Central Bank The Federal Reserve System, the central bank of the United States, was founded by Congress to provide a safe, flexible and stable monetary and financial system. The Federal Reserve carries out the nation’s monetary policy guided by the goals set forth in the Federal Reserve Act, namely to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. The Federal Reserve influences the economy through the market for balances that financial institutions maintain in their accounts at Federal Reserve Banks—Federal Reserve balances. The demand for Federal Reserve balances has three components: reserve balance requirements, contractual clearing balances and excess reserve balances. The supply of Federal Reserve balances is affected by a number of factors, including loans from the Federal Reserve through its discount window facility and term deposits accepted by the Federal Reserve. The Federal Reserve Banks offer a range of Central Bank Programs to provide tools and information to assist financial institutions in meeting reporting requirements, understanding policies governing reserve requirements and learning about discount window lending programs.
