The Federal Reserve bank serves three primary functions of Monetary Policy, Banking Supervision and Financial Services and acts as a bank for the government, providing financial services to the US Department of Treasury by selling savings bonds and treasury bills and is a depository of the United States Government.

Monetary Policy influences the amount of money and credit that is available in the US, which affects interest rates. Under Monetary Policy, there is the open markets (buying and selling of govt securities), discount rates (interest charged by Federal Banks) and reserves (the amount the banks must maintain in their vaults).

Banking Supervision regulates financial institutions to ensure operations are managed fairly and provide equitable services. Banks are required to keep a certain amount of deposits and can lend the rest to borrowers and this is how it makes money as well as charging fees for services, loans, etc.

Financial Services provides banks, credit unions and savings and loans institutions with cash and coin. The also provide the Electronic Payment Services (ACH and Fedwire) and check collection.

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