The Federal Reserve Board
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The Federal Reserve Board is responsible for monetary policy in the United States. Monetary policy involves changing the rate of growth of the supply of money in circulation in order to affect the amout of credit, thereby affecting business activity in the economy. There are three areas in which these policies are monitored; the Board of Governors, the Federal Advisory Council, and the Federal Open Market Committee.
The Board of Governors directs the operation on the Fed. It supervises the twelve Federal Reserve district banks and regulated certain activities of member banks and all other depository institutions. The seven full-time members of the Board of
Governors are appointed by the President of the United States with the approval of the Senate. The President chooses one member as a chairperson. Each member of the board serves for 14 yeras. The terms are arranged so that an opening occurs every two years. Members cannot be reappointed, and their decisions are not subject to the approval of the President or Congress. Their length of term, manner of selection, and independence in working frees members from political pressures.
The Federal Advisory Council assists the Board of Governors. It is made up of twelve members elected by the directors of each Federal Reserve district bank. The Federal Advisory Council meets at least four times each year and reports to the
Board of Governors on general business conditions in the nation.
The twelve voting memberson the Federal Open Market Committee meet eight times a year to decide the course of action that the Fed should take to control the money supply. the Federal Open Market Committee determines such economic decisions as whether to raise or lower interest rates. It is this committees actions that have a resounding effect thoughtout the financial world.