Federal Reserve Board (FRB)

What is the Federal Reserve Board?

The Federal Reserve System’s board of Governors; also called the Federal Reserve Board (FRB) is the governing authority of the entire Federal Reserve System. The Banking Act of 1935 established this authority.

Statutorily tasks are given to members with a fair representation of geographical, commercial interests, industrial, agricultural, and financial divisions of the country.

How does the Federal Reserve Board Work?

The Board of Governors in this system comprises seven members that regulate the Federal Reserve System, which is the central Bank of the US, responsible for curating monetary policy of the country. The FRB is regarded as the independent agency of this government.

The Fed works with a statutory mandate to stable prices at moderate interest rates for the long term and maximum employment. The FRB chair and other relevant officials periodically testify in front of Congress.

However, this one is structured similar to a private corporation, and they make an independent monetary policy of the executive or legislative branches.

How are the Members Appointed?

The members of this Federal Reserve Board are appointed by the president and confirmed by the Senate. Every appointed person has to serve a term of 14-years; however, they are free to leave before their time period.

In case one member leaves before completing a term, a new one is appointed to complete the remaining years. And afterwards, that new member has to sign a full term again to get reappointed. Also, if the person completes 14 years and no new member has been appointed, that member can continue serving his position.

Furthermore, the President has the power to remove a member, given adequate reason. Once appointed, every board member gets to operate on an independent level. The vice-chair and chair for the supervision of the FRB are appointed for a term of 4-years and are chosen from the existing members of the board.

This board of governors comprises a variety of subcommittees with their vice-chairs and chairs. These committees generally work on the board affairs, economic and financial monitoring and research, community affairs, Federal Reserve Bank affairs, financial stability, payments, supervision and regulation, clearing, and settlement.

Role of the Federal Reserve Board

One of the most important roles of the board members is as the members of the Federal Open Market Committee (FOMC), which regulates the operations of Open Market and comprehend the federal funds rate, one of the most important benchmark interest rates of the global Economy. Along with the seven governors, the FOMC also has the president of the Federal Reserve Bank of New York and a revolving set of four different branch presidents. The chair of the Federal Reserve Board also chairs the Federal Open Market Committee.