The Federal Reserve Board Law and Legal Definition

The Federal Reserve Board is a governmental agency supervising the banking system. The board is established by the Federal Reserve Act. The board acts as the central controlling and directing mechanism of the Federal Reserve System. The board is appointed by the U.S. President under the advice of Senate. The board adopts its own by-laws and rules of operation. The board has administrative, educative and constructive duties.

Primary functions performed by the board are;

  • selecting government directors in Federal Reserve banks;
  • approving or disapproving the salaries of officers of the banks; ;
  • framing rules and regulations for the management of business in the several districts; ;
  • reviewing the rate of discount at Federal Reserve banks; ;
  • creating rate of rediscount between Federal Reserve banks; ;
  • regulating the reserve holdings of the several banks; and ;
  • imposing penalties or fines upon banks, permitting their reserves to fall below the specified limit.