understanding of economic policy or the Federal Reserve. And they know even less about the activities of a regional Reserve Bank.
To dispel some of this mystery, we devoted our 1992 annual report to the role of regional Reserve Banks. As we reported there, one of Congress' goals, when it established the Fed more than 75 years ago, was to balance the need for central control with that of regional representation. This was accomplished in part by creating a network of 12 geographically diverse Reserve Banks that would work with a central agency, the Board of Governors, in Washington. Today, Reserve Banks ensure that all regions of the country have access to the Fed, that regional economic interests are reflected in national policymaking and that the public has a voice in central bank affairs.
They do this in three ways:
Through the work of their research departments and their president's role on the Federal Open Market Committee, Reserve Banks make valuable contributions to monetary policy. At each Bank, economists collect information about their regional economy, investigate national and international economic issues, and advise their president about policy matters. Much of their research is shared with the public. The public in turn shares its views with us at regular meetings.
Reserve Banks also carry out the Fed's responsibility to foster safe, sound and competitive banking practices. By supervising bank holding companies, state member banks and certain nonbank corporations, regional Reserve Banks significantly contribute to this process.
Providing payments services to financial institutions around the country—regardless of size or location—is a third major responsibility. We process checks, wire transfers and ACH (automated clearing house) payments, and distribute coin and currency. We also act as banker to the U.S. Treasury.
Through the combination of these three activities, Reserve Banks contribute importantly to the Fed's broad responsibility for ensuring economic and financial stability. For more information on Reserve Bank activities, you can obtain a copy of our annual report by calling (314) 444-8809.