The United States has 12 Federal Reserve Banks, not one central bank

The Federal Reserve System is split into 12 regional banks spread across the country, each serving a different part of the United States. This is not a mistake or a temporary arrangement — it was designed this way from the start in 1913. The idea was to keep banking power from concentrating in one city, the way it had in New York before then.

Each of the 12 Federal Reserve Banks serves a specific region and handles banking work for the banks in that region. They also work together on national decisions through a central board in Washington, D.C. called the Board of Governors. When you hear about "the Federal Reserve" making a decision about interest rates or money supply, that decision comes from the Board of Governors and the presidents of these 12 regional banks working together.

Key Takeaways

  • The 12 Federal Reserve Banks are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
  • Each regional bank serves member banks in its district and handles check clearing, currency distribution, and other banking services for those institutions.
  • The Board of Governors in Washington, D.C. sets overall policy, but the 12 regional bank presidents have a vote in those decisions.
  • The New York Federal Reserve Bank has special responsibilities because it handles the nation's largest financial center and conducts open market operations.

Where the 12 Federal Reserve Banks are located

The 12 Federal Reserve Banks are in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Each one covers a multi-state region. For example, the Federal Reserve Bank of Atlanta serves Alabama, Florida, Georgia, and parts of Louisiana, Mississippi, and Tennessee.

The boundaries of these regions were drawn in 1913 based on where banks and commerce were concentrated at that time. They have not changed since then, even though the country's population and economy have shifted. This means some regions are much larger by area than others, and some have grown much faster than others.

What the regional Federal Reserve Banks actually do

The 12 regional banks are not consumer banks — you cannot walk in and open an account. Instead, they provide services to the banks in their region. One major job is check clearing: when a check written on a bank in one region is deposited in a bank in another region, the Federal Reserve Banks handle moving the money between them. This happens millions of times a day.

The regional banks also distribute currency and coins to banks in their region, manage the banks' reserve accounts, and lend money to banks that need it temporarily. They also supervise and examine the banks in their region to make sure they are following the rules. Each regional bank has a president who runs it and a board of directors made up of bankers and business leaders from that region.

How the 12 banks work together on national decisions

The Federal Reserve System has a Board of Governors in Washington, D.C. that sets overall policy for the whole country. But the presidents of the 12 regional banks are part of the decision-making process. The main place this happens is the Federal Open Market Committee, or FOMC, which meets eight times a year to decide on interest rates and how much money should be in the economy.

The FOMC has 12 voting members: the seven members of the Board of Governors, the president of the New York Federal Reserve Bank (who always votes), and four of the other 11 regional bank presidents, who rotate in and out of voting seats. This structure means that decisions about national monetary policy include input from all 12 regions, not just Washington.

Why the New York Federal Reserve Bank is different

The Federal Reserve Bank of New York has more responsibility than the other 11 regional banks. It serves the largest financial center in the country and handles the most banking activity. The New York Fed also conducts open market operations, which is the main tool the Federal Reserve uses to control interest rates and the money supply. When the FOMC decides to raise or lower rates, the New York Fed is the one that actually carries out those trades.

The president of the New York Federal Reserve Bank always has a voting seat on the FOMC, while the presidents of the other 11 banks rotate. This reflects the outsized role that New York plays in the nation's financial system.

How this structure affects you as a customer

You will not interact directly with a Federal Reserve Bank — they work behind the scenes. But the decisions made by the 12 regional banks and the Board of Governors affect you through interest rates on savings accounts and loans, the stability of the banks where you keep your money, and the amount of cash available in the economy.

If you have questions about how the Federal Reserve works or want to understand more about monetary policy, each of the 12 regional banks has a website with educational resources. The Federal Reserve's main website at federalreserve.gov also has information about how the system works and what each regional bank does.

Frequently Asked Questions

Can I open an account at a Federal Reserve Bank?

No. Federal Reserve Banks only serve other banks and government agencies, not individual customers. You open accounts at commercial banks, credit unions, or other financial institutions that are members of the Federal Reserve System.

Why are there 12 Federal Reserve Banks instead of just one?

The system was designed to spread banking power across the country rather than concentrate it in one place. In 1913, when the Federal Reserve was created, the goal was to prevent any single city or group of bankers from controlling the nation's money supply.

Does my bank have to be part of the Federal Reserve System?

All national banks must be members. State-chartered banks can choose whether to join. Even banks that are not members can use some Federal Reserve services like check clearing. The Federal Reserve also supervises banks that are not members, though state regulators have primary responsibility.

How often do the 12 Federal Reserve Banks meet together?

The Federal Open Market Committee, which includes representatives from all 12 regional banks, meets eight times a year in Washington, D.C. The regional bank presidents also meet separately and communicate regularly between formal meetings.