The Federal Reserve Board, formally the Board of Governors of the Federal Reserve System, is the federal agency in Washington, D.C. that leads the central bank of the United States. Its seven governors vote on monetary policy, write and enforce many banking rules, supervise large banks and oversee the twelve regional Federal Reserve Banks. People often say "the Fed" to mean the Board, the whole Federal Reserve System, or its rate-setting committee.
The System has three main parts: the Board, the twelve Reserve Banks (in cities such as New York, Chicago and San Francisco) and the Federal Open Market Committee (FOMC). The Board was created by the Federal Reserve Act of 1913 and took its present name and form under the Banking Act of 1935, which removed the Treasury Secretary and the Comptroller of the Currency as ex officio members. It is one of the central banks whose decisions move markets worldwide, because the US dollar is the leading reserve currency.
Federal Reserve Board in plain terms
Picture a national chain of twelve regional water companies that supply the country's banks with money instead of water. The Federal Reserve Board is the head office. It does not run the pipes day to day, which is the regional companies' job, but it sets the rules, checks that the biggest customers are safe, and sits on the committee that decides how much water flows and how expensive it is.
When the cost of borrowing money changes across the country, the decision is taken by a committee in which the seven Board members always have a majority. That is why what Board members say is watched so closely.
Members and governance
The Board has seven governors, nominated by the President and confirmed by the Senate. A full term is 14 years, and terms are staggered so that one begins every two years, on 1 February of even-numbered years; a governor who has served a full term cannot be reappointed. The Chair, the Vice Chair and the Vice Chair for Supervision are chosen from among the governors, again with Senate confirmation, for four-year terms in those posts. The supervision post was created by the Dodd-Frank Act of 2010. As of November 2026 the Board's website lists Kevin Warsh as Chairman.
The long, staggered terms are meant to protect monetary policy independence from short-term political pressure. The Board is funded from the earnings of the Federal Reserve System, not by Congress, but it reports to Congress, including through a semiannual Monetary Policy Report and testimony by the Chair. The Treasury-Fed Accord of 1951 is the usual marker of the Fed's operational independence from the Treasury.
Role in interest rates
The Board's role in rates is often described loosely. The precise division of labour is:
- Federal funds target. The FOMC, not the Board alone, sets the target range for the federal funds rate. The FOMC has twelve voting members: the seven governors, the president of the New York Fed and four of the other eleven Reserve Bank presidents in rotation. It also directs open market operations and large-scale asset purchases such as quantitative easing.
- Discount rate. The discount rate charged on primary credit at the discount window is established by each Reserve Bank's board of directors, subject to review and determination by the Board. Since March 2020 it has been set at the top of the FOMC's target range.
- Interest on reserve balances. The Board sets the rate paid on banks' reserves held at the Fed, its main tool for keeping market rates within the FOMC's range.
- Reserve requirements. The Board sets the reserve requirement; it has been zero since 26 March 2020.
Through the discount window the Fed acts as lender of last resort; emergency lending to non-banks, used heavily in the 2008 financial crisis and in 2020, needs Board approval and, since Dodd-Frank, the Treasury Secretary's consent.
Supervision, rules and payments
The Board supervises bank holding companies, savings and loan holding companies, state-chartered banks that are members of the System, the US operations of foreign banks and non-bank firms designated as systemically important. It sets bank capital rules with the other US banking agencies, runs annual stress tests of the largest banks, and approves bank mergers involving holding companies.
It also writes payment rules. Regulation II, which implements the Durbin Amendment, caps debit-card interchange fees for large issuers, and Regulation J governs funds transfers through Fedwire. The Reserve Banks operate Fedwire, the FedNow instant payment service and the Fed's ACH service under policies set by the Board. Most consumer-finance rule-writing passed to the Consumer Financial Protection Bureau in 2011.
Criticism
The Board is criticised from several directions: for keeping rates too low for too long before 2008 and in the ZIRP era, for being slow to respond to inflation in 2021–2022, for supervisory failures exposed by the collapse of Silicon Valley Bank in March 2023, and, by some members of Congress, for holding too much unelected power. Its own review of the SVB failure, published in April 2023, acknowledged supervisory shortcomings.