How many districts are in the federal reserve system

Variation was expected in discount rates--the interest rate that commercial banks were charged for borrowing funds from a Reserve Bank.

The setting of a separately determined discount rate appropriate to each District was considered the most important tool of monetary policy at that time. The concept of national economic policymaking was not well developed, and the impact of open market operations--purchases and sales of U.

As the nation's economy became more integrated and more complex, through advances in technology, communications, transportation, and financial services, the effective conduct of monetary policy began to require increased collaboration and coordination throughout the System. The Depository Institutions Deregulation and Monetary Control Act of Monetary Control Act introduced an even greater degree of coordination among Reserve Banks with respect to the pricing of financial services offered to depository institutions.

There has also been a trend among Reserve Banks to centralize or consolidate many of their financial services and support functions and to standardize others. Reserve Banks have become more efficient by entering into intra-System service agreements that allocate responsibilities for services and functions that are national in scope among each of the 12 Reserve Banks. The framers of the Federal Reserve Act purposely rejected the concept of a single central bank. Instead, they provided for a central banking "system" with three salient features: 1 a central governing Board, 2 a decentralized operating structure of 12 Reserve Banks, and 3 a combination of public and private characteristics.

That's the short answer; I'll go into more detail in the paragraphs to follow. The number and location of the 12 Federal Reserve District Banks was the subject of much debate, even before final passage of the Federal Reserve Act in A variety of entities, from financial centers to rural communities, from cities to states, vied for one of the proposed regional Reserve Banks or Reserve Bank Branch offices. The committee held hearings in many cities across the nation to gather input from bankers, the business community, government officials, and the public on where to locate the new Reserve Banks.

The committee also conducted a poll of national banks. The Committee chose 12 cities as Reserve Bank locations, shown on the map below, in part because of their importance as banking centers in Most of the Districts with large geographic areas or populations or both, also had Branch offices that were designed to provide central banking services in other parts of the District.

As selected, the 12 cities and their Districts were not evenly divided in terms of either population or the geographic area they were to serve. For example, state population estimates for indicate that the Seventh District, headquartered in Chicago, included the largest share of the nation's population at that time. Chart A shows that the Chicago Fed served a share of U. The San Francisco District, even though it encompassed the largest area of the nation's landmass, accounted for only a small share, about 6 percent, of the nation's population in Over time, the Federal Reserve System's regional structure of banks and branches has provided central banking services to the nation, even as commerce, financial activity, and population have shifted.

In ninety-eight days, the RBOC completed its task of organizing the system of Reserve Banks, and the twelve Federal Reserve District Banks opened for business less than one year after the committee was formed. Despite the controversies, the Reserve Banks have remained in the twelve original cities, and district lines have seen only minor changes since they were first drawn. Federal Reserve Bank of San Francisco.

Econ: First, why haven't the boundaries of the 12 Federal Reserve Districts been adjusted to reflect changes in population or economic growth? Second, do the western states receive similar central banking and research services from the Federal Reserve, as do other areas of the country where Reserve Banks serve smaller geographic areas or populations?

Federal Reserve Bank of St. Houston, David F. Johnson, Roger T. Historical Beginnings The Federal Reserve. New York Times. Primm, James Neal. Following a five-year holding period, the actual transcripts of each FOMC meeting are also released. The FOMC has taken several steps to be more open about monetary policy. There are also two additional entities within the Fed that were established in as a result of the Dodd-Frank Act.

The Consumer Financial Protection Bureau is an autonomous agency operating within the Fed that protects consumers in financial matters. Monetary Policy. Supervision and Regulation. Payment Services. Financial Stability. Skip to content Readability Tools.