a bank that belongs to the federal reserve system is called a federal reserve bank.
a bank that belongs to the federal reserve system is called a federal reserve bank.
a bank that belongs to the federal reserve system is called a?
federal reserve bank
the twelve federal reserve banks provide the financial means to operate the federal reserve system. each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board. a member bank is a privately owned bank that must buy an amount equal to 3% of its combined capital and surplus of stock in the reserve bank within its region of the federal reserve system. this stock "may not be sold, traded, or pledged as security for a loan" and all member banks receive a 6% annual dividend. no stock in any federal reserve bank has ever been sold to the public, to foreigners, or to any non-bank u.s. firm. these member banks must maintain fractional reserves either as vault currency or on account at its reserve bank. as of october 2008, the federal reserve has paid interest to banks' holdings in reserve banks' accounts. the dividends paid by the federal reserve banks to member banks are considered partial compensation for the lack of interest paid on the required reserves. all profit after expenses is returned to the u.s. treasury or contributed to the surplus capital of the federal reserve banks. since shares in ownership of the federal reserve banks are redeemable only at par, the nominal "owners" do not benefit from this surplus capital. in 2010, the federal reserve system contributed $79 billion to the u.s. treasury.
structure of the federal reserve system
after the banking panic of 1907, the federal reserve act of 1913 called for the creation of the federal reserve system. in addition to its central bank responsibilities, the federal reserve was also charged with supervising state-chartered banks that were members of the federal reserve system. eventually, the effects of great depression also led to the enactment of the banking act of 1933, which created the federal deposit insurance corporation (fdic) as a deposit insurer and supervisor of state-chartered banks that were not members of the federal reserve system.
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