What Is the Role of the Chair of the Federal Reserve System?
The chair of the Federal Reserve, known formally as the Chair of the Board of Governors of the Federal Reserve System, is the head of the central banking system of the United States and the active executive officer of the Board of Governors of the Federal Reserve System.
Under authority provided by the Banking Act of 1935, the president of the United States appoints the seven members of the Board of Governors of the Federal Reserve System who are confirmed by the Senate and serve for 14 years. The president selects the chairman and vice-chairman from among the sitting governors and these appointments are also subject to Senate confirmation. More than 1,800 staff in Washington, D.C support the Board of Governors.
The Federal Reserve System is considered an independent central bank because its decisions do not require presidential or executive branch approval. The Federal Reserve System is subject to congressional oversight, however, and must work within the economic and financial policy framework and overall objectives of the U.S. government.
Under the chair’s leadership, the board’s responsibilities include analysis of domestic and international financial and economic developments. The board also supervises and regulates the Federal Reserve Banks, exercises responsibility in the nation’s payments system, and administers consumer credit protection laws (including the Truth in Lending, Equal Credit Opportunity, and Home Mortgage Disclosure Acts).
The board also plays a major role in the supervision and regulation of the U.S. banking system, including state-chartered banks that are Federal Reserve System members, bank holding companies, member banks’ foreign activities, foreign banks’ activities in the U.S. The board supervises approximately 900 state member banks and 5,000 bank holding companies.
By law, the chairman reports to Congress twice annually on the Federal Reserve’s activities and monetary policy and testifies before Congress on numerous other financial issues. The chair maintains regular contact with the President’s Council of Economic Advisers and other key economic officials including the secretary of the Treasury and meets periodically with the president of the United States.
In addition, the chairman serves as a member of several international financial institutions, including the board of governors of the International Monetary Fund, the board of the Bank for International Settlements (BIS), and the National Advisory Council on International Monetary and Financial Policies.
Additional information is available on the Board of Governors’ website, including the testimony and speeches, banking and consumer regulations, and statistics and research papers on banking, finance and economics. The Federal Reserve System also publishes a full review of the purposes and functions of the Federal Reserve System and Board of Governors.