The Federal Reserve Bank

The Federal Reserve Bank

Also known as “The Fed” or our Central Bank, the Federal Reserve Bank is the part of the Federal Reserve System responsible for maintaining, enforcing and implementing fiscal and monetary policies for the United States of America.

Today, the Federal Banks consist of 12 institutions across the United States, unlike other countries that have just one central bank; for example, the Bank of England, Bank of France, etc. The Federal Reserve Banks pertain to San Francisco, Dallas, Minneapolis, Kansas City, St. Louis, Chicago, New York, Boston, Philadelphia, Cleveland, Richmond, and Atlanta.

But what is its function? Like that of a bank? Like checking and savings accounts? Loans?

One of the main purposes is to keep the national currency in a healthy and stable condition. The bank does this by regulating its supply throughout the world by adjusting the rate of interest that it uses to lend money to other banks. It is also, you can say, the epicenter of the financial and banking industry of the world. More than anything, its function is to protect the dollar, which leads many times to the defense of other currencies, as well. The value of the dollar affects the cost of living, exports, and imports of goods among other things. This is very important not only to the United States’ economy, but also to that of other countries. Today, a massive devaluation of the dollar could bring a major economic collapse around the world, a depression, such as the one seen in the 1930s.

The Federal Reserve Bank is not a governmental institution. It is privately owned, and it pays an annual dividend decreed by law of six percent annually to its stockholders. The officials of the bank are appointed by the bank’s board of directors, not the President.

So, why is it so important? Why the epicenter?

The answer is gold, a lot of gold. Not like a mine of gold in which people are hammering every day to extract ounces of the commodity. I am talking about physical bars of gold. Remember, the backbone of currencies is gold (you can read more about this in one of our previous posts by clicking HERE).

In 1968, more than a quarter of the world’s gold rested in the Federal Bank of New York (that’s A LOT and wouldn’t be an ideal bank heist). The gold is actually found 76 feet below the main entrance and 50 feet below sea level. Inside, there are physical bars of gold the size of construction bricks. Each one weighs approximately 28 pounds. Let’s get this right; this is not United States gold. The country’s gold is, actually, kept at a different location than the Federal Bank of New York.

The Federal Reserve Bank of New York is the largest and most important of the twelve banks. It is the chief operating arm of the central banks and was erected on a block in New York. The entrance of the building faces Liberty Street; iron bars as thick as a baseball bat protect the windows that surround Nassau, William, and Maiden Lane. This building is bigger than most palaces in the world. It is now a full-fledged landmark. This was not always that way; the building was considered only a second-class landmark until 1967.

Why New York? It happens that during World War II, many nations entangled in the war, decided to keep it there for safekeeping. After that, it was never moved, with the exception of France.

This gives the Federal Reserve Bank of New York the ability to look at economics of the world through a microscope. If a country is having a decrease in foreign deals, it shows in the balance of the Federal Reserve. This facilitates keeping records of countries running on their reserves and puts the international banking community on alert. If need be, strategic plans are taken into action to avoid major economic meltdowns.

This past November 16th, 2014, The Fed completed 100 years of service. Interestingly enough, if you happen to be in New York, you can request a free tour of the New York Federal building and gold by visiting

In the words of Benjamin Strong, the Federal Reserve Bank’s first governor (he did not like the term “president”):

“To the Governor of this Bank: Never forget that it was created to serve the employer and the working man, the producer and the consumer, the importer and the exporter, the creditor and the debtor; all in the interest of the country as a whole.”


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