Without any doubt, the Federal Reserve is considered the most important entity in terms of undertaking the task of a comprehensive regulation of the monetary and financial workings of the economy. Since the time it was first created, its role as well as regulations have expanded. Today, there are four main roles that often fall within the workings of the Federal Reserve (The Federal Reserve Board, chapter 1). The first of these relates to ensuring that the monetary policies are set by taking into account the level of credit that is available and how changes to the monetary system might have an impact on employment figures and regulation of price. .
The second task relates to a comprehensive supervision of the country's banks and also regulating them to ensure that banks don't default. In case a bank does seem to find itself in financial problems, the Federal Reserve would step in to provide financial support in one way or the other. The third key role is to ensure that the overall financial system and its various underpinnings work as effective and efficiently as possible and also determine that overall market risk is kept at a low level. The fourth key aspect of the Fed is to provide with a number of economic and financial provisions and services to banks, local financial institutions as well as ensuring that payment mechanisms among and between financial institutions take place in a reliable yet transparent manner (The Federal Reserve Board, chapter 1). .
In terms of the general structure and makeup of the Federal Reserve, it is composed of a Board of Directors that are located in Washington DC, along with twelve regional Federal Reserve banks that tend to oversee the banks that fall under their respective region al jurisdiction. As stated earlier, the primary role of both the Board of Governors, in conjunction with the various Reserve banks is to ensure that all types of financial activities within the country are fully regulated and also overseeing the workings of banks on a frequent basis, in addition to provision financial services to these institutions if that need does arise (The Federal Reserve Board, chapter 1).
