Federal Reserve System


: the central banking system of the U.S. consisting of 12 districts with a Federal Reserve bank in the principal commercial city of each district

Examples of Federal Reserve System in a Sentence

Recent Examples on the Web The Federal Reserve System maintains high interest rates to cool off the economy and bring down inflation, but those interest rates make home ownership more difficult and affect businesses, which often raise the prices of goods and services to maintain profits. Dan Walters, The Mercury News, 8 June 2024 Through its control over the international payment service SWIFT and the influence of the U.S. Federal Reserve System, Washington has been able to pressure adversaries and impose financial sanctions with global reach. Matthias Matthijs, Foreign Affairs, 13 Apr. 2020 The budget blames stubborn inflation and the high interest rates imposed by the Federal Reserve System to tame inflation for California’s slowdown, but economies of other states have experienced the same factors and prospered despite them. Dan Walters, The Mercury News, 21 May 2024 Then, last year, the Fifth Circuit Court of Appeals ruled that the CFPB's structure is unconstitutional because, instead of an annual congressional appropriation, Congress set the agency's funding at a capped amount that comes from banking fees paid to the Federal Reserve System. Npr Washingtion Desk, NPR, 16 May 2024 This agency should be granted authority akin to the robust regulatory authority possessed by the Department of the Treasury, the Financial Stability Oversight Council, the Federal Reserve System, and the Securities and Exchange Commission in the financial sector. Jonathan Slotkin and David Vawdrey, STAT, 14 Mar. 2024 The United States has the Federal Reserve System, the Eurozone has the European Central Bank, the Maldives has the Maldives Monetary Authority, and so on. IEEE Spectrum, 30 May 2012 Most, but not all, financial institutions take their cue from the Federal Reserve System's schedule. Kate Gibson, CBS News, 9 Oct. 2023 Unlike some other federal agencies that receive annual appropriations from lawmakers, Congress allows the CFPB to draw its funding directly from an account in the Federal Reserve System. Matt Ford, The New Republic, 3 Oct. 2023

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'Federal Reserve System.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

First Known Use

1915, in the meaning defined above

Time Traveler
The first known use of Federal Reserve System was in 1915

Dictionary Entries Near Federal Reserve System

Cite this Entry

“Federal Reserve System.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/Federal%20Reserve%20System. Accessed 19 Jun. 2024.

Legal Definition

Federal Reserve System

central banking authority of the United States. It acts as a fiscal agent for the U.S. government, is custodian of the reserve accounts of commercial banks, makes loans to commercial banks, and is authorized to issue Federal Reserve notes that constitute the entire supply of paper currency of the country. Created by the Federal Reserve Act of 1913, the system consists of the Board of Governors of the Federal Reserve System, the 12 Federal Reserve banks, the Federal Open Market Committee, the Federal Advisory Council, since 2010 a Community Depository Institutions Advisory Council, since 2012 a Model Validation Council, and since 2015 a Community Advisory Council; there are several thousand member banks. The Board of Governors of the Federal Reserve System determines the reserve requirements of the member banks within statutory limits, reviews and determines the discount rates established by the 12 Federal Reserve banks, and reviews the budgets of the reserve banks. The Federal Open Market Committee (FOMC) is responsible for the determination of Federal Reserve bank policy in the purchase and sale of securities on the open market. The federal advisory councils are purely advisory. All national banks are required to be members of the Federal Reserve System, and state banks may become members if they meet membership qualifications. The Federal Reserve System may exercise its regulatory powers by adjusting the legal reserve ratio—i.e., the proportion of its deposits that a member bank must hold in its reserve account—thus increasing or reducing the amount of new loans that the commercial banks can make. The money supply may also be influenced through manipulation of the discount (also called rediscount) rate, which is the rate of interest charged by Federal Reserve banks on short-term secured loans to member banks. A third method of regulation is through open-market operations, now employed daily to make small adjustments in the market. (Federal Reserve bank sales or purchases of securities on the open market tend to reduce or increase the size of commercial-bank reserves.)

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